Wall Street’s main indexes slipped on Tuesday as Goldman Sachs missed quarterly profit estimates, worsening sentiment already dented by concerns of a slowdown in China’s economic growth.
“Widely expected to be awful, Goldman Sachs’ quarterly results were even more miserable than anticipated,” said Octavio Marenzi, chief executive at consultancy Opimas.
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.
Analysts expect year-over-year earnings from S&P 500 companies to decline 2.4% for the quarter, according to Refinitiv data.
Investors will keep an eye out for economic data, including retail sales, later in the week, as well as comments from Federal Reserve officials for clues on the central bank’s rate hike trajectory.
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 Fed cover to dial down the size of its interest rate hikes.
Money market participants are currently expecting a 25-basis point interest rate hike from the Fed in February and see rates peaking at 4.94% in June.
U.S.-listed stocks of Chinese companies such as JD.Com Inc , Baidu Inc and Bilibili Inc fell between 4.9% and 6.4% after China’s economic growth in 2022 slumped to one of its worst levels in nearly half a century.
“I think it’s a combination of some minor profit taking after a very strong rally last week and the news out of China,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
At 9:42 a.m. ET, the Dow Jones Industrial Average (.DJI) was down 147.35 points, or 0.43%, at 34,155.26, the S&P 500 (.SPX) was down 2.24 points, or 0.06%, at 3,996.85, and the Nasdaq Composite (.IXIC) was down 24.64 points, or 0.22%, at 11,054.51.
Insurer Travelers Cos Inc (TRV.N) fell 3%, among other drags on the Dow, after forecasting fourth-quarter earnings below estimates.
Advancing issues outnumbered decliners for a 1.17-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.18-to-1 ratio on the Nasdaq.
The S&P index recorded seven new 52-week highs and no new low, while the Nasdaq recorded 46 new highs and six new lows.