Day Traders Diary

4/19/23

The major averages closing mixed with the S&P 500 finishing flat even as earnings keep flooding in. The Dow Jones Industrial Average was the one average to fall, down 79 points. The S&P 500 fell 35 cents to 4154. The Nasdaq Composite rose 3 points to 12157.

While many of the companies reporting in the last day topped analysts' low-bar estimates, traders found something wrong within the results to send the stocks lower. A lack of forecasts from the major companies also left investors on edge, with the Federal Reserve set to raise interest rates again in a couple weeks and recession fears swirling.

"The market's really been sort of ho-hum in this earnings season so far," said Sandi Bragar, Aspiriant's chief client officer. "We've been concerned about shrinking corporate profits and earnings going lower, and that is starting to play out certainly in companies that have reported so far, but the market hasn't really been reacting too much to that."

Netflix shares fell 3.2% as the streaming giant disappointed investors by pushing back plans to clamp down on password sharing. In its latest quarter, Netflix beat analysts' expectations on earnings per share, and added more subscribers than expected, but fell short of revenue estimates.

Earnings from major banks institutions wrapped up with Morgan Stanley, gaining 0.7%. Despite strong results, the stock initially traded down as margins for its investment banking, wealth and asset management businesses were weaker than expected, according to Wells Fargo analyst Mike Mayo. Normalizing the bank's tax rate would show weaker-than-expected earnings for the quarter, he said.

Investors have been closely monitoring the industry after bank failures last month spurred fears that contagion would spread.

Even so, the market response has been "fairly benign" to most of the economic and financial news coming in, said LPL Financial's Quincy Krosby. Equities, she added, are in a "seesaw trade," with winners and losers shifting by the day.

"It hasn't really made a decision as to whether or not the price action is going to win out," the chief global strategist said.

So far this week, trading has been choppy as investors evaluate a rush of earnings. Wall Street this season is on the hunt for signs of weakening demand and conditions likely to put a damper on profitability into the back half of 2023, said Barclay's Emmanuel Cau in a note to clients.

"Overall, Q1 earnings may not move the needle much, in our view," he said. "However, stocks have rallied, but positioning remains cautious, so more earnings-driven upside would extend the pain trade."

Dominant electric vehicle maker Tesla headlines earnings result after the bell. IBM and Las Vegas Sands are also on deck.