Weak Earnings From McDonald’s & 3M Weighing On Equities

Commenting on the weak earnings from McDonald’s and 3M, and today’s trading Gorilla Trades strategist Ken Berman said:

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The major indices are virtually unchanged at midday following a choppy and slightly bearish morning session on Wall Street.

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McDonald & 3M Earnings

A couple of weak earnings reports, from Mcdonald’s Corp (NYSE:MCD) and industrials giant 3M Co (NYSE:MMM), and the uncertainty regarding the next stimulus bill have been weighing on equities in early trading. The continued decline in the number of new COVID cases in the U.S. supported domestic stocks this morning, but as the global numbers remain gloomy, global markets are still playing catch up, with especially European equities lagging behind their U.S. peers.

This morning’s key economic releases were mixed, but the most anticipated CB consumer confidence number fell by more-than-expected, putting more pressure on the risk-on sectors. The Case-Shiller Housing Price Index was also slightly below the consensus estimate, but the Richmond Manufacturing Index was much higher-than-expected, indicating growth for the first time since February. Gold hit yet another new all-time high this morning, with gold futures getting close to the historic $2,000 level for the first time due to the increased safe-haven demand.

Market Wrap

Dow: 26,532, – 53 or 0.2%

S&P 500: 3,242, + 2 or 0.1%

Nasdaq: 10,520, – 17 or 0.2%

Russell 2000: 1,481, – 4 or 0.2%

Market breadth has been in line with the performance of the major indices this morning, with decliners outnumbering advancing issues by a 3-to-2 ratio on the NYSE at midday. Only 12 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 82 stocks hit new 52-week highs. The major indices have been hovering around their daily VWAPs (Volume-Weighted Average Price) throughout the morning session, pointing to a mixed and choppy afternoon. Apart from utilities and real estate, stock the key sectors are all in the red at midday, even thought the losses are limited outside of the tech, energy, and materials sectors, confirming the slight risk-off shift. Stay tuned!

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