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Dow falls on Goldman results, Tesla limits S&P 500 losses

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Traders work on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., January 5, 2023. REUTERS/Andrew Kelly

The Dow fell on Tuesday as Goldman Sachs weighed the most on the index after missing quarterly profit estimates, while gains in Tesla limited losses on the benchmark S&P 500 and kept the Nasdaq afloat.

Goldman Sachs Group Inc (GS.N) slid 7.5% after the bank reported a bigger-than-expected drop in quarterly profit, dragging the price-weighted Dow Jones Industrial Average (.DJI) lower.

On the Dow, the share value of a stock is proportional to its influence on the index as opposed to the market capitalization-weighted S&P 500 (.SPX).

Morgan Stanley (MS.N) jumped 6.6% as it beat analysts’ estimates for fourth-quarter profit as its trading business got a boost from market volatility.

Earnings from Goldman Sachs and Morgan Stanley wrap up a mixed reporting season for big banks, most of which have put aside rainy-day funds to prepare for a looming recession.

“Earnings expectations for Q4 went down quite a bit. It may have set the bar low enough for some upside surprises,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab in Austin, Texas.

“Morgan Stanley obviously beat expectations, but then Goldman didn’t. So it’s kind of a mixed bag.”

Analysts expect year-over-year earnings from S&P 500 companies to decline 2.4% for the quarter, according to Refinitiv data.

Tesla Inc (TSLA.O) jumped 5.3% after the electric-vehicle maker’s January retail sales surged in China following recent price cuts on its top-selling models, according to data from China Merchants Bank International.

At 12:00 p.m. ET the Dow Jones Industrial Average (.DJI) was down 331.30 points, or 0.97%, at 33,971.31, the S&P 500 (.SPX) was down 2.24 points, or 0.06%, at 3,996.85 and the Nasdaq Composite (.IXIC) was up 9.37 points, or 0.08%, at 11,088.53.

Insurer Travelers Cos Inc (TRV.N) fell 6.2%, among other drags on the Dow, after forecasting fourth-quarter earnings below estimates.

Data showed New York state manufacturing contracted sharply in January as orders collapsed and employment growth stalled, pointing to continued weakness in national factory activity.

Markets have started 2023 on a strong footing on hopes that a moderation in inflationary pressures and some signs of cooling in the labor market could give the Federal Reserve cover to dial down the size of its interest rate hikes.

Retail sales and jobless claims data are on the economic calendar this week, as well as comments from Fed officials for clues on the central bank’s rate hike trajectory.

Money market participants are currently expecting a 25-basis point interest rate hike from the U.S. central bank in February and see rates peaking at 4.94% in June.

U.S.-listed shares of Chinese companies such as JD.Com Inc , Baidu Inc and Bilibili Inc fell between 5.3% and 7.0% after China’s economic growth in 2022 slumped to one of its worst levels in nearly half a century.

Advancing issues outnumbered decliners for a 1.16-to-1 ratio on the NYSE and a 1.01-to-1 ratio on the Nasdaq.

The S&P index recorded 13 new 52-week highs and one new low, while the Nasdaq recorded 74 new highs and seven new lows.

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