Stocks Lack Direction in Choppy Trading

U.S. equities finished mixed in a lackluster trading session, as Q4 earnings season shifted into a higher gear today. Corporate results from several Dow members were in focus, as 3M missed estimates and reported that it would reduce its global workforce by approximately 2,500 jobs. Verizon Communications and Travelers Companies reported bottom-line results that were in line with expectations, and the former offered some disappointing full-year guidance, while Johnson & Johnson missed estimates amid a decline in revenues citing unfavorable foreign exchange and lower COVID vaccine sales. Additionally, Lockheed Martin bested forecasts but issued EPS guidance that was lower than anticipated. The economic calendar offered several reports on domestic activity, as manufacturing and services PMIs unexpectedly rose but remained contractionary in January, while manufacturing activity in the Richmond region fell much more than expected. Treasury rates were lower, and the U.S. dollar dipped, while crude oil prices fell, and gold was higher. Asian stocks rose although volume remained light as Chinese and South Korean markets were closed for a holiday, while European stocks were mixed amid a host of PMI data across the globe.

The Dow Jones Industrial Average rose 104 points (0.3%) to 33,734, while the S&P 500 Index shed 3 points (0.1%) to 4,017, and the Nasdaq Composite declined 30 points (0.3%) to 11,334. In moderate volume, 3.3 billion shares of NYSE-listed stocks were traded, and 5.6 billion shares changed hands on the Nasdaq. WTI crude oil was $1.49 lower at $80.13 per barrel. Elsewhere, the gold spot price was up $10.00 to $1,938.60 per ounce, and the Dollar Index lost 0.2% to 101.96.

Dow member 3M Company (MMM $115) posted adjusted Q4 earnings-per-share (EPS) of $2.28, below the $2.36 FactSet estimate, as revenues declined 6% year-over-year (y/y) to $8.08 billion, relatively in line with the $8.05 billion expectation. MMM noted that its EPS was impacted by divestitures, foreign currency translation due to the strength of the U.S. dollar, headwinds from the decline in disposable respirator demand, along with its exit out of Russia. Chairman and CEO of the multinational tech and industrial manufacturer, Mike Roman, noted, "The slower-than-expected growth was due to rapid declines in consumer-facing markets – a dynamic that accelerated in December – along with significant slowing in China due to COVID-related disruptions. As demand weakened, we adjusted manufacturing output and controlled costs, which enabled us to improve inventory levels." He went on to discuss how the year was impacted by inflation, global conflicts, and economic softening, and that they expect macroeconomic challenges to persist in 2023. MMM provided full-year EPS guidance which may not be comparable to estimates due to headwinds, and estimated a 2-6% decline in adjusted total sales growth. The company also noted that it will reduce approximately 2,500 global manufacturing roles based on what it saw in its end markets. Shares fell.