Equities Extend More Losses

Economic numbers and corporate earnings reports clouded investors’ views of the economy’s health. This extended a streak of losses in equities Thursday.

The S&P 500 didn’t have much momentum after initially opening lower, falling for the third day in a row. It has decreased by 0.8%. The Dow Jones Industrial Average fell 0.8% on the year, putting it in negative territory. The tech-heavy Nasdaq Composite Index fell 1%.

Markets started the year 2023 with decent gains, fueled by expectations that the Federal Reserve will eventually begin cutting the pace of its interest-rate hikes and China’s severe pandemic limitations. However, the positive attitude has started to wane in recent days. Investors worry that the Fed’s rate increases are impacting the economy.

Weaker-than-expected economic numbers have accompanied this week’s losses. Both retail sales and producer prices in the United States pointed to a sluggish economy. The Federal Reserve’s battle against inflation is succeeding but at a price.

The number of people unemployed fell to the lowest level since September, according to Thursday data. The fact that the labor market is still tight may be a sign. However, traders’ worries were exacerbated by a batch of lukewarm corporate earnings reports and the Fed’s latest business climate assessment.

Individual Stocks Also Slumped Due to Weak Earnings

On Thursday, specific company equities took big losses due to lukewarm earnings reports. Alcoa, aluminum producer, suffered a $3.93 loss, or 7.4%, after closing at $49.52 due to decreased sales caused by cheaper aluminum prices. Discover Financial, the credit card company, lost 44 cents to $101.90, or 0.4%. According to reports released after Wednesday’s close, more of the company’s customers are delinquent on loans and credit cards.

Procter & Gamble (P&G) stock dropped $3.08 to $142.42, or 2.1%. The rising costs of Tide detergent and other essentials prompted people to cut back on purchases at the end of 2022. Hence, the consumer goods company reported a lower quarterly profit and sales volumes.

Truist Financial and Fifth Third banks saw year-over-year profit growth in the most recent quarter, which boosted their stock prices. Fifth Third climbed 92 cents, or 2.8%, to $33.64, while Truist increased $1.97, or 4.3%, to $47.71

Don Townswick is an equity manager of Conning Asset Management. According to him, sales performance has generally outperformed profits among the S&P 500 firms that have reported fourth-quarter results thus far.

And lastly, some Meta bulls believe that Facebook CEO Mark Zuckerberg will scale back his ambitions or quit entirely on his metaverse spending. The oncoming economic crisis, pinching sales at technology firms, may even compel him to leave.