After the largest shock in history yesterday, market volatility continued, and the major U.S. stock indexes fell again on Tuesday (25th). At the time of writing, the Dow Jones Industrial Average fell more than 600 points or 1.8%, the Nasdaq Composite fell 2.5%, the S&P 500 fell 2.2%, and the Philadelphia Semiconductor Index fell nearly 4%.
The Dow Jones index fell by more than 1,000 points in intraday trading yesterday, and the Nasdaq composite index also collapsed by 4.9%. The four major indexes then pulled sharply, and finally rebounded and closed higher.
As the earnings season continues to progress, Microsoft (MSFT-US) is about to report its latest results after the bell today, and Apple (AAPL-US) and Tesla (TSLA-US) earnings reports will follow later this week. Big tech stocks fell broadly as Microsoft opened more than 1 percent lower on Tuesday ahead of its earnings report.
In earnings news, IBM (IBM-US) opened slightly up 0.2% after announcing that revenue hit a 10-year high after the bell on Monday; General Electric (GE-US) and Johnson & Johnson (JNJ-US) both missed their latest revenue expectations , opened down more than 6% and 0.7% respectively.
The market has been fluctuating recently as investors’ concerns about the Fed’s early tightening policy have intensified. In addition, geopolitical tensions around Russia and Ukraine have also weighed on market sentiment. As Russia continues to increase its troops to the Ukrainian border, the U.S. Department of Defense has 8,500 soldiers were ordered to be placed on high alert so that troops could be deployed at any time.
The VIX panic index rose to the highest since October 2020 in intraday trading on Monday, rising for 6 consecutive trading days and was reported at 33.03 by the time of writing. The 10-year U.S. bond yield rose to 1.757%, and the dollar edged up 0.3%.
As of 22:00 on Tuesday (25th) Taipei time:
- The Dow Jones Industrial Average fell 631.90 points or -1.84% to 33732.60
- The Nasdaq Composite Index fell 349.59 points or -2.52% to 13502.90
- The S&P 500 fell 97.56 points, or -2.21%, to 4312.57
- Feihan fell 133.03 points or -3.77%, temporarily reported 3348.91 points
- TSMC ADR fell 2.49% to $122.82 per share
- 10-year U.S. Treasury yield rose to 1.757%
- NY Light crude rose 0.24% to $83.51 a barrel
- Brent crude rose 0.52% to $86.72 a barrel
- Gold fell 0.04% to $1,841.00 an ounce
- U.S. dollar index rises to 96.185
Stocks in focus:
3M (MMM-US) was up 0.77% at $174.13 in early trade.
3M pre-market reported last quarter revenue of $8.6 billion and EPS of $2.31, both higher than market expectations. 3M said that as the company made progress in supply chain issues, cost control and pricing, the fourth quarter performance was quite solid, especially It’s December.
Johnson & Johnson (JNJ-US) was up 0.89% at $164.42 in early trade.
Johnson & Johnson reported mixed earnings for the last quarter, with revenue below market estimates, but slightly better-than-expected EPS, and an optimistic full-year forecast. Johnson & Johnson expects the new crown vaccine will contribute $3 billion to $3.5 billion in revenue this year.
General Electric (GE-US) was down 6.82% at $90.30 in early trade.
Due to supply chain problems increasing delivery time and inventory, General Electric announced a 3% year-on-year decline in revenue last quarter, which was worse than market estimates, and adjusted EPS was better than expected. GE expects that inflation will remain a major challenge this year.
Key Economic Data:
- The annual growth rate of the S&P CS 20 major city house price index in November was 18.29%, compared with the previous value of 18.41%
- US November FHFA house price index monthly growth rate was reported at 1.1%, expected 1.1%, the previous value of 1.1%
- At 23:00 Taipei time, the U.S. Economic Federation Consumer Confidence Index for January was announced, expected to be 111.9, the previous value was 115.8
Wall Street Analysis:
Goldman Sachs chief U.S. equity strategist David Kostin said that of the 64 S&P 500 companies that have reported earnings so far, 52% have outperformed analysts’ consensus earnings estimates, slightly below the historical average and more worrying. The most important point is the company’s financial forecast outlook. Among the 6 S&P 500 companies that have announced their Q1 financial forecasts this year, 5 companies have revised down their forecasts.
David Donabedian, investment director at CIBC Private Wealth, said that even if corporate earnings in 2021 are a source of momentum for the stock market, recent results show that companies are fighting inflation and slowing economic growth.
