S&P500 falls as major US banks report earnings


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Note: Figures recorded at 7:40am AEDT. Updated figures and a video recording will be available at 9am AEDT.

The Dow Jones Industrial Average fell on Tuesday as rates ticked higher and Wall Street pored through the latest batch of fourth quarter earnings. Investors also awaited more data that can give better glimpse into the state of the American consumer.

Several major banks released their quarterly earnings Tuesday morning. Goldman Sachs reported better-than-expected profit and revenue, driven by a strong performance in equity trading and increased revenue from asset and wealth management. Meanwhile, Morgan Stanley's fourth-quarter profit was impacted by $535 million in charges, but the bank's revenue exceeded expectations, thanks to a rebound in investment banking fueled by debt underwriting. Shares of Goldman Sachs inched up 0.1%, while Morgan Stanley declined 4.7%.

Roughly 30 S&P 500 companies have reported calendar fourth-quarter results thus far. Of those, 78% have beaten earnings expectations, according to FactSet.

The Dow declined 296 points, or 0.8%. The S&P 500 and Nasdaq Composite slipped 0.4% and 0.3%, respectively.

In further company news, Boeing shares tumbled 8% after Wells Fargo downgraded the company to equal weight from overweight, amid ongoing troubles with its 737 Max 9 model. Meanwhile, AMD shares jumped 7.6% following upbeat analyst commentary on semiconductor demand. The chipmaker trying to catch Nvidia in the A.I. race rose to a new 52-week high, and is scheduled to report its quarterly results on Jan. 30.

Apple's stock declined following reports of rare iPhone discounts in China due to competitive pressures, and the US Supreme Court's decision not to consider Apple's appeal in an antitrust suit challenging its App Store, which is expected to impact the company's revenue significantly.

The benchmark 10-year Treasury note yield jumped 12 basis points to 4.071% after Federal Reserve Governor Christopher Waller indicated in a speech that the central bank may ease monetary policy slower than Wall Street had anticipated.

After these comments, oil prices dropped as the U.S. dollar strengthened. The West Texas Intermediate futures contract for February decreased by 0.77% to $72.12 a barrel, while the Brent futures contract for March fell by 0.17% to $78.02 a barrel.

Investors are also looking ahead to December retail sales data out Wednesday, which could fuel recessionary fears and concerns about economic growth if U.S. consumer spending sees a cooldown.

Currency

One Australian dollar at 7.50am was buying 65.82 US cents.

Figures around the globe

European markets closed lower. London’s FTSE fell 0.48 per cent, Frankfurt lost 0.30 per cent, and Paris closed 0.18 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei lost 0.79 per cent, Hong Kong’s Hang Seng dropped 2.16 per cent and China’s Shanghai Composite closed 0.27 per cent higher.

The Australian share market closed 1.09 per cent lower at 7,414.79.
 
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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