Stocks slipped at the open on Tuesday, after retail sales data smashed expectations and earnings season picked up steam.
The Dow Jones Industrial Average (^DJI) fell about 0.4%, or roughly 130 points, after finishing Monday with gains. Contracts on the benchmark S&P 500 (^GSPC) and the tech-heavy Nasdaq 100 (^NDX) shed about 0.8% and 1.1%, respectively.
The 10-year Treasury yield jumped 12 basis points to trade around 4.83%. The 10-year yield hit a 16-year high of 4.89% on Oct. 6.
Retail sales rose 0.7% in September from the previous month, more than double Wall Street’s estimates for 0.3% growth, the latest data out Tuesday showed. The surprise reading reflects continued resilience in the American consumer despite predictions of a slowdown.
In earnings, Bank of America (BAC) reported a 10% rise in profit, echoing last week’s strong showing by peers last week. Goldman Sachs (GS) is another highlight in Tuesday’s third quarter reports, with Lockheed Martin (LMT), Johnson & Johnson (JNJ), and United Airlines (UAL) also on the docket.
Earnings season is still in its early days, but there are already encouraging signs that corporate America could be seeing an end to the recent earnings recession. Tesla (TSLA) and Netflix (NFLX) lead out tech sector results on Wednesday, giving more insight into the toll taken from higher borrowing costs.
Read more: What a Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards
Meanwhile, the Middle East conflict still weighed on the market as investors assessed the chances of it breaking out into a wider war. The rising geopolitical tensions in the Middle East could drive a global recession, leading investors have warned.
News that President Joe Biden plans to visit Israel on Wednesday and then travel to Jordan has eased some worries driven by a looming Israeli ground offensive on Gaza, seen as a red line for its Arab neighbors.
Oil prices steadied as the US intensified its diplomatic efforts and as hopes grew that the US will ease sanctions on producer Venezuela. Crude oil futures (CL=F) held above $87 a barrel, while Brent crude futures (BZ=F) traded at almost $90 a barrel.
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ASemiconductors fall on Biden crackdown
The Biden administration is upping its restrictions around the sale of semiconductors from American companies to China.
Chip stocks like Nvidia (NVDA), Advanced Micro Devices (AMD) and VMware (VMW) all fell on the news, down roughly 6%, 3% and 8%, respectively, as the broader tech space lags the overall market.
The crackdown is the latest effort by US officials to limit China’s access to AI chips, further escalating tensions between the two countries as the technology war intensifies.
US Commerce secretary Gina Raimondo said the goal is to curb China’s access to “advanced semiconductors that could fuel breakthroughs in artificial intelligence and sophisticated computers that are critical to (Chinese) military applications.”
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ABank of America, Goldman report mixed earnings
Big banks like Bank of America (BAC) and Goldman Sachs (GS) reported mixed results on Monday as earnings season kicks into high gear.
As Yahoo Finance’s David Hollerith reports:
Third quarter profits at Bank of America were up 10% from a year ago, as the second-largest US bank got a boost from higher interest income and a strong performance from its Wall Street unit.
It reported earnings of $7.8 billion and revenue of $25.2 billion, which was up 3% from a year ago. Its net interest income, which measures the difference between what it makes on its loans and pays for its deposits, rose 4% year over year.
Its trading and investment banking revenues were also up, a sign that a slump in dealmaking is starting to thaw.
Meanwhile, third quarter profits at Goldman Sachs fell as the Wall Street giant continued its costly retreat from consumer banking and tried to recover from a prolonged slump in dealmaking.
Its earnings were $2.06 billion, down 33% from $3.07 billion a year ago. That result was affected by a $506 million write-down on GreenSky, a specialty lender it agreed to sell, and $358 million in impairments on real estate investments.
Its performance during the quarter trailed other big-bank rivals JPMorgan (JPM), Bank of America (BAC), Citigroup (C), and Wells Fargo (WFC), all of which reported profit increases year over year.
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JThe consumer slowdown was nowhere to be found in September
The American consumer keeps surprising Wall Street.
New data from the Commerce Department released Monday showed retail sales rose 0.7% in September from the previous month, more than double Wall Street’s estimates for 0.3% growth. Sales excluding auto and gas increased 0.6%, above estimates for a 0.1% increase compiled by Bloomberg. Meanwhile, August’s sales were revised up to 0.8% from a previously reported 0.6% increase.
The September report, offers a snapshot of consumer spending at a time when economic data has been coming in largely stronger than expected despite the Federal Reserve’s interest rate hiking campaign as the central bank seeks to cool inflation.
Nine of the 13 categories highlighted in the release saw increases from a month ago while sporting goods was the lone category unchanged from August. Sales at miscellaneous store retailers led all categories, shooting up 3% from August. Sales at nonstore retailers popped 1.1% while motor vehicle & parts dealers sales were the other leader, rising 1% from September.
The biggest laggards were electronics & appliance stores as well as clothing sales which both dropped 0.8% compared to the month prior.
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BofA, Lockheed, and Wyndham: Stocks trending in premarket trading
Here are some of the stocks leading Yahoo Finance’s trending tickers page in premarket trading on Tuesday:
Bank of America Corporation (BAC): Bank of America stock rose over 1% premarket. The second-largest US bank saw its profits rise by 10% after getting a boost from higher interest income and a strong performance from its Wall Street unit, as reported by Yahoo Finance’s David Hollerith.
Lockheed Martin (LMT): Shares fell by over 1% on Tuesday in premarket trading. The group reported higher third quarter revenue on Tuesday as geopolitical tensions fueled demand for its military equipment.
Wyndham (WH): Shares in Wyndham rose 12%. Choice Hotels said on Tuesday that it has offered to buy Wyndham Hotels in a potential near-$10 billion deal.
Ericsson (ERIC): Shares fell over 4% after the company reported downbeat earnings and said it expected the uncertainty impacting its mobile networks business to persist into 2024.
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KStock futures fall as earnings season picks up pace
The major Wall Street stock gauges pointed lower Tuesday as reports from Bank of America and Johnson & Johnson got the week’s stream of earnings under way.
Futures on the Dow Jones Industrial Average (^DJI) were down 0.18%, or 61 points, while S&P 500 (^GSPC) futures shed 0.23%. Contracts on the tech-heavy Nasdaq 100 (^NDX) were 0.27% lower.
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