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Empire State Plummets; Goldman Beats, Morgan Mixed in Q4
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Pre-market futures are down slightly to start a new trading session in this holiday-shortened week. The Dow is currently down -140 points, the S&P 500 is -20 and the Nasdaq -70 points. These indices are now back to where they were a month ago, which was half-way through a robust bullish period at the end of the year where investors saw an opportunity for interest rates to come down measurably in 2024. The small-cap Russell 2000 is the one index lagging in the new year, -4%, after leading indices during the late 2023 period.
Market participants looking for signs the Fed may still look to slash interest rates in the coming months have their latest puzzle piece with the release of this morning’s Empire State Manufacturing Survey for January: -43.7 is a major step down — more than 3x lower than the previous month’s -14.5, and the deepest cut on this metric since -78.2 back in April of 2020 — the heart of the Covid pandemic. It also marks the eight month in negative territory in the past year. This is a sign of major weakening in New York State manufacturing.
The all-time high in the Empire State survey was +43 points in July 2021, back when the Fed was assuring the markets that inflation was “transitory.” Here at interest rate levels of between 5.25-5.50%, it’s unclear where manufacturing in the 4th most populous state in the U.S. — and 3rd in nominal GDP — is going to once again gain traction. We haven’t seen a positive number on the Empire State survey since +9.1 back in November.
Meanwhile, the World Economic Forum in Davos, Switzerland is underway this week through Friday, with plenty of grist for the global economic mill. Artificial intelligence (A.I.) looks to be the one overarching factor in proposed solutions from green energy — which has become a focal point of adoption, and not just a “theory” in need of further study — to cybersecurity. There are also two major wars to consider — Ukraine and Gaza/Red Sea — as the lions of industry exchange discourse on business solutions going forward, as well as a General Election in the U.S. coming this November.
Q4 earnings for Goldman Sachs (GS - Free Report) are also out this morning, with strong beats on both top and bottom lines. Earnings of $5.48 per share trounced the $3.47 expected (and $3.32 per share in the year-ago quarter) for a +58% earnings surprise. This makes the third quarter in the last four that Goldman has outperformed earnings expectations. Revenues of $11.32 billion outpaced expectations by +5.7%. For more on GS’ earnings, click here.
Morgan Stanley (MS - Free Report) is also out with Q4 earnings, with mixed results: earnings of 85 cents per share was well off the $1.05 analysts were looking for, and more than -30% lower than the year-ago’s $1.31 per share. Revenues, on the other hand, put up a positive surprise to $12.90 billion in the quarter, fairly breakeven with year-ago results. Shares are down -2.2% in pre-market activity, however; the big banks in the near term look to be well out of favor.
Image: Bigstock
Empire State Plummets; Goldman Beats, Morgan Mixed in Q4
Pre-market futures are down slightly to start a new trading session in this holiday-shortened week. The Dow is currently down -140 points, the S&P 500 is -20 and the Nasdaq -70 points. These indices are now back to where they were a month ago, which was half-way through a robust bullish period at the end of the year where investors saw an opportunity for interest rates to come down measurably in 2024. The small-cap Russell 2000 is the one index lagging in the new year, -4%, after leading indices during the late 2023 period.
Market participants looking for signs the Fed may still look to slash interest rates in the coming months have their latest puzzle piece with the release of this morning’s Empire State Manufacturing Survey for January: -43.7 is a major step down — more than 3x lower than the previous month’s -14.5, and the deepest cut on this metric since -78.2 back in April of 2020 — the heart of the Covid pandemic. It also marks the eight month in negative territory in the past year. This is a sign of major weakening in New York State manufacturing.
The all-time high in the Empire State survey was +43 points in July 2021, back when the Fed was assuring the markets that inflation was “transitory.” Here at interest rate levels of between 5.25-5.50%, it’s unclear where manufacturing in the 4th most populous state in the U.S. — and 3rd in nominal GDP — is going to once again gain traction. We haven’t seen a positive number on the Empire State survey since +9.1 back in November.
Meanwhile, the World Economic Forum in Davos, Switzerland is underway this week through Friday, with plenty of grist for the global economic mill. Artificial intelligence (A.I.) looks to be the one overarching factor in proposed solutions from green energy — which has become a focal point of adoption, and not just a “theory” in need of further study — to cybersecurity. There are also two major wars to consider — Ukraine and Gaza/Red Sea — as the lions of industry exchange discourse on business solutions going forward, as well as a General Election in the U.S. coming this November.
Q4 earnings for Goldman Sachs (GS - Free Report) are also out this morning, with strong beats on both top and bottom lines. Earnings of $5.48 per share trounced the $3.47 expected (and $3.32 per share in the year-ago quarter) for a +58% earnings surprise. This makes the third quarter in the last four that Goldman has outperformed earnings expectations. Revenues of $11.32 billion outpaced expectations by +5.7%. For more on GS’ earnings, click here.
Morgan Stanley (MS - Free Report) is also out with Q4 earnings, with mixed results: earnings of 85 cents per share was well off the $1.05 analysts were looking for, and more than -30% lower than the year-ago’s $1.31 per share. Revenues, on the other hand, put up a positive surprise to $12.90 billion in the quarter, fairly breakeven with year-ago results. Shares are down -2.2% in pre-market activity, however; the big banks in the near term look to be well out of favor.
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