Stocks fluctuate as big earnings week begins

U.S. stocks wobbled at the open on Monday as investors braced for a week filled with corporate earnings and the Federal Reserve’s next interest rate move ahead. central bank meeting at the end of the month.

The S&P 500 Index (^GSPC) moves just above breakeven, while the Dow Jones Industrial Average (^DJI) slide below the flat line. The tech-heavy Nasdaq Composite (^IXIC) increased modestly by 0.2%.

All eyes are on Salesforce (CRM) Monday morning after news of hedge fund Elliott Investment Management took billions of dollars worth of activist shares in the software giant. Shares were up 2.6% at the start of trading.

“Salesforce is one of the preeminent software companies in the world, and having followed the company for nearly two decades, we have developed a deep respect for Marc Benioff and what he has built.” Jesse Cohn, managing partner of Elliott said in a statement. “We look forward to a constructive partnership with Salesforce to realize the value it deserves as a company.”

Elsewhere in the early steps, Spotify Technology (PLACE) shares were up about 5.8% early in the session after the company confirmed the music streaming platform will cut 6% of the workforceincreased layoffs to cut costs in the technology sector.

Monday morning’s moves come after the S&P 500 and Nasdaq rallied towards a winning week on Friday, regaining positions after two losing sessions. The Dow lagged for the week, down less than 2%.

Technology stocks have so far led the bull run across the U.S. stock market starting at the start of the year, with the Nasdaq up more than 6% in January so far.

On the economic front, despite messages from Federal Reserve officials that interest rates would rise above 5%, the market cheered another expected drop into a smaller rally in February. after some weaker economic data points. The CME FedWatch Toolacts as a barometer for impending Fed interest rates and US monetary policy, suggesting markets are pricing in a 99.8% chance of a 25 basis point increase on Feb.

The US dollar index, as well as US Treasury yields, fell on Monday morning on these expectations.

The bets are also reinforced by a weekend piece by Wall Street Journal reporter Nick Timiraos said officials are preparing to slow the pace from 50 basis points in December to 25 basis points at their next policy-setting meeting from January 31 to February 31.

A person walks past the New York Stock Exchange (NYSE) in New York City, U.S., January 5, 2023. REUTERS/Andrew Kelly

A person walks past the New York Stock Exchange (NYSE) in New York City, U.S., January 5, 2023. REUTERS/Andrew Kelly

Investors are also entering what looks to be a dismal earnings season. Market giants include Microsoft (MSFT) and Tesla (TSLA) is expected to report results this week, along with dozens of other big names. The coming days will also be flooded with economic data, with gross domestic product (GDP) data for the fourth quarter due out on Thursday.

Of the roughly 11% of S&P 500 companies that have reported fourth-quarter earnings so far, only 67% have seen earnings per share meet estimates above — below the five-year average of 77% typically. do — according to data from the FactSet Study. Furthermore, Wall Street analysts have revised down their estimates.

However, history shows that stocks trending up in years when income falls more than zero.

“This may seem counter-intuitive, but it makes sense when we remind ourselves that the market is looking to the future,” said LPL Chief Financial Strategist Jeffrey Buchbinder’s Notes. “The market often values ​​falling earnings before they happen—perhaps the next two or three quarters. By the time the earnings fall is on the books, stocks have moved higher in anticipation of an earnings cycle. enter next.”

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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