US stocks struggled for direction at the open on Tuesday as a short but profitable week began for Wall Street companies.
The S&P 500 (^GSPC) was up 0.1%, while the Dow Jones Industrial Average (^DJI) was down 50 points, or 0.2%. The technology-heavy Nasdaq Composite (^IXIC) was just above the break-even point.
The rest of the results are set to trickle in from the financial sector over the coming days, with all eyes focused on banking giants Goldman Sachs (GS) and Morgan Stanley (MS) reporting results before the bell on Tuesday after a lackluster round of quarterly updates from their peers. late last week.
Goldman Sachs posted a larger-than-expected 69% drop in earnings for the fourth quarter, hurt by a sharp drop in deal-making revenue and a higher provision for loan losses. Shares fell 2.3 percent in early trading.
Meanwhile, Morgan Stanley reported a lower-than-expected profit drop. Like its Wall Street peers, the bank posted a decline in investment banking revenue, but higher net interest income and a record quarter for the wealth management business helped smooth out the overall numbers. Shares rose 4%.
Earnings reports from other segments will also rise in the coming days, with the focus on numbers from Netflix (NFLX) on Thursday. The update is likely to be a potential sign of things to come for the results for the technology sector, which are set to begin in earnest the following week.
The S&P 500 is expected to post a year-over-year profit decline of 3.9% for the fourth quarter, according to data from FactSet Research. This marks the first annual decline in earnings reported by the index since a 5.7% decline in the third quarter of 2020.
“We expect earnings to take center stage in the future, as earnings feedback ramps up, while inflation/FOMC feedback wanes,” Bank of America’s Savita Subramanian and Ohsung Kwon wrote in a note on Friday.
Global business leaders gather in the mountains of Davos, Switzerland, this week for the World Economic Forum. A global recession, post-pandemic challenges, climate change, and the crisis in Eastern Europe are expected to be high on the agenda of the politicians, CEOs, and billionaires in attendance. Among those attending was European Central Bank President Christine Lagarde.
Next week will also be a busy Fedspeak, with several members of the US central bank scheduled to deliver remarks in speeches across the country in the coming days.
US Treasury yields rose Tuesday morning, with the benchmark 10-year note rising nearly 5 basis points, to above 3.55%.
Oil futures rose slightly. West Texas Intermediate (WTI) crude futures were trading around $80 a barrel as of 6:55 a.m. ET.
Tuesday’s moves come after a long weekend that saw the US stock and bond markets closed on Monday, January 16, in observance of Martin Luther King Jr. Day. On Friday, all three major averages closed out their second winning week in a row.
The tech-savvy Nasdaq Composite Index posted a hefty 4.8% gain for the week, while the S&P 500 and Dow Jones Industrial Average posted their best performance since November, posting weekly gains of 2.7% and 2%, respectively.
Alexandra Semenova is a correspondent at Yahoo Finance. Follow her on Twitter @employee
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