Stocks were choppy Tuesday as market participants took in a number of blue chip earnings reports and looked ahead to the release of key economic reports before the next Fed meeting at month's end.
Both the S&P 500 (+0.3% at 4,864) and the Nasdaq Composite (+0.4% at 15,425) managed modest gains today, with the latter notching a third straight record close. However, the Dow Jones Industrial Average slipped 0.3% to 37,905.
Post-It maker 3M (MMM) was the biggest drag on the Dow, sinking 10.9% after its fourth-quarter earnings report. While 3M disclosed higher-than-expected earnings of $2.42 per share on $8.0 billion in revenue, it gave lower-than-anticipated guidance for Q1 earnings.
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"As we start 2024, the macro environment remains muted, similar to what we saw in the fourth quarter," said CEO Mike Roman in the company's earnings call. Roman added that 3M will give a full strategic update following the spinoff of its healthcare unit, which is "on track to be completed in the first half of this year."
3M's outlook "implies muted growth across its businesses, weighed down by expected weakness in consumer discretionary spending and softness from industrial end markets," says CFRA Research analyst Jonathan Sakraida. "Macro-related headwinds coupled with idiosyncratic challenges (lawsuits) inform our Hold opinion, despite the relatively discounted valuation."
Verizon stock jumps nearly 7% after earnings
At the other end of the spectrum was Verizon Communications (VZ), which was the best Dow Jones stock today. VZ jumped 6.7% after the telecommunications firm said it had 318,000 consumer wireless retail postpaid net additions in the final three months of 2023 vs 41,000 in the year-ago period. Verizon also reported in-line Q4 earnings of $1.08 per share on higher-than-anticipated revenue of $35.1 billion.
The blue chip stock has been a long-term laggard. In 2023, for instance, it generated a total return (price change plus dividends) of 2.8% vs the S&P 500's total return of 26.3% – making it one of the Dogs of the Dow for 2024. However, it's now up nearly 11% for the year-to-date.
Q4 GDP, inflation data on deck
Looking ahead, there's plenty more action on this week's earnings calendar, starting with tonight's results from streaming giant Netflix (NFLX, +1.3%) and chipmaker Texas Instruments (TXN, -0.3%).
Meanwhile, this week's key economic reports include Thursday's initial look at fourth-quarter gross domestic product (GDP). And Friday, we'll get the December personal consumption and expenditures (PCE) index – the Fed's preferred measure of inflation that measures consumer spending.
These reports are all the more anticipated after recent economic data came in hotter than expected. As a result, CME Group's FedWatch tool indicates futures traders are currently pricing in a 42% chance for a quarter-point rate cut in March, down from 76% one month ago. Meanwhile, the odds for a rate cut at the May meeting have jumped to 53% from 12% over that same time frame.
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