Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets in the day ahead. Today is Tuesday, Jan. 23, 2024. The Bottom Line segment of today’s podcast starts at (4:16) for listeners who want to skip ahead.
0745: Updates with latest earnings.
State of Play
Stocks gained ground again yesterday as the S&P 500 and Dow Industrials closed at fresh record highs for the second trading day in a row. As we look at our board of indicators at 0635, things are pretty quiet as we await earnings:
Stock index futures aren’t doing much. Only the Russell 2000 which tracks small caps is moving at all from the break-even point and that is up 0.8%;
Cryptocurrencies continue to retreat, with bitcoin down 5% to trade around $39,000. Insert joke about the spot ETFs being the catalyst for permanently higher bitcoin prices;
Bonds are selling off a bit, with the 2-year yield up 3 basis points to 4.41% and the 10-year yield up 4bps to 4.14% (yields move inversely to prices);
Commodities are mixed, with WTI crude oil down 1% to trade around $74/barrel and copper up 0.5%.
Today’s Known Events
Not much in the way of economic data again but it is a big day for earnings. In fact, two major consumer staples just reported:
3M (MMM 0.00%↑ ) reported mixed earnings and guidance that fell short of forecasts. That stock is sinking in the pre-market, down ~7% at the time of this writing;
Johnson & Johnson (JNJ 0.00%↑) beat on top- and bottom-line estimates and reaffirmed its full-year outlook, but the stock is down a bit on this news, presumably because it didn’t beat estimates by very much (that and reaffirming guidance is not as good as raising guidance);
GE (GE 0.00%↑) beat top- and bottom-line estimates but its guidance fell short and the stock is down a bit in the pre-market;
D.R.Horton (DHI 0.00%↑) results were mixed and that stock is dropping.
Better news came from:
Procter & Gamble (PG 0.00%↑) results were mixed but margins impressed and the stock is moving higher in the pre-market;
Verizon (VZ 0.00%↑) reported a strong beat of estimates and that stock is rising, taking AT&T (T 0.00%↑) and T-Mobile US (TMUS 0.00%↑) along with it;
Lockheed Martin (LMT 0.00%↑) and RTX (RTX 0.00%↑) beat top- and bottom-line estimates and are moving higher;
Halliburton (HAL 0.00%↑) results were mixed but the company raised its dividend and that stock is rallying in the pre-market.
After the close we’ll get Netflix (NFLX 0.00%↑) and Texas Instruments (TXN 0.00%↑) among others.
The Bottom Line©️
Earnings should drive things today. You’ll want to look below the surface a bit to see how much of the guidance in particular is driven by economic factors versus company-specific issues. Sometimes company-specific issues will spill over, as it did with United Airlines (UAL 0.00%↑) which reported yesterday and blamed Boeing’s issues for an anticipated loss for its upcoming quarter. Sometimes of course companies seek to blame exogenous factors for their loss of market share, so this whole exercise can get a little tricky.
The earnings we’ve seen this morning aren’t great, and the fact that they’re coming from consumer staples (ish) companies is certainly not a good sign. PG could be telling here when they report.
This whole situation is developing, so the briefing (though not the podcast) may get updated.
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
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A Big Day for Earnings