Nasdaq lower ahead of big tech earnings, focus on Fed

The tech-heavy Nasdaq lost ground on Tuesday as the market awaited a spate of high profile corporate earnings and the Federal Reserve convened for its monetary policy meeting.

The S&P 500 closed nominally lower after touching a new intraday high, while the blue-chip Dow finished higher.

Shares of Alphabet Inc and Microsoft Corp fell in extended trading after the companies released their quarterly earnings reports.

"There's a lot of trepidation over the start of the earnings releases from 'the magnificent seven,'" said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

"The stocks have done incredibly well and there's a little bit of caution being expressed right now and maybe rightly so."

Economically sensitive sectors such as Dow Transports, chips and small caps underperformed the broader market.

The Labor Department reported an unexpected rise in job openings, hinting that the market remains too solid for the Fed to consider cutting its key policy rate as soon as March.

The Fed is expected to end its policy meeting on Wednesday with a decision to let its key interest rate stand at 5.25-5.50 per cent. Its accompanying statement and Fed Chair Jerome Powell's subsequent press conference will be parsed for clues on the timing and number of rate cuts this year.

"I'm going to be looking for language that matches the storyline that we hope to see in 2024, that sometime in the second quarter we'll see the beginning of a reduction in rates," Tuz added. "I'm going to be listening for language that confirms that that's the most likely scenario."

Fourth-quarter reporting season has shifted into overdrive, with announcements so far by 144 of the companies in the S&P 500. Of those, 78 per cent have delivered consensus-beating earnings, according to LSEG.

On aggregate, analysts now expect fourth-quarter earnings growth of 5.5 per cent over last year, up from the 4.7 per cent seen at the beginning of the month, LSEG data showed.

United Parcel Service slid 8.2 per cent after the package deliverer issued a disappointing annual revenue forecast, weighing on transports.

General Motors jumped 7.8 per cent after the automaker provided an upbeat 2024 earnings forecast, and promised more capital return to shareholders.

Ford Motor rose 2.0 per cent.

The S&P 500 declined 0.06 per cent to end at 4,924.97 points. The Nasdaq Composite Index fell 0.76 per cent to 15,509.90 points, while the Dow Jones Industrial Average rose 0.35 per cent to 38,467.31 points.

Six of the 11 S&P 500 sector indexes rose, led by financials, up 1.2 per cent, followed by a 1.01 per cent gain in energy .

Boeing Co shares slid 2.3 per cent ahead of its quarterly earnings report expected before Wednesday's opening bell. Scrutiny into the planemaker is intensifying over its 737 MAX 7 after a mid-air cabin blowout on January 5.

Citigroup and Bank of America rose over 3 per cent following rating upgrades from Morgan Stanley, pushing the S&P 500 banks index up 2.1 per cent.

Johnson Controls dropped 3.8 per cent after the building products supplier lowered its full-year profit estimate, while MSCI advanced 9.3 per cent after the global index provider posted a higher fourth-quarter profit.

Super Micro Computer rose 3.5 per cent after the server seller projected stronger-than-expected quarterly sales.

Advancing issues outnumbered falling ones within the S&P 500 by a 1.2-to-one ratio.

Across the US stock market, declining stocks outnumbered rising ones by a 1.4-to-one ratio.

The S&P 500 posted 80 new highs and no new lows. The Nasdaq recorded 126 new highs and 75 new lows.

Volume on US exchanges was relatively light, with 10.3 billion shares traded, compared to an average of 11.5 billion shares over the previous 20 sessions.

Austrlaian Associated PressBack to Breaking News

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