New York Stock Market Pauses Ahead of MS Earnings and FOMC Meeting

Slight Decline After Dow and S&P Hit Record Highs Previous Day
MS and Alphabet Earnings Released After Market Close

The three major indices of the U.S. New York stock market showed a slight decline in early trading on the 30th (local time). After all closing higher the previous day, the New York stock market entered a pause, awaiting the earnings reports of Microsoft (MS) and Alphabet released that day, as well as the two-day Federal Open Market Committee (FOMC) meeting starting that day.

As of 9:48 a.m. at the New York Stock Exchange (NYSE) on that day, the Dow Jones Industrial Average was trading at 38,321.28, down 0.03% from the previous trading day. The S&P 500, which focuses on large-cap stocks, was down 0.02% at 4,927.16, and the tech-heavy Nasdaq index was down 0.13% at 15,608.41.

General Motors (GM) saw its stock price jump more than 8% after reporting fourth-quarter earnings that exceeded market expectations. Cybersecurity company F5 also rose more than 2% as its earnings beat market forecasts. U.S. electronics company Sanmina surged over 35% following earnings that surpassed expectations. Home appliance maker Whirlpool fell nearly 5% after issuing earnings guidance below market expectations for this year.

The New York stock market closed higher across the board the previous day. The Dow Jones Industrial Average and the S&P 500 both hit all-time highs, and the Nasdaq rose more than 1%. MS, Alphabet, Nvidia, Meta, and others all reached record highs. The buying spree was driven by optimism over strong big tech earnings and the possibility of interest rate cuts following the FOMC meeting. Additionally, the U.S. Treasury announced that the amount of Treasury issuance in the first quarter would be lower than initially expected, providing a tailwind to the overall market. The Treasury forecasted $760 billion in first-quarter issuance, which is $55 billion less than the previously announced estimate.

As the market takes a breather, investors are closely watching the scheduled big tech earnings announcements. MS and Alphabet, Google's parent company, will report earnings after the market closes that day. Once these two companies release their results, it will be possible to gauge whether optimistic sentiment toward the "Magnificent 7" (MS, Apple, Alphabet, Amazon, Nvidia, Meta, Tesla ? the big tech stocks leading the U.S. stock market) will continue. Following that, Apple, Amazon, and Meta will announce earnings on the 1st of next month.

Case Buchanan, Senior Portfolio Manager at Globalt Investment, said, "There does not necessarily need to be a consistent message this earnings season," adding, "This tide cannot lift all boats. So far, we have seen clear winners and clear losers in this earnings season."

Attention is also focused on the January FOMC meeting, which could confirm the possibility of a Fed interest rate cut that has driven the tech rally. The two-day FOMC meeting starting that day is expected to keep the benchmark interest rate steady at the current 5.25?5.5% range. The market is watching closely for any messages from Fed Chair Jerome Powell, as his statements could provide clues about the timing and pace of future rate cuts.

Alexandre Baradez, Senior Market Analyst at IG Markets, said, "Everything will be decided over the three days when the Fed meeting and U.S. tech earnings are announced," and forecasted, "The market is waiting for Powell to open the door to a rate cut in March, but it is more likely that signals will come in the second quarter."

This week will also see the release of key employment data. The December Job Openings and Labor Turnover Survey (JOLTS) will be released that day, followed by the highly anticipated January nonfarm payrolls and unemployment rate on the 2nd of next month. Market research firm FactSet expects January new jobs to be 170,000, significantly lower than December's 216,000. The unemployment rate is forecast to rise from 3.7% in December to 3.8% in January.

International oil prices are falling amid expectations of weakened demand due to the Chinese real estate crisis. West Texas Intermediate (WTI) crude oil prices dropped $0.29 (0.4%) to $76.49 per barrel, while Brent crude futures fell $0.52 (0.6%) to $81.88.

In the New York bond market, Treasury yields are declining. Following the Treasury's announcement of reduced borrowing estimates for the first quarter, the benchmark U.S. 10-year Treasury yield is hovering around 4.04%, and the 2-year Treasury yield, sensitive to monetary policy, is around 4.3%.