Stock Market Volatility Persists as Major Indexes Experience Sharp Declines
The U.S. stock market continues its turbulent trend, with all leading indexes dropping over 2% following yesterday's notable recovery.
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The volatility in U.S. stock markets remains intense, with major indexes tumbling more than 2% after yesterday’s significant rebound from a steep sell-off.
Market jitters continue due to monetary policy uncertainties and geopolitical tensions, compounded by disappointing earnings reports. Shares of General Electric Company (GE) declined over 6% after missing revenue expectations.
Key Insights
- U.S. stock indexes are retreating following a dramatic bounce-back by the Dow Jones, which had reversed a 1,000-point drop just a day earlier.
- Concerns over monetary policy and global geopolitical issues, alongside earnings misses, are unsettling investors. GE’s stock dropped sharply after underperforming revenue forecasts.
- The Federal Open Market Committee (FOMC) begins its two-day policy meeting today, with markets anticipating a rate hike in March.
The FOMC meeting marks a critical moment as the Federal Reserve is expected to signal its intent to raise interest rates in March, marking the first tightening since the near-zero rates implemented at the pandemic’s onset nearly two years ago.
Internationally, Japan’s Nikkei index closed down 1.7%, while South Korea’s KOSPI fell over 2%. European markets rebounded following yesterday’s gains in U.S. stocks.
Yesterday, investors pushed key indices into positive territory by the close, with the S&P 500 briefly entering correction territory. The Dow Jones Industrial Average rose 0.29%, the S&P 500 gained 0.28%, and the Nasdaq increased by 0.63%.
Corporate earnings reports continue to roll in from major companies including 3M Company (MMM), American Express (AXP), Johnson & Johnson (JNJ), General Electric, Verizon Communications (VZ), and Microsoft Corporation (MSFT).
This morning, S&P CoreLogic is set to release its Case-Shiller National Home Price Index for November, expected to show an 18% year-over-year increase, slightly below October’s figures. This would mark 12 consecutive months of double-digit home price gains. Additionally, The Conference Board will publish its Consumer Confidence Index, projected to decline to 111.8 in January from 115.8 in December.
The yield on the 10-year U.S. Treasury note rose to 1.745%. Oil prices climbed, with light sweet crude surpassing $84 per barrel amid concerns over supply disruptions tied to escalating geopolitical tensions.
Today's Highlights: Brief Updates
Ford Motor Company (F) has temporarily halted orders for its new $20,000 Maverick pickup truck due to overwhelming demand and production capacity limits.
International Business Machines Corporation (IBM) saw its shares surge after reporting a 6% increase in fourth-quarter revenue, with the company forecasting mid-single-digit growth.
Amazon.com, Inc. (AMZN) plans to open new Amazon Go stores in suburban areas, starting with a location in Mill Creek, Washington, aiming to bring convenience closer to customers' homes.
Meta Platforms, Inc. (FB) announced the development of a new AI supercomputer, dubbed the AI Research SuperCluster, expected to be the world’s fastest upon completion this year. This system will enhance AI models' ability to learn from trillions of examples across multiple languages and analyze diverse data types.
The International Monetary Fund (IMF) is anticipated to lower its global economic growth forecast in the upcoming World Economic Outlook update, citing COVID-19 surges and persistent supply chain and labor market challenges.
Legendary musician Bob Dylan has sold his entire recorded music catalog to Sony Music (SONY) in a deal valued between $150 million and $200 million, including rights to future releases.
Spotlight on Microsoft: A Pivotal Moment
Microsoft’s stock experienced a nearly 6% drop yesterday, leading declines in the Dow and approaching a six-month low near bear market territory, before recovering slightly by the close. The stock currently trades about 18% below its November 19 record high of $343.
Microsoft is scheduled to report its latest quarterly earnings after market close today, with expectations of growth in profits and revenue driven by strong demand for cloud services and Office 365. Analysts forecast earnings per share of $2.32 on $50.7 billion in sales, according to FactSet.
Attention will also focus on Microsoft’s planned acquisition of Activision Blizzard for nearly $69 billion. Pending regulatory approval, this deal would significantly expand Microsoft’s gaming revenue, positioning it as the world’s third-largest gaming company by revenue, behind Tencent Holdings (TCEHY) and Sony. Microsoft reported $3.6 billion in gaming revenue last quarter, compared to Activision Blizzard’s $2.1 billion.
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