Stock swings continue after wild day

The rat race in US stock markets continued, with all major indexes falling more than 2% after yesterday’s dramatic turnaround from a strong sell-off.

Monetary policy and geopolitical concerns once again rattled markets and earnings. Shares of General Electric Company (GE) fell more than 6% after earnings missed analysts’ estimates.

Key points to remember

  • Major US stock indices are falling, a day after the Dow Jones reversed a decline of more than 1,000 points.
  • Monetary policy and geopolitical concerns once again rattled markets and earnings. GE fell more than 6% after revenue missed analysts’ estimates.
  • The US Federal Open Market Committee (FOMC) is due to start its two-day monetary policy meeting today, and investors are betting on a rate hike in March.

The US Federal Open Market Committee (FOMC) is scheduled to begin its two-day monetary policy meeting today. Investors expect the Fed to signal that it plans to raise rates in March, tightening monetary policy for the first time since it cut borrowing costs to near zero shortly after the start of the the coronavirus pandemic nearly two years ago.

Overseas, Japan’s Nikkei index closed down 1.7% and South Korea’s KOSPI index fell more than 2%. European stocks rebounded after US stocks closed higher yesterday.

Yesterday, investors pushed indices into positive territory late in the session, after the S&P 500 briefly dipped into correction territory. The Dow Jones Industrial Average (DJIA) rose 0.29%, the S&P 500 0.28% and the Nasdaq 0.63%.

Meanwhile, the corporate earnings stream continues from big names such as 3M Company (MMM), American Express Company (AXP), Johnson & Johnson (JNJ), General Electric, Verizon Communications Inc. (VZ) and Microsoft Corporation ( MSFT).

Later this morning, S&P CoreLogic releases its national Case-Shiller home price index for November. Economists forecast an 18% year-over-year rise, slightly lower than October’s. This would mark the 12th consecutive month with double-digit gains for house prices. The Conference Board is also expected to release its consumer confidence index, which likely fell to 111.8 in January from 115.8 in December.

The yield on the benchmark 10-year Treasury note rose to 1.745. Oil prices rose, with light sweet crude rising above $84 a barrel on concerns about supply disruptions as geopolitical tensions rise.

Today’s Headlines: Quick Shots

Ford Motor Company (F) has halted orders for its new $20,000 Maverick pickup truck it rolled out last fall. In an unusual move, the automaker said it had reached the maximum it could build and was suffering from a backlog of orders.

Shares of International Business Machines Corporation (IBM) jumped after the company reported a 6% increase in revenue growth in the fourth quarter. The company told investors to seek single-digit revenue growth.

Amazon.com, Inc. (AMZN) plans to open a new type of store to serve customers in suburban areas. Amazon will open new Amazon Go stores “closer to home” for shoppers, with the first store opening in Mill Creek, Washington, in the coming months.

Facebook parent company Meta Platforms, Inc. (FB) said its research team has built a new artificial intelligence supercomputer that it says will be the world’s fastest when completed this year. Meta said in a statement that its new AI Research SuperCluster will help the company build better AI models that can learn from billions of examples, work in hundreds of languages ​​and analyze text, images and videos.

The International Monetary Fund (IMF) is expected to lower its global economic growth forecast when it releases an updated World Economic Outlook. The IMF’s downgrade is due to an upsurge in the COVID-19 pandemic and continued supply chain and labor disruptions.

Bob Dylan sold his entire catalog of recorded music to Sony Music from Sony Group Corporation (SONY). The deal is worth between $150 million and $200 million and includes the rights to several future releases.

The Microsoft Moment: The Big Story

Microsoft stock price fell nearly 6% at one point yesterday to lead the Dow’s declines, putting it on course for a six-month low and near bear market territory, before bouncing back to finish slightly higher. Microsoft was trading down about 18% below its record high Nov. 19 close of $343.


Microsoft Total Return Vs. S&P 500 and Activision Blizzard.

Microsoft will release its latest results after the closing bell today and is expected to post second-quarter profit and revenue growth, driven by demand for cloud and Office 365 services and features. Microsoft is expected to report earnings per share of 2 $.32 on revenue of $50.7 billion, according to FactSet.

Commentary on the company’s biggest ever acquisition of Activision Blizzard for nearly $69 billion will also be the center of attention when the conference call opens for questions from analysts. The acquisition, if approved by regulators, would significantly boost Microsoft’s gaming revenue and make Microsoft the world’s third-largest gaming company by revenue, behind Tencent Holdings Limited (TCEHY) and Sony. Microsoft games revenue was $3.6 billion last quarter. By comparison, Activision Blizzard reported net revenue of $2.1 billion in its comparable quarter.

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