US and European stocks fell slightly on Tuesday as investors assessed the recent wave of corporate earnings and business activity surveys for clues about the health of the global economy.
Wall Street’s benchmark S&P 500 was flat by mid-afternoon in New York. The technology-heavy Nasdaq Composite Index fell 0.3 percent.
The muted activity came after trading in dozens of blue-chip stocks was briefly halted following problems at the opening auction on the New York Stock Exchange.
The stock moves also preceded Microsoft’s quarterly results, due after the closing bell, which comes days after the tech giant announced plans to cut 10,000 jobs by the end of March and confirmed it would invest billions of dollars in ChatGPT bot maker OpenAI.
Lockheed Martin and Raytheon were the two US companies to report earlier in the day. The former reported lower year-over-year sales, but beat analyst expectations for revenue for the fourth quarter.
Healthcare products company Johnson & Johnson predicted on Tuesday that earnings for this year would rise above estimates, even after sales fell more than 4 percent in the three months ending in December.
In European stock markets, the regional Stoxx 600 index lost 0.2 percent and the German DAX lost 0.1 percent.
“The best vibes [the] Growth expectations Monday helped the S&P 500 climb to its highest level since early December, according to analysts at JPMorgan, with semiconductor and technology stocks in particular posting strong gains.
However, the US bank does not expect the stock market rally to continue in January. The recent weakness in economic data predicted a decline in earnings expectations and weakened [full-year] Guidance indicates which markets are likely to go down.
But others are more optimistic. Lee Hardman, currency analyst at MUFG, said the reopening of the Chinese economy, easing recession fears in Europe, and declining inflation in the United States meant that “investor concerns about a stronger landing for the global economy” have allayed.
He added that traders have “new confidence that central banks can pause rate hike cycles” this year, even as officials at the US Federal Reserve and European Central Bank insist their battle against inflation is a long way off.
A survey of business activity on Tuesday showed that private sector output in the United States continued to decline in January, with the composite PMI rising to 46.6 from 45 in December. Any number below 50 indicates contraction, not expansion.
Analysts at ABN Amro said the figure supports its forecast for a “modest decline” in US gross domestic product this quarter.
Meanwhile, the eurozone has “returned to growth” at the start of 2023, according to a flash PMI update from S&P Global on Tuesday, with business activity picking up in January after six consecutive months of decline.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said the data “adds to evidence that the region may escape recession.”
Andrew Kenningham, chief economist for Europe at Capital Economics, said the region’s PMI corresponds to an “almost stagnant” economy, adding that there is “nothing here” to stop the ECB from raising interest rates by one percentage point over the next two months,” he said. And maybe even more than that.”
US government bond prices improved on Tuesday, with the yield on the 10-year US Treasury note falling 0.06 percentage point to 3.47 percent.
In Asian stock markets, Hong Kong’s Hang Seng Index rose 1.8 percent. Japan’s Nikkei 225 added 1.5 percent, having fully recovered from the sell-off triggered by the Bank of Japan’s surprise adjustment of long-running yield curve control measures in late December.
Brent crude, the global oil benchmark, fell 2.5 percent to $86.05 a barrel. Analysts at Bank of America expect Brent crude to touch $110 a barrel by summer, buoyed by rising Chinese demand.
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