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Disappointing earnings weigh on Dow

The Dow Jones Industrial Average fell Tuesday, pulling back from record-breaking highs as traders pored through the latest batch of corporate earnings.

The blue-chip Dow slid 96.36 points, or 0.25 per cent, to 37,905.45, retreating below the 38,000 level that was crossed for the first time on Monday. Tuesday’s losses ended a three-day winning streak.

The S&P 500 rose by 0.29 per cent to 4,864.60, a fresh all-time closing high. The technology-heavy Nasdaq Composite advanced 0.43 per cent to 15,425.94.

The 30-stock Dow was pressured by an 11 per cent decline in 3M following disappointing guidance. Johnson & Johnson fell 1.6 per cent after reporting earnings.

D.R. Horton dropped more than 9 per cent after the homebuilder missed Wall Street’s consensus forecast for per-share earnings. Lockheed Martin slipped more than 4 per cent following a weak outlook for full-year earnings per share.

On the other hand, United Airlines rose more than 5 per cent after reporting strong fourth-quarter results. However, the airline operator said it expects a first-quarter loss from the grounding of Boeing 737 Max 9 airplanes, the model involved in the Alaska Airlines emergency earlier this month.

Shares of other airline operators rose in tandem. Southwest Airlines climbed more than 3 per cent, while American Airlines, Delta Air Lines and Alaska added more than 2 per cent.

Elsewhere, Verizon and Procter & Gamble helped mitigate losses for the Dow. The pair gained more than 6 per cent and 4 per cent, respectively, as investors bought in following the companies’ financial reports.

And Netflix was the latest to report after the bell, topping Wall Street’s revenue expectations. Netflix now has 260.8 million paid subscribers, a new record for the service.
But investors are deliberating how long the gains can persist, especially as the rally this year has centred around technology stocks such as Nvidia, lacking broader participation. This month alone, Nvidia is up 20 per cent. In contrast, the small-cap Russell 2000 is lower by more than 2 per cent.

Traders are also awaiting two key economic data releases later in the week. The preliminary fourth-quarter gross domestic product figure is due Thursday, followed by the Commerce Department’s closely-watched personal consumption expenditures price index for December on Friday.

Technology remains a focus later in the week, with IBM and Tesla slated for Wednesday and Intel expected Thursday. Outside of tech, American, Alaska and Southwest are also due Thursday.

Turning to commodities, oil prices remained stable on Tuesday amid mixed Middle East signals and concerns about supply disruptions. The West Texas Intermediate contract increased by 0.28 per cent, while Brent crude rose by 0.06 per cent. These fluctuations were influenced by events like Israel proposing a Gaza ceasefire, rejected by Hamas, and supply threats like Ukrainian drone strikes and Yemen airstrikes. Cold weather reduced U.S. oil production in North Dakota by 400,000 barrels per day, but Libya restarted production at the Sharara oilfield, adding 300,000 barrels per day.

The continued decrease in nickel prices is expected to result in numerous mine closures, further solidifying Indonesia’s position as a dominant player in the global supply of nickel. This decline, exceeding 40 per cent over the past year, is primarily attributed to increased nickel supply from Indonesia, coinciding with diminished demand growth. Analysts from BloombergNEF suggest that Indonesian projects are better equipped to withstand the effects of declining nickel prices due to their flexibility.

Overall, US sectors were mixed overnight. Consumer Staples was the best performer, whilst Real Estate was the worst.

Bitcoin has experienced a 15 per cent decline in value over the past two weeks, with some investors capitalising on the recent launch of bitcoin exchange-traded funds (ETFs) to realise profits and exit their positions in the volatile cryptocurrency. On Tuesday, the price of bitcoin briefly dropped by as much as 3 per cent, falling below $39,000 for the first time since early December, before showing a partial recovery during afternoon trading.

Futures

The SPI futures are pointing to a 0.2 per cent rise.

Currency

One Australian dollar at 8.20am was buying 65.78 US cents.

Commodities

Gold added 0.37 per cent. Silver gained 1.21 per cent. Copper added 1.12 per cent. Oil fell 0.28 per cent.

Figures around the globe

European markets closed lower. London’s FTSE lost 0.03 per cent, Frankfurt fell 0.34 per cent, and Paris closed 0.34 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei fell 0.08 per cent, Hong Kong’s Hang Seng gained 2.63 per cent and China’s Shanghai Composite closed 0.53 per cent higher.

The Australian share market closed 0.51 per cent higher at 7,514.94.

Ex-dividends
5G Networks (ASX:5GN) is paying 2 cents unfranked
Alternative Investment Trust (ASX:AIQ) is paying 3.95 cents unfranked
Mirrabooka Investments (ASX:MIR) is paying 4 cents fully franked

Dividends payable
Premier Investments (ASX:PMV)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

Disclaimer

The views, opinions or recommendations of the commentators in this presentation are solely those of the author and do not in any way reflect the views, opinions, recommendations, of Sequoia Financial Group Limited ABN 90 091 744 884 and its related bodies corporate (“SEQ”). SEQ makes no representation or warranty with respect to the accuracy, completeness or currency of the content. Any prices published are accurate subject to the time of filming and shouldn’t be relied upon to make a financial decision. Commentators may hold positions in stocks mentioned and companies may pay FNN to produce the content at times. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian Financial Services Licensee before making investment decisions. To the extent permitted by law, SEQ excludes all liability for any loss or damage arising in any way including by way of negligence.