Yahoo Finance US stocks mixed as investors digest more company earnings
The FTSE 100 (^FTSE) and European markets rose on Tuesday as investors digested a raft of economic data to gauge the health of the global economy, while US indices opened mixed as traders weighed-up more big earnings from US banks.
The Dow Jones (^DJI) fell 0.16% to 33,933.46 points, while the S&P 500 (^GSPC) gained 0.32% to 4,164.53 points. The tech-heavy NASDAQ (^IXIC) also opened in the green, gaining 0.49% to 12,217.08.
Investors monitored more earnings reports, including from Johnson & Johnson (JNJ), Bank of America (BAC) and Goldman Sachs (GS).
Tesla (TSLA) will also be on the radar of investors as it releases its results on Wednesday, while Netflix (NFLX) posts its earnings after the US market close on Tuesday.
FTSE 100 and European markets
In the UK, the FTSE 100 (^FTSE) rose 0.28% to 7,901.83, while the CAC 40 (^FCHI) in Paris went up 0.26% to 7,517.52 points. In Germany, the DAX (^GDAXI) also opened up 0.31% to 15,839.25.
The UK unemployment rate for December 2022 to February 2023 increased by 0.1 percentage points on the quarter to 3.8%, according to the Office for National Statistics (ONS).
Fresnillo (FRES.L), Entain (ENT.L), Anglo American (AAL.L), Antofagasta (ANTO.L) and Rolls Royce (RR.L) were the top five risers on the FTSE 100 on Tuesday morning.
Read more: UK inflation likely dropped below double digits but interest rates still set to rise
Berkeley Group (BKG.L), Unilever (ULVR.L), Taylor Wimpey (TW.L), Persimmon (PSN.L) and Abrdn (ABDN.L) were at the bottom of the basket.
Mining stocks were boosted by positive economic GDP data from China with investors hopeful the country’s lifting of COVID-19 restrictions will boost demand.
“The FTSE 100 has opened higher for the eighth consecutive session, trading above 7,900 with miners like Fresnillo, Antofagasta, Anglo American and Glencore outperforming. Basic resources are enjoying a tailwind from China’s strong first quarter GDP figure which hit 4.5%, beating expectations for 4% thanks to the release of pent-up demand after Beijing unwound its strict COVID lockdown measures late last year,” Victoria Scholar, head of investment at Interactive Investor, said.
US earnings
In the US, investors monitored more earnings reports on Tuesday, including from Johnson & Johnson (JNJ), Bank of America (BAC) and Goldman Sachs (GS).
Johnson & Johnson topped Wall Street’s expectations and reported adjusted earnings of $2.68 a share for the first quarter of 2023, up from $2.67 in the same period the previous year, and quarterly revenue of $24.75bn, up 5.6% from the prior year.
The pharmaceutical company also raised its full-year adjusted earnings expectations to a range of $10.60-$10.70 per share, from $10.45-$10.65, and raised its full-year sales expectations to a range of $97.9bn-$98.9bn, from $96.9bn-$97.9bn.
“Johnson & Johnson reported another quarter of strong results across our business in the first quarter of 2023,” Joe Wolk, executive vice president and chief financial officer at Johnson & Johnson, said.
“We remain focused on the successful separation of our Consumer Health business and are confident in the long-term growth prospects of our Pharmaceutical and MedTech businesses that continue to drive meaningful value for Johnson & Johnson shareholders.”
Bank of America earnings also topped expectations with its profits up 15% to $8.2bn, while its revenue grew 13% to $26.3bn, beating the expected $25.2bn that analysts had forecast.
“Every business segment performed well as we grew client relationships and accounts organically and at a strong pace. Led by 13% year-over-year revenue growth, we delivered our seventh straight quarter of operating leverage. We further strengthened our balance sheet and maintained strong liquidity,” Brian Moynihan, chair and chief executive of Bank of America, said in a statement.
“We delivered earnings of $0.94 per share, up 18% over Q1-22, in an economy with modestly slower GDP growth. Our results demonstrate how our company’s decade-long commitment to responsible growth helped to provide stability in changing economic environments,” he added.
Goldman Sachs (GS), meanwhile, said revenue fell 5% to $12.22bn, which was below analyst estimates of $12.8bn, as a result of consumer loan losses and weaker than expected bond trading.
The bank said net income for the first quarter was $3.2bn, down from $3.8bn in the same period last year.
It noted a $470m loss from a partial sale and markdown of its consumer loan portfolio but said it was partly offset by a release of credit reserves.
Investors will also be keeping an eye on the outlook for interest rates ahead of the next Federal Reserve meeting in May. It’s widely expected among analysts that the Fed will raise rates by another quarter percentage point.
Tesla and Netflx
Tesla (TSLA) will also be on the radar of investors as it releases its results on Wednesday, while Netflix (NFLX) posts its earnings after the US market close on Tuesday.
Bloomberg consensus estimates expect the streaming giant to report revenue of $8.18bn (£6.58bn) and earnings per share (EPS) at $2.86.
Naeem Aslam, chief investment officer at Zaye Capital Markets, said that for Netflix, user growth and customer loyalty will be of interest.
“Consumers are under pressure, and discretionary money remains very limited, causing them to cut down. As a result, we may not see as many customers willing to renew their membership. Another element that traders will consider is how the corporation has been able to get more members by pursuing password sharing.”
Read more: Trending tickers: Apple | Netflix | EasyJet | Alphabet
Meanwhile, Tina Teng, analyst at CMC Markets, said Tesla’s profit margin is in doubt due to its generous price cuts, despite a record Q4 delivery number.
“Also, whether the EV maker can achieve its 2 million delivery number becomes suspicious amid severe Chinese carmaker competition,” she added.
Asia markets
In Asia, the major markets closed mixed as China’s economy grew more than analysts had expected.
Tokyo’s Nikkei 225 (^N225) rose 0.51% to 28,658.83 points, while the Hang Seng (^HSI) in Hong Kong declined 0.85% to 20,606.11. In mainland China, the Shanghai Composite (000001.SS) reversed earlier losses and gained 0.21% to 3,392.72 points as consumer cyclicals and technology stocks dragged down the index.
Pound
The pound (GBPUSD=X) gained against the US dollar by 0.22% to 1.24. Against the euro, sterling (GBPEUR=X) also rose by 0.09% to 1.13.
Fiona Cincotta, senior financial markets analyst at City Index, said the GBP/USD is rising towards 1.24 amid USD weakness.
“The USD is easing after two days of gains following solid US data which reinforced expectations of another Fed rate hike in May. Manufacturing activity in the New York state rose for the first time in five months,” she said.
Oil prices
Crude prices edged higher again on Tuesday after losing ground during the previous trading session after better-than-expected growth figures from China boosted sentiment on a growth in crude demand.
US crude oil, or West Texas Intermediate (CL=F), rose 0.28% to $81.06 a barrel, while Brent crude (BZ=F) also gained 0.40% to $85.10 a barrel.
Meanwhile, gold (GC=F) has continued to trade around $2,000 after giving back some gains in recent sessions.
“The yellow metal came close to record highs late last week but didn't quite have the legs to properly test it. That may still come but it seems we're now seeing some profit-taking, which is coinciding with yields creeping higher and interest rate expectations doing similar,” Craig Erlam, senior market analyst, UK & EMEA, OANDA, said.
Economic data
The UK unemployment rate ticked up as total pay growth rose faster than expected, with public pay growth jumping by the largest amount since 2005.
The UK unemployment rate for December 2022 to February 2023 increased by 0.1 percentage points on the quarter to 3.8%, according to the Office for National Statistics (ONS).
The increase in unemployment, the ONS said, was driven by people unemployed for up to six months.
Read more: UK pay growth jumps as unemployment rate rises
Total pay, including bonuses, grew at an annual rate of 5.9% in the three months to February, up from 5.7%.
However, when excluding bonuses, pay growth was unchanged from an upwardly revised pay growth figure of 6.6% for the three months to January.
Meanwhile, average regular pay growth for the public sector was 5.3% from December to February, compared to growth of 6.9% in the private sector.
In March, the number of staff on payrolls rose by 31,000, to 30 million. In January to March 2023, the estimated number of vacancies fell by 47,000, to 1,105,000. That’s the ninth consecutive fall in a row, going back to May to July 2022.
Craig Erlam said the UK jobs report was a mixed bag with wage growth remaining stubbornly high.
“The Bank of England will no doubt be frustrated at the lack of progress on wages — particularly excluding bonuses — but if the move higher in unemployment is sustained, the additional slack in the labour market may give them confidence that they will come down,” he said.
“Of course, with inflation still above 10%, the case for pausing rate hikes is already extremely challenging and markets strongly expect another 25 basis points next month and maybe one more before the end of the year.”
Read more: Philip Hammond warns of 'real risk' to London financial services from EU crypto bill
Danni Hewson, head of financial analysis at AJ Bell, said: “It’s an odd situation where employers are still offering pretty decent pay increases to their staff, but the ravages of inflation are rendering them all but useless by the time they hit pay packets.
“That’s leading to real hardship for some people who are finding the only solution is industrial action, with 348,000 days lost to strikes last month. This is having a knock-on effect to economic growth, which in turn knocks on to business confidence and stymies job creation.”
UK inflation data
Investors will also be watching UK inflation data due out on Wednesday.
Sanjay Raja, senior economist at Deutsche Bank Research, said in a note to clients it expects price momentum to regain its downward footing after February's inflation surprise.
“A reversal of very strong clothing inflation alongside an unwind of some unusually strong price increases, we think, will push CPI and RPI lower, with the former dropping below double digits for the first time in six months,” Raja said.
“What to expect? We see headline CPI slowing to 9.73% y-o-y with core CPI slipping to 5.85% y-o-y. Services CPI, we estimate, will drop to 6.3% y-o-y. And headline RPI will likely edge down to 13.29% y-o-y. Risks to our forecasts are tilted to the upside.”
Euro area inflation data for March is also due on Wednesday.
Other stocks to watch
EasyJet (EZJ.L) said on Tuesday it expects to exceed analysts’ consensus forecast of £260m adjusted pre-tax profit.
It’s the second time the airline has upgraded its earnings guidance for its current financial year.
“When they are bad, they are awful, but when they are good, they can be amazing and right now investors seem to be unsure as to what to expect from airline stocks, even as EasyJet upgrades earnings guidance for the second time for its current financial year,” said AJ Bell investment director Russ Mould.
“Even as bookings improve, capacity remains tight and pricing stays firm, investors seem far from convinced that clear skies lie ahead for an industry whose fortunes are notoriously volatile,” he added.
Read more: Price of cheddar cheese, white bread and porridge oats soar by as much as 80%
Shares in the company were up nearly 3% on Tuesday.
Investors were watching Apple (AAPL) stock on Tuesday after it opened its first retail store in India. The company showed its commitment to expand in the country, which it also plans to turn into a manufacturing hub.
Apple’s launch of a new savings account in the US — that will pay a market-leading 4.5% a year — has also whet the appetite of investors.
Traders will also be across how Alphabet stock (GOOG) is performing to see how it recovers after it lost nearly 4% on Monday, erasing about $55bn in its market value. At market open in the US on Tuesday, the stock declined a further 0.46% to 105.93.
It comes after a report from The New York Times suggested that competition was heating up in the mobile search market.
The report said that Samsung could replace Google as the default search engine on its devices with Microsoft’s (MSFT) Bing Search instead.
Watch: Netflix earnings: Here's what to expect from the call
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