Stocks began the week on a down note, as tech stocks continue to struggle.
Earnings season remains in full swing, with a little more than half of the S&P 500 companies having reported. For the most part, results have been favorable, with more than three-quarters of the announcements topping Wall Street’s sales and earnings expectations. However, investors have quickly bailed out of some big names in the wake of disappointing news. Notably, shares of Meta Platforms (FB), the parent company of Facebook, fell 5% yesterday, and have now shed 35% for the year to date. Following uninspiring guidance issued last week, the company recently revealed it might be forced to shut down its Facebook and Instagram social media platforms in Europe due to potential regulatory restrictions. Meanwhile, shares of Netflix (NFLX) continue to get beaten down after management said it expected slower subscriber growth. Like Meta, Netflix is down about 35% so far this year.
After spending most of the day in positive territory, the Dow Jones Industrials ended the session at just a point above breakeven. The broader S&P 500 followed a similar pattern, but closed down 16 points, while the tech-heavy NASDAQ fared the worst of the lot, slumping 82 points, or a little over half a percentage point. Among the major market sectors, decliners outnumbered advancing issues, with communication services (-2.2%), technology (-.7%), and basic materials (-4%) suffering the biggest setbacks. On the positive side of the ledger, energy stocks gained 1.3%, while financials moved up about one-third of a percent.
Meanwhile, the European bourses had a positive session, with the key indexes in France, Germany, and the U.K. all advancing about three-quarters of a percentage point. Elsewhere, oil prices moved slightly lower, with light sweet crude down .8%, to about $91.60 a barrel.
Earnings continue to roll in, with a number of heavyweights, such as Coca-Cola (KO), Disney (DIS), Pfizer (PFE), and Toyota (TM), scheduled to report this week. More importantly, perhaps, investors will be eager to read Thursday’s report from the Labor Department on the consumer price index for January. The latest consensus is that the figure will come in at slightly above 7%, which would mark the largest rate of advance in about 40 years. If it comes in higher, it would increase the chance that the Federal Reserve raises its overnight rate by half a percent in March. (All things being equal, the more interest rates rise, the less attractive stocks become.) Thursday will also bring the latest figures on initial jobless claims.
As for today, stocks in Asia were mostly up, and the major indexes in Europe are trading just above breakeven. Meanwhile, U.S. stock futures are suggesting the indexes will have a mixed open, and crude oil prices are down about 1.3%.
– Mario Ferro
At the time of this writing, the author did not have positions in any of the companies mentioned.
