[New York Stock Market] Dow Falls 1.14% on Goldman Earnings Miss

[Asia Economy New York=Special Correspondent Joselgina] The major indices of the U.S. New York stock market showed mixed trends on the first trading day of this week, the 17th (local time), after the holiday, digesting the earnings reports of companies including Goldman Sachs.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,910.85, down 391.76 points (1.14%) from the previous session. The S&P 500 index, centered on large-cap stocks, recorded 3,990.97, down 8.12 points (0.2%). Meanwhile, the tech-heavy Nasdaq index closed up 15.96 points (0.14%) at 11,095.11.

[Image source=Reuters Yonhap News]

Within the S&P 500, discretionary consumer goods, energy, real estate, and technology-related stocks rose. On the other hand, materials, communication, financial, and industrial sectors declined. By stock, Goldman Sachs closed down 6.44% after reporting net income far below expectations. Morgan Stanley rose 5.91% overall, exceeding expectations. Representative tech stock Tesla rose 7.43% on news that sales increased in China due to price cuts. Roblox jumped nearly 12% on news that its daily active users in December increased 18% year-over-year.

Investors digested the earnings news and awaited Federal Reserve (Fed) officials' remarks and economic indicators expected throughout the week. Economic media CNBC reported, "A large part of the Dow's decline today was due to Goldman Sachs," adding, "What investors are more concerned about is the cautious remarks from Goldman Sachs executives who see early signs of consumer credit deterioration."

Goldman Sachs announced that its fourth-quarter net income last year was $1.33 billion, down 66% from the same period the previous year. Earnings per share were $3.32, far below the $5.48 forecast by financial information provider Refinitiv. This is the first time since October 2011 that Goldman Sachs' results have differed so significantly from market expectations. Meanwhile, Morgan Stanley, which also reported earnings on the same day, exceeded market expectations overall despite a sharp drop in revenue in its investment banking division. Morgan Stanley's fourth-quarter net income was $2.24 billion, down 40% year-over-year. Earnings per share were $1.26, surpassing the market forecast of $1.23.

Ma Young-yu, Chief Investment Strategist at BMO, explained the background of the mixed results, saying, "Even within the financial sector, individual business lines are progressing very differently." According to S&P Global Market Intelligence data, the net income of companies listed on the S&P 500 index is expected to have decreased by 2.3% compared to the same period last year. After the market closes today, United Airlines and others will release their earnings.

This week, many Fed officials are scheduled to speak. Ahead of the Federal Open Market Committee (FOMC) regular meeting held from January 31 to February 1, and as the blackout period approaches soon, investors are expected to seek hints about the Fed's future moves from this week's speeches. Starting with John Williams, President of the New York Federal Reserve Bank, speakers will include Raphael Bostic, President of the Atlanta Fed; James Bullard, President of the St. Louis Fed; Esther George, President of the Kansas City Fed; Patrick Harker, President of the Philadelphia Fed; Susan Collins, President of the Boston Fed; Lori Logan, President of the Dallas Fed; Lael Brainard, Fed Vice Chair; and Christopher Waller, Fed Governor.

In the New York bond market on this day, U.S. Treasury yields showed little movement as investors awaited key remarks from Fed officials. The 10-year U.S. Treasury yield rose slightly to around 3.53%. The inversion of the yield curve, where the long-term 10-year yield is below the 2-year (4.2%) and 3-month (4.6%) yields, continues. This is generally considered a precursor to a recession.

Manufacturing activity in New York state slowed to its lowest level since the early days of the COVID-19 pandemic. According to the New York Federal Reserve Bank, the Empire State Manufacturing Index for January recorded -32.9, down 21.7 points from the previous month. It remained below zero for two consecutive months following December last year, continuing the contraction trend. Specifically, new orders, shipments, and employment all showed weakness. However, CNBC reported that the inflation-related parts of the report showed signs of easing compared to the previous month.

International oil prices rose due to improved Chinese economic indicators. On the New York Mercantile Exchange, the February West Texas Intermediate (WTI) crude oil price closed at $80.18 per barrel, up 32 cents (0.40%) from the previous session. It rose for eight consecutive trading days, marking the first time this year that the closing price exceeded $80 per barrel.