Market Snapshot: Stocks Retreat Amid Mixed Earnings Reports

The S&P 500 Index ($SPX) (SPY) closed down -0.29% on Friday, while the Dow Jones Industrials Index ($DOWI) (DIA) fell by -0.32%. The Nasdaq 100 Index ($IUXX) (QQQ) saw a decrease of -0.58%. March E-mini S&P futures (ESH25) and March E-mini Nasdaq futures (NQH25) declined by -0.36% and -0.62%, respectively.

Stock Market Performance

On Friday, following an early rise, stocks fell back due to disappointing earnings reports. Texas Instruments dropped over -7%, leading a decline in chipmakers after it predicted a weaker-than-expected Q1 EPS. HCA Healthcare also fell more than -4% due to Q4 EPS coming in below analyst expectations, and CSX Corp saw a -2% dip following below-consensus revenue figures.

Initial Gains Cut Short

At the start of trading, stocks had momentum, with the S&P 500 reaching a new record high and the Nasdaq 100 hitting a five-week high. Investor sentiment was buoyed by President Trump’s remarks indicating a less aggressive stance on tariffs. On Thursday, he expressed a preference against imposing tariffs on China and held off from tariffs on Europe, although he did warn about possible tariffs on Canada and Mexico.

Economic Indicators Mixed

Economic data released on Friday offered a mixed review of the market. The Jan S&P manufacturing PMI increased by +0.7 to reach 50.1, surpassing expectations of 49.8, marking the fastest growth rate in seven months. However, the University of Michigan’s consumer sentiment index was revised downward by -2.1 to 71.1, falling short of expectations for no change at 73.2. In contrast, December existing home sales climbed by +2.2% month-over-month to 4.24 million, exceeding projections of 4.20 million.

Quarterly Earnings Season

As companies continue to report Q4 earnings, analysts at Bloomberg Intelligence estimate that S&P 500 earnings grew by +7.5% year-over-year, making it the second-best pre-season forecast in three years. The market currently estimates a 1% chance of a -25 basis point rate cut at the upcoming January 28-29 FOMC meeting.

Global Market Recap

On the international front, stock markets closed mixed. The Euro Stoxx 50 reached a 24-year peak, gaining +0.04%. Meanwhile, China’s Shanghai Composite Index increased by +0.70%, while Japan’s Nikkei Stock 225 dropped by -0.07% from a two-and-a-half-week high.

Interest Rates Overview

March 10-year T-notes (ZNH25) rose by +3 ticks, with the 10-year T-note yield dropping -1.8 basis points to 4.626%. T-note prices were bolstered by President Trump’s softened tariff comments, which appeared to ease inflation concerns. However, losses in German bunds limited gains in T-notes. Economic news was mixed for T-notes, with positive manufacturing activity and existing home sales data, countered by a decline in consumer sentiment.

European Bond Market Trends

European government bond yields displayed mixed results on Friday. The yield on the 10-year German bund climbed to 2.595%, finishing the day up +1.9 basis points at 2.569%. In the UK, the 10-year gilt yield fell by -0.7 basis points to 4.629%.

PMI Data from Eurozone

The January Eurozone S&P manufacturing PMI increased by +1.0 to 46.1, surpassing expectations of 45.4. Additionally, the Eurozone S&P composite PMI rose +0.6 to 50.2, exceeding forecasts of 49.7, representing the highest level in five months. Swaps currently suggest a 97% likelihood of a -25 basis point rate cut from the ECB in its January 30 meeting.

US Stock Movers

The decline in chip stocks primarily impacted the market, led by Texas Instruments (TXN), which fell by -7% after projecting Q1 EPS between $0.94 and $1.16, falling short of the consensus of $1.17. Other notable losses included Microchip Technology (MCHP) down more than -5%, and Analog Devices (ADI) down more than -4%. In the Dow, Nvidia (NVDA) also saw a drop of more than -3%. Additional companies like Intel (INTC) and ON Semiconductor (ON) experienced similar losses of over -3%.

CF Industries Holdings (CF) saw its stock drop by over -7% following a downgrade from JPMorgan Chase to “underweight” and a price target of $75. Mohawk Industries (MHK) declined by over -4% because of issues related to a new ERP system reportedly affecting operations and order management.

HCA Healthcare (HCA) fell by over -4% after recording Q4 EPS of $5.63, notably lower than the consensus forecast of $6.15. Additionally, Airbnb (ABNB) dropped more than -4% amid signs of insider selling after CEO Chesky sold $5.12 million shares on Tuesday. Intuitive Surgical (ISRG) witnessed a decline of over -3% after projecting a lower-than-expected gross profit margin for the full year.

Other notable stock movements included CSX Corp (CSX), which closed down more than -2% after reporting Q4 revenue of $3.54 billion, missing the consensus of $3.57 billion. American Express (AXP) declined by more than -1% upon revealing Q4 total expenses of $13.1 billion, exceeding expectations of $12.88 billion.

Stocks on the Rise

On a brighter note, Twilio (TWLO) surged over +20% after reporting Q4 revenue growth of approximately +11% year-over-year, surpassing expectations of +8%. Middleby Corp (MIDD) saw its stock increase by more than +16% following news that Garden Investments acquired a 5% stake in the company and intends to propose changes aimed at enhancing stock value.

Southwest Gas Holdings (SWX) gained over +3% after Ladenburg Thalmann & Co initiated coverage with a “buy” recommendation and a price target of $84. Welltower Inc (WELL) also closed up more than +3% after Bank of America raised its price target from $190 to $221. Meta Platforms (META) saw an increase of over +1% after CEO Zuckerberg stated the company’s 2025 capex will be significantly higher than previous estimates.

Oshkosh Corp (OSK), United Airlines Holdings (UAL), and Tapestry (TPR) all experienced gains of over +1% following various upgrades and increased price targets from analysts.

Earnings Reports Announced

Upcoming earnings reports for January 27, 2025, include Alexandria Real Estate Equities (ARE), AT&T Inc (T), Brown & Brown Inc (BRO), Nucor Corp (NUE), and W R Berkley Corp (WRB).

On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy
here.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.