Today’s Big Picture Asia-Pacific equity markets finished the day mixed except for India’s SENSEX which fell 0.80%.Both Japan’s Nikkei and South Korea’s KOSPI ended the day flat, each up a mere 0.03%.Australia’s ASX All Ordinaries gained 0.48%, Taiwan’s TAIEX rose 0.71%, Hong Kong’s Hang Seng advanced 1.96%, and China’s Shanghai Composite closed 3.03% higher on the continued effects of the reportedly $278 billion rescue package.European markets are mixed in midday trading and U.S.
equity futures point to a mixed market open.
We could see a dramatic change in equity futures, which are contending this morning with pressure on Tesla ( TSLA ) shares following last night’s latest earnings report – see Stocks to Watch below.At 8:30 AM ET, the first take on 4Q 2023 US GDP was published, showing that the economy grew much faster than expected, increasing 3.3%, compared to expectations of 2% growth.
This growth argues the Fed does not need to race toward cutting interest rates, yet the market still sees 5-6 rate cuts coming before we close out 2024.That sets the tone for the Fed to once again deliver some sobering talk to the market when it concludes its next policy meeting on January 31.
Data Download International Economy
AT 8:15 AM ET, the European Central Bank (ECB) will deliver its latest interest rate decision, and the market expectation is there will be no action, leaving the rate at 4.5%.Thirty minutes later, the ECB will hold its policy press conference, where questions will likely be geared toward when the ECB expects to embark on a rate cutting cycle.
At the recent World Economic Forum, ECB President Christine Lagarde comments the central bank is likely to begin cutting rates this summer.
Domestic Economy
In addition to the initial 4Q 2023 GDP print discussed above, we have the usual weekly Thursday day as well as December Durable Orders and New Home Sales reports at 8:30 AM ET and 10 AM ET.Headline durable orders are expected to rise 1.1% MoM following November’s 5.4% gain.New Home Sales are also expected to climb to 645,000 in December up from 590,000 in November.
Markets
Sectors were mostly lower yesterday, led by Real Estate and Utilities, which both fell 1.37%, and Materials which came close, down 1.35%.The only standout was energy which gained 1.43%.Splendid Six laden Technology, and Communication Services added 0.69% and 0.62%, respectively.Broad indexes were once again mixed as the Dow fell 0.26% and the Russell 2000 declined 0.73% while the S&P 500 came close to even, up 0.08% and the Nasdaq Composite closed 0.36% higher.
Shares of Netflix ( NFLX ) were bid up 10.70% following the company’s latest earnings release which not only pleased investors but contributed to about 80% of the Communication Services sector returns.
Here’s how the major market indicators stack up year-to-date:
Dow Jones Industrial Average: 0.31% S&P 500: 2.07% Nasdaq Composite: 3.13% Russell 2000: -3.22% Bitcoin (BTC-USD): -4.39% Ether (ETH-USD): -2.56% Stocks to Watch Alaska Air (ALK), American Airlines (AAL), Banc of California (BANC), Comcast (CMCSA), Dow (DOW), Humana (HUM), McCormick & Co.
(MKC), Nokia (NOK), Northrop Grumman (NOC), Sherwin Williams (SHW), STMicroelectronics (STM), and Union Pacific (UNP) are expected to release quarterly earnings before equities begin trading later this morning.
Pre-market breadth is healthy today as 235 names in the S&P 500 have traded hands so far this morning with 147 gainers and 88 decliners.
In reaction to various earnings releases and one FAA-mandated 737 MAX 9 production halt, Resmed Incorporated ( RMD ) and IBM ( IBM ) (more below) are being bid up this morning while Tesla ( TSLA ) is coming under significant pressure (more below), and VF Corporation ( VFC ) and Boeing ( BA ) are also being bid lower.
Tesla reported December quarter EPS of $0.71, missing the $0.73 consensus, on revenue that rose 3.5% YoY to $25.17 billion, also missing the consensus forecast.While deliveries rose 20% to 484,507, gross margin for the quarter came in at 17.6% compared to 23.8% in the year ago quarter.For the coming year, Tesla shared vehicle volume growth rate may be notably lower than compared to 2023’s growth rate as its teams work to launch the next-generation vehicle at Gigafactory Texas.
December quarter results posted by IBM ( IBM ) topped revenue and EPS expectations.Software segment revenue came in at $7.5 billion, up 3.5% YoY, while Consulting revenue was $5.0 billion for the quarter and Infrastructure revenue was $4.6 billion.The company issued an optimistic outlook that calls for mid-single digit revenue growth, which implies a faster rate of growth compared to the December quarter.
While Nokia ( NOK ) reported disappointing results for 2023 and guidance that reflects slower than expected telecom spending, the company’s shares are moving higher following the announcement of a $653 million share buyback in the current quarter.
Cloud solutions company ServiceNow ( NOW ) posted stronger than expected December quarter EPS on revenue that rose 25.6% YoY, modestly ahead of the consensus forecast.
Subscription revenue came in $2.365 billion in the quarter, up 27% YoY, accounting for 97% of revenue for the quarter.For the current quarter, the company sees subscription revenue rising ot $2.51-$2.515 billion, and for its fiscal 2024 that revenue is projected to be in the $10.555-$10.575 billion range versus $8.6 billion in 2023.
Semiconductor capital equipment company Lam Research ( LRCX ) crushed December quarter EPS expectations and reported revenue of $3.76 billion for the period, topping the $3.71 billion market forecast.For the current quarter, Lam sees EPS of $6.50-$8.00 versus the $6.63 consensus on revenue between $3.4-$4.0 billion that bookends $3.68 billion consensus.
Commercial aerospace supplier Hexcel ( HXL ) shares are moving lower in pre-market trading after the company’s December quarter results missed top and bottom line expectations.Management also issued 2024 EPS guidance of $2.10-$2.30 which also fell short of the $2.48 consensus.
Research firm IDC found Apple’s ( AAPL ) iPhone sales dropped 2.1% YoY in 4Q 2023, but for 2023 it was the top selling smartphone vendor with 17.3% market share.The December quarter slip in units explains Apple’s recent move to offer a rare iPhone discount in China.Overall smartphone shipment volumes in in China’s was 73.63 million units in 4Q 2023 according to IDC, and 271 million units in 2023, down 5%.
Sasol ( SSL ) expects pricing and demand volatility to continue through 1H 2024 as global market sentiment and the petrochemical markets remain uncertain with muted demand for chemicals.
IPOs
Readers who want to dig deeper into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page .
After Today’s Market Close
Capital One (COF), Fair Isaac (FICO), Intel (INTC), KLA Corp.(KLAC), T-Mobile US (TMUS), Visa (V), and Western Digital (WDC) are expected to report quarterly results after equities stop trading today.
Those looking for more on upcoming quarterly earnings reports should head on over to Nasdaq’s Earnings Calendar .
On the Horizon Friday, January 26
Japan: Tokyo CPI – January Japan: Leading Economic Index (Final) – November US: Personal Income & Spending, PCE Prices – December US: Pending Home Sales – December Thought for the Day “I don’t think people understand there’s 100% correlation with what happens to a company’s earnings over several years and what happens to the stock.” ~ Peter Lynch
Disclosures Intel (INTC) , Nokia (NOK) are constituents of the Tematica BITA Digital Infrastructure & Connectivity Index Apple (AAPL) is a constituent of the Tematica Research Thematic Dividend All-Stars Index The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc..