S&P 500 News: Index sinks as US Treasury yields, Boeing weigh on market

• The stock market was closed on Monday in observance of the MLK, Jr. holiday.
• The all-time high of 4,818 from two years ago still sits within striking distance.
• Houthis struck a US-owned cargo ship near the Red Sea on Monday.
• Goldman Sachs announced double beat of Q4 consensus on better wealth management performance.
• NY Empire State Manufacturing Index for January sank to lowest level since pandemic.

Boeing (BA) stock continued to lead the market lower afterhours on Tuesday as more news appeared concerning the two Boeing airliners that collided at O'Hare Airport in Chicago. The passenger jets owned by All Nippon Airways and Delta Airlines smashed their wingtips into one another, but no passengers on either jet were hurt.

The S&P 500 index sold off 0.37% on Tuesday after the NY Empire State Manufacturing Index for January featured a huge miss, reaching a level not seen since the depths of the pandemic nearly four years ago.

The NASDAQ Composite also shed 0.19% to start the week, and the Dow Jones lost a more serious 0.62% as 2-year through 30-year Treasuries saw their yields rise more than 2% along the curve.

Goldman Sachs and Morgan Stanley released fourth-quarter results that were a mixed bag before the bell on Tuesday. A number of other regional banks will report earnings this week alongside high-profile companies like Taiwan Semiconductor (TSM) and Travelers (TRV).

Middle East hostilities continue to put pressure on the market by raising oil prices. The Houthis in Yemen attacked a US-owned cargo ship in the Gulf of Aden on Monday. The UK and the US responded with a barrage of missiles on Houthi targets in Yemen, and Iran bombed buildings in northern Iraq it said were part of an Israeli intelligence program. The Houthis say they are responding to US support for Israel’s war on Gaza.

S&P 500 News: Poor manufacturing data reported before Wednesday’s Retail Sales

The New York Fed Empire State Manufacturing Index for January declined to -43.7 compared to estimates of -5 and a December reading of -14.5. This was the lowest reading since May 2020 and a sign that the economy might be doing worse than thought.

Of course, that index only surveys manufacturing businesses in the state of New York, which is only a snapshot of the larger country. But it does come after the December data also showcased a major miss.

Still, the market is largely looking forward to the US Retails Sales data out on Wednesday. The data is expected to show December Retails Sales rising 0.4% on a monthly basis compared with November’s 0.3%. A positive reading that beats consensus would raise optimism that has been depleted by the morning's poor manufacturing figures.

A US Treasury auction on Tuesday saw 6-month bills exchanged for yields below 5%, the first time that happened since May 15, 2023. Lower yields are good for the stock market, but the auction was overshadowed by longer-dated yields rising.

Bank earnings on tap this week

It’s back to financial earnings this week after large banks kicked off earnings season last Friday. Analysts expect a muted earnings season with just a 1.3% earnings increase for S&P 500 companies compared with a year ago, according to John Stoltzfus, chief investment strategist at Oppenheimer Asset Management.

Goldman Sachs and Morgan Stanley are giving the market a mixed outlook on Tuesday. Goldman reported GAAP earnings per share (EPS) of $5.48, which turned out to be a whopping $1.55 or 39% above consensus.

Revenue at the storied investment bank rose 7% from a year ago to $11.32 billion as Goldman’s asset & wealth management unit ended a year of lackluster results back in a competitive position. Revenue beat expectations by $360 million.

Morgan Stanley missed the profit target by about 17% in the fourth quarter. This owed to legal fines and other charges amounting to $535 million poking into its pretax income. Revenue of $12.9 billion narrowly beat the consensus among analysts, however, and earnings would have been quite positive without the charges.

PNC Financial (PNC) was the first of a number of large regional banks to report earnings this week. Before the Tuesday open, PNC reported a 17% beat on Q4 adjusted EPS and a slight beat on revenue.

Wednesday sees Charles Schwab (SCHW) and US Bancorp (USB) report earnings results, followed by Truist Financial (TFC) and KeyCorp (KEY) on Thursday, as wells as Ally Financial (ALLY), Comerica (CMA) and Fifth Third (FITB) on Friday.

On Thursday, Taiwan Semiconductor will report results that will shed light on the entire computer chip space. Analyst consensus expects adjusted EPS of $1.37 on $19.58 billion in sales.

On Friday, Travelers, the 180th largest holding in the S&P 500, is expected to report earnings of $5.04 on revenue of $9.95 billion. Analysts unanimously agreed on revising their earnings lower for the reporting quarter.