Nasdaq 100, Dow Jones, S&P 500: Caution Ahead of Earnings, PMI Data

Highlights

• US stock index futures down ahead of earnings reports and economic data
• Industries experiencing recession while others not yet impacted
• CSX & PPG beat estimates, while Knight-Swift & W.R. Berkley miss

Overview

The major U.S. stock index futures are edging lower early Friday. Traders are awaiting fresh earnings reports and key economic data that could determine Fed policy next month.

Earnings season continues Friday, with Procter & Gamble, Regions Financial, SLB, Freeport-McMoRan and HCA Healthcare set to report earnings before the bell. Investors will also be looking at the Purchasing Managers’ Index for the manufacturing and services sectors to get insight into the economy.

At 07:30 GMT, blue chip Dow futures are trading 33849.00, down 60.00 or -0.18%. Benchmark S&P 500 Index futures are at 4146.50, down 6.00 or -0.14% and tech-weighted NASDAQ futures are trading 13057.50, down 16.75 or -0.13%. The major stock market averages are currently projected to end the week negatively, with both the Dow and the S&P 500 expected to have their weakest performances since March.

Tesla’s Weak Q1 Earnings Hit Tech Shares

The Dow experienced a drop of around 110 points, which is equivalent to 0.33% on Thursday.  Meanwhile, the S&P 500 decreased by 0.6%, and the tech-centered Nasdaq Composite saw a loss of 0.8%.

The Nasdaq’s decline was partly due to Tesla shares, which fell by almost 10% the day after the company reported a significant decrease in net income for the first quarter compared to the same period last year.

Possibility of Rolling Recessions Bringing Uncertainty to Earnings Season

Compared to previous seasons, macro-level uncertainty is affecting the current earnings season more. “Rolling recessions” are expected to happen in the upcoming months.

Some industries, such as semiconductors, have already experienced a recession in the past 6 to 12 months. On the other hand, other industries have not yet faced any weakness.

Therefore, it is a case-by-case situation, resulting in significant movements at the individual stock and industry level, which investors may not notice if they only observe the top-level moves of the S&P 500 or the Dow.

CSX reported first-quarter earnings and revenue that beat analysts’ expectations, leading to a 2.6% increase in its share price. The transportation company posted earnings of 48 cents per share and revenue of $3.71 billion. Meanwhile, Refinitiv analysts had predicted earnings of 43 cents per share and $3.58 billion in revenue.

Knight-Swift Transportation’s shares fell by less than 1% after the freight transportation company missed analysts’ estimated earnings for the first quarter.  The company’s revenue of $1.64 billion surpassed expectations.  Its adjusted earnings of 73 cents per share fell short of the estimated 81 cents per share, according to FactSet. Additionally, Knight-Swift reduced its full-year EPS guidance for 2023.

W.R. Berkley’s stock fell 2% after the commercial lines insurer reported net premiums of $2.49 billion, which was lower than analysts’ anticipated $2.53 billion, according to FactSet. Operating eps of $1.00, was lower than the $1.10 eps from a year ago.

PPG Industries’ stock rose slightly after the paint manufacturer issued second-quarter guidance that exceeded analysts’ expectations, with adjusted earnings anticipated to be $2.05 to $2.15 per share compared to analysts’ estimate of $1.96 per share. The company also issued optimistic guidance for the full year.

For a look at all of today’s economic events, check out our economic calendar.