US Stocks Slide as Morgan Stanley and Goldman Sachs Report Mixed Earnings, Boeing and Apple Weigh on S&P 500

US Stocks Slide as Morgan Stanley and Goldman Sachs Report Mixed Earnings, Boeing and Apple Weigh on S&P 500

US stocks closed lower on Tuesday as mixed earnings from Morgan Stanley and Goldman Sachs put pressure on banks, while sell-offs in Boeing and Apple weighed on the S&P 500. The Dow Jones Industrial Average fell 0.62%, the S&P 500 lost 0.37%, and the Nasdaq Composite dropped 0.19%.

Morgan Stanley saw a 4.2% decline in its stock after reporting lower quarterly profit, while Goldman Sachs reported a 51% increase in profit, causing a 0.7% rise in its stock. The S&P 500 banks index dipped 1.2%, reaching a more than one-month low, following other major US banks’ lower profits on Friday.

Spirit Airlines also faced a significant decline of 47% after a federal judge blocked JetBlue Airways’ planned acquisition of the ultra-low-cost carrier. The judge agreed with the US Department of Justice, stating that the deal would harm consumers.

Apple experienced a 1.2% drop in its stock after offering rare discounts on iPhones in response to intense competition in China, where it was recently overtaken by Microsoft as the world’s most valuable firm.

Federal Reserve governor Christopher Waller dampened market sentiment by suggesting that there should be no rush to cut interest rates, despite being more confident about inflation meeting the Fed’s 2% target. This led traders to lower their expectations for rate cuts in March, resulting in rising US Treasury yields.

Regarding the broader market, Ross Mayfield, an investment strategy analyst at Baird, said, Certainly valuations are extended, but I think what is happening today is more of a broader consolidation of markets around that idea that investors had gotten a little too optimistic about how willing the Fed would be to ease rates.

After strong gains in December, the S&P 500 has been hovering near its January 2022 record high close. However, it is now down approximately 1% from that peak.

UBS Global Research raised its 2024 year-end target for the S&P 500 to 5,150 points, forecasting more than an 8% upside from current levels.

In the semiconductor industry, Advanced Micro Devices (AMD) experienced an 8.3% jump in its stock after Barclays analysts increased their price targets for AMD and other chipmakers due to expected growth in artificial intelligence. Nvidia, a larger rival of AMD, also climbed about 3% and reached a record high.

Boeing, on the other hand, faced a slump of nearly 8% to a two-month low. This came after the Federal Aviation Administration extended the grounding of its 737 MAX 9 airplanes indefinitely, and Wells Fargo downgraded the stock.

In summary, US stocks closed lower on Tuesday due to mixed earnings from Morgan Stanley and Goldman Sachs, as well as sell-offs in Boeing and Apple. The market also responded to statements by Federal Reserve governor Christopher Waller and ongoing speculation about the timing of rate cuts. As the market consolidates, investors are adjusting their expectations while UBS Global Research remains optimistic about the S&P 500’s performance.