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Durable Goods Orders For December Rose Lower-than-Expected

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Markets have pivoted downward ahead of the opening bell this morning, after starting the pre-market trading reflecting flattish overseas market performance. Even before economic data and new Q4 reports hit the tape, it seems a new round of profit-taking is manifesting itself ahead of what will be the single-most consequential day of earnings season so far. The Dow looks to open -300 points, the Nasdaq -100 and the S&P 500 -40 points.

Durable Goods Orders for the month of December came in far lower than expected: +0.2% from the +0.8% consensus. This follows an upwardly revised November headline of +1.2%. Looking under the hood a moment, these figures get back closer to expectations when we strip out Transportation (+0.7%) and Defense (+0.5%). Non-Defense, ex-Aircraft (a proxy for general business investment) came in at +0.6%, less dire than the headline number would suggest.

In fact, we might trace this lower-than-expected performance in durables to one industry: aircraft. Even further, one company: Boeing (BA - Free Report) . Non-Defense aircraft fell 52% over the past quarter, of which Boeing is the top supplier in the world. Thus, while durables are less strong than predicted, a turnaround in aircraft — which we may see in coming months and quarters as Boeing’s 787 MAX comes back online — may spike these monthly figures by this spring.

Speaking of Boeing, the Zacks Rank #3 (Hold)-rated company reported a simply gigantic miss on its Q4 bottom line: -$15.25 per share was way off the -$1.78 expected; even several times worse than the year-ago quarter’s -$2.33 per share, for a negative quarterly earnings surprise of 756%! Revenues were slightly better than expected to $15.30 billion (compared to $17.91 billion a year ago). Shares had already fallen 5% year to date; they are down an additional 3.5% following the earnings release.

Abbott Labs (ABT - Free Report) posted a strong Q4 this morning: +$1.45 per share topped both the $1.36 per share expected and the 95 cents posted in the year-ago quarter. Revenues of $10.70 billion were 8% better than the Zacks consensus, and well ahead of the $8.31 billion reported for Q4 2019. Shares are up 1.1% on the earnings release, adding to the +4.8% the stock has earned so far year to date.

AT&T (T - Free Report) is down in early trading after its Q4 earnings results were reported this morning, even after beating bottom-line estimates by 2 cents to 75 cents per share, on $45.69 billion in revenues which topped expectations by 2.5%. This top line number is smaller than it was a year ago, demonstrating that the company’s acquisition of Time Warner a year and a half ago has yet to yield the fruits anticipated due to the ongoing pandemic. Shares are down 2.7% in today’s pre-market.

After today’s close, we see quarterly reports from Apple (AAPL - Free Report) , Tesla (TSLA - Free Report) , Facebook and many others. Seeing how the biggest players in the market performed last quarter may provide a new entry level toward fresh highs — depending on the results, of course — now that we’re starting the day a bit lower (and cheaper).

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