S&P500 falls as major US banks report earnings

The Dow Jones Industrial Average fell on Tuesday as rates ticked higher and Wall Street pored through the latest batch of fourth quarter earnings. Investors also awaited more data that can give better glimpse into the state of the American consumer.

Several major banks released their quarterly earnings Tuesday morning. Goldman Sachs reported better-than-expected profit and revenue, driven by a strong performance in equity trading and increased revenue from asset and wealth management. Meanwhile, Morgan Stanley's fourth-quarter profit was impacted by $535 million in charges, but the bank's revenue exceeded expectations, thanks to a rebound in investment banking fueled by debt underwriting. Shares of Goldman Sachs inched up 0.7 per cent, while Morgan Stanley declined more than 4 per cent.

Roughly 30 S&P 500 companies have reported calendar fourth-quarter results thus far. Of those, 78 per cent have beaten earnings expectations, according to FactSet.

The Dow declined 231.86 points, or 0.62 per cent, to close at 37,361.12. The S&P 500 slipped 0.37 per cent to end at 4,765.98, and the Nasdaq Composite dropped 0.19 per cent to 14,944.35.

In further company news, Boeing shares tumbled 7.9 per cent after Wells Fargo downgraded the company to equal weight from overweight, amid ongoing troubles with its 737 Max 9 model. Meanwhile, AMD shares jumped 8.3 per cent following upbeat analyst commentary on semiconductor demand. The chipmaker trying to catch Nvidia in the A.I. race rose to a new 52-week high, and is scheduled to report its quarterly results on Jan. 30.

Apple's stock declined following reports of rare iPhone discounts in China due to competitive pressures, and the US Supreme Court's decision not to consider Apple's appeal in an antitrust suit challenging its App Store, which is expected to impact the company's revenue significantly.

The benchmark 10-year Treasury note yield jumped 12 basis points to 4.071 per cent after Federal Reserve Governor Christopher Waller indicated in a speech that the central bank may ease monetary policy slower than Wall Street had anticipated.

After these comments, oil prices dropped as the U.S. dollar strengthened. The West Texas Intermediate futures contract for February decreased by 0.77 per cent to $72.12 a barrel, while the Brent futures contract for March fell by 0.17 per cent to $78.02 a barrel.

Investors are also looking ahead to December retail sales data out Wednesday, which could fuel recessionary fears and concerns about economic growth if U.S. consumer spending sees a cooldown.

Overall, turning to US sectors, Tech was the only performer that closed higher overnight. Energy was the worst performer.

Futures

The SPI futures are pointing to a 0.1 per cent rise.

Currency

One Australian dollar at 8.30am was buying 65.86 US cents.

Commodities

Gold lost 1.00 per cent. Silver fell 1.09 per cent. Copper added 0.72 per cent. Oil lost 1.24 per cent.

Figures around the globe

European markets closed lower. London’s FTSE fell 0.48 per cent, Frankfurt lost 0.30 per cent, and Paris closed 0.18 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei lost 0.79 per cent, Hong Kong’s Hang Seng dropped 2.16 per cent and China’s Shanghai Composite closed 0.27 per cent higher.

The Australian share market closed 1.09 per cent lower at 7,414.79.

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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