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Nasdaq closes slightly lower for a second day as earnings season rolls on

Pro Picks: Watch all of Wednesday's big stock calls on CNBC
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Pro Picks: Watch all of Wednesday's big stock calls on CNBC

The Nasdaq closed lower Wednesday for a second day as investors studied the latest batch of corporate earnings, and assessed how the largest companies are faring amid rising rates and mounting recession fears.

The tech-heavy index dipped 0.18% to close at 11,313.36, while the S&P 500 dipped 0.02% to settle at 4,016.22. The Dow Jones Industrial Average eked out a small gain, rising 9.88 points, or 0.03%, to end at 33,743.84.

Stocks pared their losses during afternoon trading, with the Dow bouncing back from a more than 460-point tumble. At its lows, the Nasdaq shed 2.34%.

Technology stocks languished for most of the session after Microsoft's lackluster guidance further fueled growth concerns. The software giant closed slightly lower. Boeing finished slightly higher despite a top-and bottom-line miss.

"If the company is bearish on its own future, why should investors be bullish? That's pretty much the message we're getting from earnings season so far," said Adam Sarhan CEO of 50 Park Investments.

Investors bought stocks heading into the reporting period, anticipating better-than-expected prints as companies reset and lowered expectations. But reports so far across sectors have mostly dashed those hopes as many companies share dismal outlooks, he said.

Investors are bracing for more high-profile corporate earnings this week as fears of a recession persist, with Tesla and IBM among the companies slated to post numbers after the bell. Through Wednesday's open, more than 19% of S&P 500 companies have reported fourth-quarter earnings, with 68% of them posting stronger-than-expected results, according to FactSet.

This beat rate, however, lags historical trends, according to The Earnings Scout CEO Nick Raich. The average beat rate for fourth-quarter earnings is 79%, he pointed out in a Friday note.

As of Wednesday's close, all three major averages are higher for the week, with the Nasdaq up 1.55%. The S&P and Dow have gained 1.1% each.

Stocks finish mixed

Stocks were mixed Wednesday.

The Dow Jones Industrial Average rose 9.88 points, or 0.03%, to end at 33,743.84. The Nasdaq Composite dipped 0.18% to close at 11,313.36, and the S&P 500 dipped 0.02% to settle at 4,016.22.

— Samantha Subin

Emerging markets' stunning January may herald further outperformance

The iShares MSCI Emerging Markets ETF (EEM) is higher by about 10.5% so far in January and on pace for its best January to start the year since 2012 (when it rose about 11% and the S&P 500 gained about 4.4%).

Emerging market ETF in January

So, just out of curiosity, what did emerging markets go on to do the rest of the way in 2012?

The emerging markets ETF ended 2012 higher by 16.9%, beating out the S&P 500's 13.4% advance.

Emerging markets have seen surging inflows of new capital lately. Toronto-Dominion Wednesday said EM equities attracted $13 billion in new money in January alone, while EM bonds drew $3.6 billion.

"Reduced positioning, cheaper valuations, softer USD, peak Fed rates pricing, lower [Treasury] yields, China opening and the approaching onset of an easing cycle across EM are sharply improving the attractiveness of EM assets," said Mitul Kotecha, TD head of emerging markets strategy, in a report.

— Scott Schnipper, Gina Francolla


2023 could be ‘transformational’ for Robinhood, Mizuho says

Mizuho is raising its estimates on Robinhood's fourth quarter transaction revenue thanks to strength in the fintech company's options volumes, analyst Dan Dolev said in a note Wednesday, and lowering estimates for revenue from crypto trading.

"We expect the upside to arise from better than expected options trading volumes paired with higher net interest revenues, somewhat offset by lower crypto trading volumes," Dolev said. "Beyond 4Q, we continue to view 2023 as a transformational year for HOOD as it should benefit from new products, such as its new IRA offering."

— Tanaya Macheel

Bank of America initiates Papa Johns with a buy rating

Bank of America has initiated coverage of pizza chain Papa Johns with a buy rating and a price target implying about 20% upside from its current share price, the firm said in a note Wednesday.

Demand for pizza was above trend during the pandemic and pizza comps are softening now as a demand normalizes. However, franchise growth could generate low-20% unlevered returns, and Bank of America sees "significant" white space in the U.S. and room for the company to add more than 1,300 stores internationally.

— Tanaya Macheel

Toast is 'an incredible growth story just getting started,' says D.A. Davidson

D.A. Davidson enthusiastically issued a buy rating for the cloud-based restaurant management company Toast, calling it an innovative "market leader." 

"As a pure-play restaurant-focused fintech, Toast is transforming how restaurants manage operations with software that yields dramatic top and bottom line benefits," wrote analyst Christopher Brendler in a client note. "With fantastic hardware, superior software, and attractive pricing, Toast makes it easy and as a result, it recently crossed ~10% market share in the US."

Toast's shares have increased 19.08% year-to-date. The company has reached 11% market share domestically, and has recently begun to expand internationally to Canada, the UK, and Ireland.

Despite what several analysts anticipate will be a rocky year ahead for tech and e-commerce stocks, the firm is optimistic that Toast can maintain its success. 

"Although macro is a concern, we note Toast has already proven its ability to power through tough times," citing the company's 24% revenue growth in 2020, during which restaurants and merchants — Toast's customer base — struggled. 

— Hakyung Kim

Bill Baruch shares how he's playing electric vehicles ahead of Tesla earnings

Tesla investors will be watching for its earnings report after the bell. But some are looking elsewhere within the electric vehicle space.

"We play the theme of EV in bits and pieces," said Bill Baruch, president of Blue Line Futures, on CNBC "Halftime Report."

Those bits and pieces, he said, are copper mining stock Freeport-McMoRan and semiconductor maker Nvidia. Baruch also said he added General Motors to his value portfolio in recent months following its leadership change.

Tesla is expected to report $1.13 per share in earnings and $24.16 billion in revenue, according to Refinitiv.

— Alex Harring

Jeremy Grantham calls for more losses after the first leg of bubble bursting

Jeremy Grantham, famed investor with a history of calling bear markets including the one last year, said investors should brace for even more losses in 2023 as the bursting of the growth stock bubble was just the beginning.

"While the most extreme froth has been wiped off the market, valuations are still nowhere near their long-term averages," Grantham said in a note Tuesday. "Given the complexities of an ever-changing world, investors should have far less certainty about the timing and extent of the next leg down from here."

The investor said he sees the S&P 500 ending the year at about 3,200, which is around 20% below current levels. Grantham added that it's possible that stocks stay lower for longer at that level.

— Yun Li

Dow turns positive

The Dow Jones Industrial Average turned positive during the final hour of trading.

The 30-stock index was last up 14 points, or 0.04%, after tumbling more than 460 points earlier in the session.

The Nasdaq Composite dipped 0.1%, while the S&P 500 traded flat.

— Samantha Subin

Loop Capital says to buy Intel’s Mobileye Global

Loop Capital gave Intel's Mobileye Global a buy rating and $45 price target, suggesting shares could gain as much as 31.9% from Tuesday's close.

Analyst Ananda Baruah said in a Tuesday note that the company holds strong advantages in autonomous technology, which offers sizable market opportunity. 

Mobileye Global, which develops autonomous-driving and driver-assist technologies, is a 70% share leader in Phase 1 of the advanced driver assistance system (ADAS) and "has an opportunity to become synonymous with autonomous," Baruah said.

The firm noted that increasingly new car designs require at least some ADAS capability to be given the highest safety ratings, making safety a key factor for adoption of the company's flagship product. 

While Loop Capital called Mobileye Global the "best game in town," the firm also spotlighted Nvidia and Qualcomm as competitors. The stock was last traded slightly lower.

— Pia Singh

Bank of America downgrades Union Pacific

Railroad stock Union Pacific dipped about 1.6% on Wednesday after being downgraded to neutral from buy at Bank of America.

Analyst Ken Hoexter cited "sustained pressure on costs, negative mix pressures, [and] inflation impacts" as some of the reasons for the downgrade.

Some of those costs come from hiring, where the railroad company still sees a shortage of employees.

"While the rail has achieved its 1,400 new Train, Engine & Yard hiring target for 2022, it sees lack of crews in certain parts of its network as the key bottleneck for its service recovery. It aims to hire roughly the same level of headcount in 2023 vs in 2022," Hoexter said in a note to clients.

Bank of America cuts its earnings estimates for 2023 and 2024 by 6% and 7%, respectively.

— Jesse Pound, Michael Bloom

Financial stocks rise

Many financial stocks traded positive Wednesday, helping to pare some of S&P 500's losses during afternoon trading.

As of 2:33 p.m. EST, the S&P sector traded 0.47% higher, boosted by shares of Capital One Financial, U.S. Bancorp and Progressive, which gained 8.7%, 5.1% and 4.1% respectively.

Capital One rose despite a disappointing quarter as it propped up credit reserves by $1 billion in the fourth quarter. U.S. Bancorp posted an earnings miss.

Consumer discretionary was the only other sector trading positive, rising 0.19%.

Capital One rises despite earnings miss

— Samantha Subin

CNBC Pro: Oliver Stone’s new film puts nuclear energy in the spotlight

Investors are taking another look at nuclear energy on the back of a new documentary on the topic from Oliver Stone that was screened at Davos.

"It's going to be a miserable existence if we have worse and worse hurricanes, fires, droughts. It's frightening," Stone said in an interview with CNBC's Tania Bryer at the World Economic Forum in Davos, Switzerland.

"We had the solution [nuclear power] … and the environmental movement, to be honest, just derailed it. I think the environmental movement did a lot of good, a lot of good ... [I'm] not knocking it, but in this one major matter, it was wrong. It was wrong," Stone said.

For investors, the film adds to growing interest in nuclear power as an alternative to fossil fuels besides renewables.

CNBC Pro subscribers can read more on nuclear power, as well as stock beneficiaries, here.

— Sarah Min

Stocks making the biggest midday moves

These stocks are among those making the biggest moves in midday trading:

  • Sunrun — The stock dropped 8.9% after being downgraded by Barclays to equal weight from overweight. The firm also downgraded SunPower, down more than 2%, to underweight from equal weight. Barclays cited a potential slowdown in solar demand in for the calls.
  • U.S. Bancorp — Shares gained 5.5% after U.S. Bancorp reported fourth quarter earnings of $1.20, excluding items, versus the $1.12 expected by StreetAccount. However, revenue missed estimates.
  • Capital One Financial — The stock jumped 7.5%, despite reporting disappointing quarterly results. However, BMO Capital Markets pointed out in a note that Capital One built credit reserves by $1 billion in the fourth quarter, twice that of peers. "We applaud COF for doing what its peers have not so far this earnings season: provision appropriately ahead of a credit cycle," the firm said.

Click here to see more stocks making midday moves.

— Michelle Fox

News Corp rises as Murdoch abandons merger plans

Shares of the Wall Street Journal's parent company, News Corp, rose 5% midday after Rupert Murdoch scrapped his plans to re-combine the company with Fox Corp.

Fox Corp added 2.4% during midday trading.

News Corp. rises as Murdoch scraps merger plans

— Lillian Rizzo, Samantha Subin

Oppenheimer downgrades Block

It's time to take a step back from Block shares, according to Oppenheimer.

Analyst Dominick Gabriele downgraded the mobile payments stock to perform from outperform after its recent rise. Shares are up roughly 23% to start 2023.

"Given the strong recent market rally and performance in SQ shares, combined with our 2024FYE significantly lower gross profit vs. consensus, we're downgrading shares from Outperform to Perform," Gabriele wrote in a Tuesday note.

"We think SQ will be a first mover for risk on; that said, we don't believe we have seen the bottom in stocks and thus we could see the recent SQ rally evaporate (up a whopping 43% last three months)," the analyst added.

Shares are down more than 4% in Wednesday midday trading.

Block shares fall

— Sarah Min

UBS downgrades Cheesecake Factory

It's a good time to sell shares of Cheesecake Factory, given the stock's roughly 16% gain this year and the potential for a tough macro environment going forward, according to UBS.

The firm on Wednesday downgraded the fast casual chain to sell from a neutral rating and kept its $30 price target, which implies a more than 20% decline from where shares are trading.

"While CAKE could continue to benefit from customer brand affinity and earnings upside potential exists if targets are reached, we think potential pressured industry demand, ongoing cost headwinds and limited macro visibility highlight risk to the recent move higher in shares and expectations," wrote analyst Dennis Geiger in a Jan. 25 note.

UBS sees slowing sales trends going forward and revenue for the year at the low end of its targeted range of $3.5 billion to $3.6 billion after a relatively resilient year in 2022. Risks include spending pressures, elevated ticket prices relative to peers, menu price concerns and the chain's underperformance during the Great Recession.

Any recovery to pre-Covid restaurant margins this year is also unlikely as labor and food costs face upwards pressure.

— Carmen Reinicke

J.P. Morgan reiterates overweight rating on Texas Instrument shares

J.P. Morgan reiterated its overweight rating on Texas Instrument shares, saying that the company will maintain its standing as one of the market leaders in high-value analog and embedded products. 

"Despite a difficult environment this year (slowing demand along with

GM cost/depreciation headwinds) for Texas Instruments, the team continues to

execute well and maintain strong earnings power even with weaker fundamentals," said J.P. Morgan Executive Director Harlan Sur. 

The semiconductor manufacturer released its fourth quarter earnings yesterday, which marked  the first time the company posted a quarterly year-on-year revenue contraction since the post-pandemic recovery. Despite the losses, reported revenue and earnings of $2.13 per share beat analysts expectations of $1.98 per share, according to FactSet

Texas Instruments share fell 2.25% today, following a small rally under 1% during yesterday's aftermarket hours.

— Hakyung Kim

Evercore ISI says other adtech companies may benefit from new Google antitrust suit

Don't expect Google to be out in the clear any time soon as it faces another antitrust suit, Evercore ISI said.

"We've long said that Google faces the greatest overall regulatory and litigation risk among the big tech platforms, and the filing of yet another plausible case against them underscores the cloud that will continue to hang over them," wrote U.S. policy and politics strategist Tobin Marcus in a note to clients Tuesday.

The comments came as the U.S. Department of Justice on Tuesday filed its second antitrust suit against Google, accusing the tech giant of monopolizing the online advertisement market.

The Wall Street firm believes the regulatory pressure on Google may benefit adtech companies PubMatic, The Trade Desk, Magnite, and Microsoft subsidiary Xandr. Other than Google, Amazon and The Trade Desk, both at $10 billion in annual gross advertising spend, are the largest players in the demand-side platform space.

Companies like Meta and Apple might also stand to benefit as well, according to Evercore ISI. The firm noted Meta doesn't face as much anti-trust scrutiny as Google does, and that Apple has the scale and resources to compete in the advertising solutions space.

"This regulatory risk likely carries only modest fundamental risk – in terms of heightened overhead expenses (legal fees, regulatory compliance expenses), management distraction, and possible ad market demand tentativeness," the note said. "The risk is less to the E than to the P/E. But it is real, and is not going away anytime soon."

— Pia Singh

Bank of America downgrades Booking Holdings

Bank of America downgraded shares of Booking Holdings to neutral from buy, saying it's time to look elsewhere after Booking's recent outperformance.

"Our thesis on Asia recovery seems to be playing out as a positive driver for Booking, and China outbound could provide an additional Summer boost," analyst Justin Post wrote Wednesday.

"However, Booking stock has far outperformed peers (+3% TTM [trailing twelve months] vs NASDAQ -16%), comps get tougher in 2Q, and we downgrade to Neutral from Buy as we see less valuation upside looking out to our now above-Street 2024 ests. (adjusted for FX)," Post added.

Instead, Post said he favors another travel stock.

Shares declined about 1%.

CNBC Pro subscribers can read more about the call here.

— Sarah Min

Marathon Petroleum, Travelers notch new highs

Despite Wednesday's selloff trend, three stocks notched new highs during the trading session.

That included shares of Marathon Petroleum, which hit their highest level dating back to the company's June 2011 spinoff from Marathon Oil.

These stocks also hit fresh highs:

  • Hess trading at all-time highs back to its merger with Cletrac and public listing on the NYSE in 1962
  • Travelers trading at all-time highs back to its spin-off from Citi in 2002

CVS Health, meanwhile, last traded near lows not seen since October 2021.

— Chris Hayes, Samantha Subin

Piper Sandler downgrades Enphase Energy

Piper Sandler downgraded shares of Enphase Energy to neutral from overweight, saying the U.S. residential solar power market could undergo a reset this year on weaker demand.

"We still view ENPH as a company with solid products, strong mgmt, best-in-class ops, and an attractive market position; however, we believe US resi demand uncertainty is too elevated. We look for US resi demand stabilization to revisit our rating," Harrison wrote.

CNBC Pro subscribers can read the full report here.

— Sarah Min

Tech stocks falter

Technology stocks declined Wednesday as growth fears mounted and Microsoft shared disappointing earnings guidance.

Shares of Tesla, Salesforce and Alphabet shed 2% each, while Amazon fell 3.6% amid a price cut from Bernstein. Apple declined 1.5%. Semiconductor stocks also slipped, with Advanced Micro Devices and Nvidia down 1% each.

The moves dragged down the tech-heavy Nasdaq Composite by 1.7% as of 9:50 a.m. Wednesday, and the S&P 500's information technology sector by 2%.

— Samantha Subin

Stocks decline as busy earnings week continues

Stocks declined Wednesday as earnings season carried on.

The Dow Jones Industrial Average declined by 270 points, or 0.8%. The Nasdaq Composite fell 1.8%, and the S&P 500 dropped 1.26%.

— Samantha Subin

Analysts stand by Microsoft

Despite Microsoft's muted guidance for the current quarter, most analysts covering the stock are standing by the tech giant.

Citi analyst Tyler Radke said Microsoft remains "best positioned" among the large cap software names, saying that it offers investors a good mix of growth and profitability. Morgan Stanley's Keith Weiss also maintained an overweight rating on the stock.

Microsoft reported a stronger-than-expected profit for the previous quarter, but it's current-quarter guidance sent the stock down more than 2%.

— Sarah Min

Boeing, News Corp, AT&T among stocks making biggest moves premarket

These are some of the companies making headlines before the bell:

Boeing – Boeing's stock dropped about 1.7% premarket after the aircraft maker posted earnings and revenue that missed expectations, despite a demand recovery. The company cited labor and supply shortages for the disappointing numbers.

News Corporation, Fox News — Shares of News Corp and Fox News were up 4.9% and 1.8%, respectively, after Rupert Murdoch ditched plans to merge the two companies, a proposition that met pushback from shareholders.

​​AT&T — Shares were up 1.8% after the telecommunications giant's fourth-quarter report came out Wednesday, showing an increase in subscribers but forecasting an annual profit below expectations.

Microsoft — Microsoft shares declined by nearly 3% after the software giant shared a dismal revenue forecast for the current quarter. The tech bellwether topped earnings expectations but said new business growth slowed in December, including within its Azure segment.

Click here to read more of today's early market movers.

— Pia Singh

Amazon shares decline as Bernstein trims price target

Shares of Amazon declined nearly 3% premarket amid a price target cut from analysts at Bernstein.

The firm trimmed its price target by $5 to $120 a share, representing about 25% upside from Tuesday's close price.

"We remain comfortably above the street on EBIT for 2023 as we see operating leverage as a when, not an if, but are keeping an eye on the outlook for AWS as MSFT ... performed well this quarter but the guide was weak," said analyst Nikhil Devnani in a Wednesday note to clients.

Bank of America analyst Justin Post, meanwhile, shared worries about the company's Amazon Web Services division heading into earnings. He cited Microsoft's recent Azure guidance as an indicator of decelerating cloud spend.

"We think it will take a few more quarters to digest elevated Pandemic era Cloud spend, but with a large total addressable market and healthy innovation, industry growth can accelerate in 2024," he said in a Tuesday note

— Samantha Subin

AT&T rises on earnings beat

Shares of AT&T rose more than 2% before the bell despite posting mixed quarterly results.

The telecom giant beat earnings estimates by 4 cents a share, although revenue came in slightly below the $31.39 billion as expected by analysts.

— Samantha Subin

Boeing declines on earnings miss

Boeing shares declined as much as 4% before the bell after fourth-quarter earnings fell short of estimates on both the top and bottom lines amid labor and supply shortages.

The aircraft maker posted an unexpected loss of $1.75 a share on $19.98 billion in revenue. Analysts had anticipated earnings of 26 cents per share on revenues of $20.38 billion.

Despite the top-and-bottom line miss, Boeing generated free cash flow last year for the first time since 2018.

Boeing falls on earnings miss

— Leslie Josephs, Samantha Subin

Mortgage interest rates fall for third consecutive week

Demand for weekly mortgage rose last week as rates declined for the third consecutive period.

Total application volume rose 7% last week over the previous week, according to the Mortgage Bankers Association's seasonally adjusted index.

At the same time, rates dropped to the lowest level since September, with the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances declining to 6.2% from 6.23%

— Diana Olick, Samantha Subin

Intuitive Surgical drops after earnings miss

Shares of Intuitive Surgical fell nearly 9% in the premarket after the company reported weaker-than-expected quarterly results.

Intuitive Surgical earned $1.23 per share on revenue of $1.66 billion. Analysts polled by Refinitiv expected a profit of $1.25 per share on revenue of $1.67 billion. The company cited a resurgence in Covid cases in China, which hurt procedure volumes in the region.

ISRG falls after earnings

— Fred Imbert

Microsoft shares shed after-hours gains, turn negative

Microsoft shares slid about 1% in after-hours trading, reversing earlier gains.

Shares were initially higher after the company posted quarterly earnings per share that beat the Street's expectations. However, investors' sentiment soured after Microsoft issued disappointing guidance for revenue in the current quarter on its earnings conference call.

The company forecasted $50.5 billion to $51.5 billion in fiscal third quarter revenue, while analysts surveyed by Refinitiv anticipated $52.43 billion.

Read more about Microsoft's results here.

-Darla Mercado, Jordan Novet

Morgan Stanley's Mike Wilson expects earnings will start to roll over on weaker consumer

Morgan Stanley's Mike Wilson said investors should brace for tougher times ahead.

"The numbers are actually going to finally come down in a way that we didn't think would happen in Q4, which it didn't, but now, we think that's happening," Wilson said Tuesday on CNBC's "Closing Bell: Overtime."

The investment strategist said he expects earnings will start to roll over as companies deal with a weakening consumer.

Still, he's open to changing his outlook if he does not see a "more meaningful" drawdown in the next three or four months, or by April.

"We will probably back off our call, ... because we're still in a world of somewhat of financial repression, and bonds are not a great alternative necessarily longer term, and stocks are kind of the only game in town in a higher inflationary environment," he said. "We're not willing to make that call today because we think the risk reward is out of whack."

— Sarah Min

Microsoft shares rise after earnings results show resilience in cloud

Shares of Microsoft led the gains in after-hours trading, up more than 4% after its quarterly results came in above estimates on top and bottom lines. The stronger-than-expected report was driven by the strong growth in its cloud unit.

Revenue in Microsoft's Intelligent Cloud segment amounted to $21.51 billion, up 18%. Meanwhile, sales from Azure and other cloud services, which Microsoft does not report in dollars, grew by 31%.

— Yun Li