Tech and Industrials Earnings Could Upend Markets
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What market theme opens this Money Briefing and why does the host say to 'buckle your Wall Street seatbelts'?
With your money briefing, I'm J.R. Whalen at The Wall Street Journal in New York. Buckle your Wall Street seatbelts. Industrial and tech corporate earnings reports are likely to send investors on a wild ride for the rest of January. We'll have details in a moment. First, these money and market stories you should know. Existing home sales fell 6.4 percent in December from the previous month to their weakest level in more than three years. Economists said that broader anxiety about the stock market and volatile political news helps explain why buyers reacted so strongly to the rise in mortgage rates, which remain low by historical standards. That suggests that even if mortgage rates ease, there's unlikely to be a return to the frenzied market of early last year.
And Wall Street Journal reporter Gabriel Rubin outlined significant ways the month-old government shutdown has affected the business and financial sectors. For one, the Bitcoin futures trading platform known as Bakkt cannot launch its contracts until the Commodity Futures Trading Commission issues comments on its business plan. Much of the commission's staff has been furloughed. Also, companies that issue product recalls can't connect with the Consumer Product Safety Commission, which usually spreads the word about the recalls and monitors how the recall is implemented. And the airlines are feeling the pinch, too, and it's not because of TSA agents staying home from work. Delta Airlines says the shutdown would cost the company $25 million in lost revenue because most government employees aren't traveling.
And Delta can't start service in its new Airbus A220 airplanes either. The shutdown has grounded the process of Delta getting approval from the FAA.
It's the calm before and after the storm. The stock market volatility of the fourth quarter has been replaced by gains and relative tranquility since the start of the year. But on the horizon comes earnings reports from industrial and technology companies, and that could bring choppy waters back to Wall Street. Markets reporter Amrith Ramkumar is with us to explain.
Why did existing home sales drop in December and how are mortgage rates and market anxiety connected?
So, Amrith, up until the third week of January, for many investors, it's been a very happy new year.
Absolutely. Like you mentioned, not only have stocks gone up steadily last week, logging their best four-week stretch since 2011, really, since up through mid-January, it's been kind of steady, like you're saying. So the moves on a day-to-day basis have been much smaller, about 0.6% on average for the Dow and S&P 500 through mid-January in that latest two-week period. And that's a change because, like you were saying last quarter, Every day was almost a 1% average move in both directions and mostly down. So that really gave people whiplash and stoked some fears.
Kept us all at the office for long hours as well.
Absolutely. The day-to-day action, like the Dow, for example, was dropping hundreds of points in minutes on occasion, and it really got a lot of people jittery. So far this month, it has been calmer. But yeah, a lot of headwinds on the horizon for that with some of these bigger companies and next week with the Fed meeting and jobs report as well.
Yeah, you know, some closely watched earnings reports coming from tech companies that are seen as a barometer of the broader economy.
Right. And those would be some of the chip companies that have been hardest hit by trade tensions because that business is so tied to China and global trade flows. So, you know, Intel and some of the companies like that reporting this week and then looking ahead to next week. There's Apple after their really big revenue cut earlier this month and then Amazon and then Facebook and then Alphabet the week after that. So definitely the tech side and also the industrial side, obviously those manufacturing companies have kind of gotten it both ways because they've had higher input costs from some of the tariffs and have also been hit by fears that slowing global growth. And there have been new stories and data points about that almost every day.
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Chapters
3 chapters
1
What market theme opens this Money Briefing and why does the host say to 'buckle your Wall Street seatbelts'?
0:05–2:11
2
Why did existing home sales drop in December and how are mortgage rates and market anxiety connected?
2:11–4:35
3
How has the month‑long government shutdown affected financial regulators, recalls and airlines' operations?
4:35–7:29
Speakers
2 identifiedMore from WSJ Your Money Briefing
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