Stocks Erase Early Gains on Some Negative Earnings Results

The S&P 500 Index ($SPX) (SPY) today is down -0.10%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.29%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.19%.  March E-mini S&P futures (ESH25) are down -0.10%, and March E-mini Nasdaq futures (NQH25) are down -0.27%. 

Stocks today gave up early gains and are slightly lower on some negative earnings results.  Texas Instruments is down more than -5% after forecasting a weaker-than-expected Q1 EPS. Also, American Express is down more than -3% after reporting higher-than-expected Q4 total expenses. In addition, CSX Corp is down more than -3% after reporting Q4 revenue below consensus.

Stocks initially moved higher today, with the S&P 500 posting a new record high and the Nasdaq 100 posting a 5-week high. Stocks found support on President Trump's softening approach toward tariffs.  Thursday evening, Trump told Fox News that he would "rather not" use tariffs against China, the world's second-largest economy. President Trump has also held back from imposing tariffs on Europe, though he warned of tariffs against Canada and Mexico.

Today's US economic news was mixed for stocks after the Jan S&P manufacturing activity and Dec existing home sales rose more than expected, but Jan consumer sentiment unexpectedly declined.

The US Jan S&P manufacturing PMI rose +0.7 to 50.1, stronger than expectations of 49.8 and the fastest pace of expansion in 7 months.

The University of Michigan US Jan consumer sentiment index was revised downward by -2.1 to 71.1, weaker than expectations of no change at 73.2. 

US Dec existing home sales rose +2.2% m/m to a 10-month high of 4.24 million, stronger than expectations of 4.20 million.

Earnings season is in full swing as companies report Q4 earnings results.  According to Bloomberg Intelligence, analysts estimate S&P 500 earnings grew by +7.5% y/y in Q4, the second-highest pre-season forecast in the past three years.

The markets are discounting the chances at 1% for a -25 bp rate cut at the January 28-29 FOMC meeting.

Overseas stock markets today are mixed.  The Euro Stoxx 50 fell from a 24-year high and is down -0.11%.  China's Shanghai Composite Index closed up +0.70%.  Japan's Nikkei Stock 225 fell from a 2-1/2 week high and closed down -0.07%.

Interest Rates

March 10-year T-notes (ZNH25) today are up +7 ticks.  The 10-year T-note yield is down -3.0 bp to 4.626%.  T-notes have support today on comments from President Trump, who appears to have softened his approach toward tariffs on China when he said that he would "rather not" use tariffs against China.  Trump's comments on the lack of tariffs on China eased inflation concerns and supported T-note prices.  However, higher European government bond yields today are pressuring T-note prices.  Today's US economic news was mixed for T-notes after Jan S&P manufacturing activity and Dec existing home sales rose more than expected, but Jan consumer sentiment unexpectedly declined.

European government bond yields today are moving higher.  The 10-year German bund yield rose to a 1-week high of 2.595% and is up +2.3 bp to 2.573%.  The 10-year UK gilt yield is up +0.4 bp to 4.639%.

The Jan Eurozone S&P manufacturing PMI rose +1.0 to 46.1, stronger than the expectations of 45.4.  Also, the Jan Eurozone S&P composite PMI rose +0.6 to 50.2, stronger than the expectations of 49.7 and the highest level in 5 months.

Swaps are discounting the chances at 97% for a -25 bp rate cut by the ECB at its January 30 policy meeting.

US Stock Movers

Chip stocks are sliding today to weigh on the overall market, led by a -5% fall in Texas Instruments (TXN) to lead losers in the Nasdaq 100 after forecasting Q1 EPS of $0.94-$1.16, weaker than the consensus of $1.17.  Also, Analog Devices (ADI) and Microchip Technology (MCHP) are down more than -3%.  In addition, Intel (INTC) and ON Semiconductor (ON) are down more than -2%, and Nvidia (NVDA), KLA Corp (KLAC), Micron Technology (MU), ASML Holding NV (ASML), and Applied Materials (AMAT) are down more than -1%.

CF Industries Holdings (CF) is down more than -6% to lead losers in the S&P 500 after JPMorgan Chase downgraded the stock to underweight from neutral with a price target of $75. 

Intuitive Surgical (ISRG) is down more than -5% after forecasting a full-year gross profit margin of 67% to 68%, below the consensus of 68.6%. 

Mohawk Industries (MHK) is down more than -5% after Zelman said the company's rollout of a new ERP system has seen complications and has hindered the company's ability to take orders, invoice customers, ship products, and collect payments.

American Express (AXP) is down more than -3% to lead losers in the Dow Jones Industrials after reporting Q4 total expenses of $13.1 billion, above the consensus of $12.88 billion. 

CSX Corp (CSX) is down more than -3% after reporting Q4 revenue of $3.54 billion, weaker than the consensus of $3.57 billion. 

HCA Healthcare (HCA) is down more than -3% after reporting Q4 EPS of $5.63, weaker than the consensus of $6.15.

Airbnb (ABNB) is down more than -3% on signs of insider selling after an SEC filing showed CEO Chesky sold $5.12 million shares on Tuesday.

Twilio (TWLO) is up more than +22% after reporting preliminary Q4 revenue growth of about +11% y/y, stronger than the consensus of +8% y/y. 

Middleby Corp (MIDD) is up more than +13% after the Wall Street Journal reported that Garden Investments has built a 5% position in the company and plans to push for changes that could boost the stock and will seek board seats. 

Meta Platforms (META) is up nearly +1% after CEO Zuckerburg said the company's 2025 capex will be $60 billion-$65 million, well above the consensus of $51.31 billion.

Verizon Communications (VZ) is up more than +1% to lead gainers in the Dow Jones Industrials after reporting Q4 adjusted EPS of $1.10, better than the consensus of $1.09.

Oshkosh Corp (OSK) is up more than +2% after KeyBanc Capital Markets upgraded the stock to overweight from sector weight with a price target of $113. 

United Airlines Holdings (UAL)  is up more than +1% after TD Cowen raised its price target on the stock to $165 from $142.

Tapestry (TPR) is up more than +2% after Citigroup raised its price target on the stock to $85 from $60.

Earnings Reports (1/24/2025)

American Express Co (AXP), Crown Castle Inc (CCI), HCA Healthcare Inc (HCA), NextEra Energy Inc (NEE), and Verizon Communications Inc (VZ).