Dow Jones, Nasdaq, S&P 500 mixed at midday after 'flash' PMI data helps reverse early losses

12:31pm: Major indexes nearly flat

At midday, the Dow was up 12 points to 33,641, the Nasdaq Composite was 4 points lower to 11,361 and the S&P 500 lost 5 points to 4,015.

The indexes have been unable to build on a strong start to the week but climbed out of negative territory after better-than-feared flash PMI data released Tuesday morning.

Meanwhile, earnings season is in full swing, with investors awaiting figures from Microsoft Corporation after the bell. 

“Microsoft earnings provide the big corporate story of the day, with investors and traders alike expecting to see the giant lose traction on both earnings and profit-front,” said Joshua Mahony, senior market analyst at online trading platform IG. “The decision to slash 10,000 jobs does highlight a bloated business which had grown its workforce by a whopping 77,000 since the beginning of the pandemic (+47%).”

10.25am: Flash PMI sees improvement

Private sector firms in the US registered a further decline in output at the start of 2023, according to the latest ‘flash’ purchasing managers index (PMI) data from S&P Global.

The fall in business activity softened to the slowest in three months, however, as manufacturers and service providers signalled moderations in their respective downturns.

The headline flash US PMI composite output index registered 46.6 in January, up from 45.0 at the end of 2022. A reading below 50 represents a contraction in activity but while the contraction was solid overall, it was the slowest since last October.

Goods producers and service providers recorded similar rates of decline, with service sector firms indicating a notable slowdown in the pace of decrease since December. Nonetheless, US companies continued to highlight subdued customer demand and the impact of high inflation on client spending.

In reaction to the slightly better-than-expected data, the Dow Jones Industrial Average eased off earlier lows, down 0.3% at 33,515, but the S&P 500 index stayed 0.4% lower at 4,002, and the tech-heavy Nasdaq Composite also shed 0.4% at 11,327.

9.40am: Verizon climbs despite mixed 4Q results

US stocks fell at the open on Tuesday, following back-to-back daily gains, as investors continued to weigh a slew of corporate earnings.

Just after the market opened, the Dow Jones Industrial Average shed 166 points to 33,463, while the S&P 500 eased 27 points at 3,993 and the tech-heavy Nasdaq Composite lost 45 points to 11,320.

The Russell 2000 small-cap index, though, climbed more than 1.2%.

Notable stock movers included Verizon Communications Inc, which jumped more than 7% despite posting mixed results for its fourth quarter of 2022.

“We do not see much scope for markets to rally in the near term, especially given our outlook for continued pressure on corporate profit growth,” UBS Global Wealth Management chief investment officer Mark Haefele wrote in a note to clients.

6.30am: Microsoft quarterly results in focus 

Wall Street is set for a lower opening as traders mark time ahead of quarterly results after the close today from Microsoft and fourth quarter GDP and Personal Consumption Expenditures data later in the week that will help to inform the Federal Reserve’s next move on interest rates.  

Futures for the Dow Jones Industrial Average (DJIA) fell 0.3% in Tuesday pre-market trading, while those for the broader S&P 500 index also retreated 0.3%, and contracts for the Nasdaq-100 declined 0.5%.

The Nasdaq led US stocks higher on Monday as the markets started a busy week of earnings and economic data on the front foot. At the close, the DJIA was up 0.8% at 33,630 points, the S&P 500 added 1.2% to reach 4,020, and the Nasdaq gained the most to close at 11,364 points.

“Wall Street kicked off the week sharply higher on Monday with the risk-on tech-heavy Nasdaq leading the charge to log a gain of more than 2%,” Victoria Scholar, head of investment at interactive investor commented.

“Focus this week is on US GDP figures which are out on Thursday for clues into the strength of the US economy,” she added. “Microsoft gets set to deliver earnings after the bell having added to the chorus of job cuts facing Big Tech just last week, providing a boost to the sector. Netflix set the bar high last week with its earnings release, sharply outpacing expectations in terms of its subscriber numbers.”

Ahead of Microsoft’s results, General Electric (NYSE:GE) and Johnson & Johnson (NYSE:JNJ) will report their December quarter earnings early Tuesday. Tesla and Boeing report on Wednesday, in a week that sees an estimated quarter of the S&P 500 reporting.  

“The US data slate is also dominated by PMI data due later today,” noted TickMill Group’s market analyst Patrick Munnelly. “With both readings believed to remain in contractionary territory, key for US investors will be whether next week’s ISM data confirms the PMI prints as the ISM releases tend to be tracked more closely by US investors.”