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Wall Street falls flat after promising start as earnings reports take center stage

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12:25 pm: Markets little changed at midday

The Dow, after being up more than 150, was up just 3 points to 30,963. The Nasdaq Composite gained less than 2 points to 13,638, and the S&P 500 declined almost 4 points, 0.1%, to 3,852.

General Electric Company (NYSE:GE) shares rose more than 2% to $11.22 after the company reported fourth quarter industrial free cash flow that topped expectations.

10 am: Proactive North America headlines:

Heritage Cannabis Holdings Corp (CSE:CANN) (OTCQX:HERTF) (FRA:2UE) closes its acquisition of Canadian cannabis company Premium 5

Talon Metals Corp (TSE:TLO) (OTCMKTS:TLOFF) (FRA:TAO) intersects longest mixed massive sulphide nickel mineralization to date at Tamarack project.

DRDGOLD Limited (NYSE:DRD) (JSE:DRD) says independent non-executive chairman, Geoffrey Campbell will leave its board on December 1, 2021

NexTech AR Solutions Corp (OTCQB:NEXCF) (NEO:NTAR) (FRA:N29) inks six-figure deal to deliver augmented reality video conferencing to National Association of Medicaid Directors

Q BioMed Inc (OTCQB:QBIO) secures further international protection for its liver cancer chemotherapy candidate

Loop Insightss Inc (CVE:MTRX) (OTCQB:RACMF) and Empower Clinics partner to establish Re-open Vancouver coalition to obtain COVID-19 mitigation solution

Mandalay Resources Corporation (TSE:MND) (OTCQB:MNDJF) (FRA:R7X2) posts more encouraging drill assays from Youle deposit at its Australia mine

First Cobalt Corp Corp (CVE:FCC) (OTCQX:FTSSF) begins important preparation work ahead of refinery construction

TruTrace Technologies Inc (CSE:TTT) (OCTQB:TTTSF) and Applied DNA Sciences join forces to deliver complete cannabis product validation and authentication platform

BetterLife Pharma Inc (CSE:BETR) (OTCQB:BETRF) (FRA:NPAU) inhaled coronavirus treatment passes six months of cold temperture tests

9.41am: Wall Street starts higher

The main Wall Street indices opened higher across the board on Tuesday as investors looked ahead to the coming deluge of corporate earnings later this week.

In the first minutes of trading, the Dow Jones Industrial Average was up 0.47% at 31,104 while the S&P 500 climbed 0.35% to 3,868 and the Nasdaq rose 0.38% to 13,688.

Positive results from large firms such as General Electric and Johnson & Johnson may have helped boost optimism for the rest of the earnings season, especially with tech giant Microsoft set to report later today followed by Apple, Facebook and Tesla on Wednesday.

Speaking Tesla, one of the early winners of the session was e-commerce platform Etsy Inc (NASDAQ:ETSY), which jumped 4.5% to US$218.26 following a complimentary Tweet from Elon Musk after he purchased a “hand knit wool Marvin the Martian helm” for his dog through the site.

8:00am: Wall Street to move mostly higher

With the results season in full swing, US indices are set to open broadly firmer, although an earnings beat/miss here or there could change that.

Spread betting quotes indicate that the Dow Jones Industrial Average, which lost ground yesterday, will open 105 points higher at 31,065 while the Nasdaq Composite, which advanced yesterday, is set to open 139 points lower at 13,497.

The S&P 500 is tipped to add 7 points to yesterday’s gains at 3,862.

We’ve already had several heavy hitters weigh in with earnings updates; industrial holding companies General Electric and 3M went their separate ways, with the former missing forecasts with its earnings per share while the latter topped expectations.

Drugs maker Johnson & Johnson reported better than expected earnings, as did defence and aerospace giant Raytheon, although the latter’s results also included a cautious outlook statement that prompted the shares to be marked lower in pre-market trading.

For those who ignore earnings and just trade on momentum, there is always glamour stock Tesla but it is currently having its thunder stolen (or hype purloined, if you prefer) by GameStop, an old school video games retailer that is on the proverbial roller-coaster (tycoon) ride.

Market commentators appear to be relishing a battle between the Masters of the Universe, aka hedge funds, and nerds on Reddit who are pumping the price of GameStop, which some hedge funds have heavily “shorted” (sold stock they don’t own in the hope of buying it back cheaper later).

The shares were up 18% in screen-based trading ahead of the opening bell.

Well, punting shares makes a change from playing “Stock Market Bubble Mania” …

“It’s been a decidedly odd 24 hours as while global sentiment suddenly dipped in the US morning session, we simultaneously saw some astonishing moves higher in names that are currently the darlings of the Robinhood/Reddit world. Both then normalised into the close but what a round trip,” said Jim Reid of Deutsche Bank in his “Early Morning Reid” missive.

“Round trip” is American for “return journey” but enough about returns.

Reid confesses to being an erstwhile BlackBerry fan and fearing the worst for the Canadian technology company behind it (Research in Motion, as it once was) once Apple and Samsung ate its lunch.

“However, BlackBerry shares have surged +301% since the end of October and are up +172% YTD and +28.4% yesterday (+48.4% at the day’s highs and at levels not seen since October 2011). It seems this has been a popular stock with online stock chat rooms (on Reddit). Another stock that is getting attention for similar reasons is GameStop. Since the end of October, it’s up +633%, +308% YTD and +146% at the peak yesterday before closing +18.1%. So a wild ride and the retail day traders seem to be targeting and battling institutional shorts at the moment with the former generally winning in recent days and weeks,” Reid said.

It’s just as well we have a busy results schedule today as there is not much to get excited about on the macroeconomic front.

The Conference Board consumer confidence reading for January is expected to edge up to 89.0 from 88.6 in December while the Richmond Fed manufacturing survey is tipped to be unchanged from December’s 19.0 reading.

Three things to watch for on Tuesday:

  • Other large firms in the earnings diary for Tuesday include telecoms firm Verizon Inc (NYSE:VIZ), Starbucks Corp (NASDAQ:SBUX) and payments firm American Express Co (NYSE:AXP)
  • In other earnings news, investors will be eyeing shares in General Electric Co (NYSE:GE) after the industrial giant missed profit expectations for its fourth quarter but managed to deliver free cash flow that beat market forecasts
  • Shares in e-commerce website Etsy Inc (NASDAQ:ETSY) may also get a look in after Tesla boss Elon Musk tweeted that he “kinda loves” the website, which allows creators to sell bespoke or customer art and other products

Story by ProactiveInvestors


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