(Reuters) – Wall Street’s major stock indexes fell on Tuesday after Goldman Sachs Co posted quarterly profit below estimates, boosting investor confidence already battered by fears of an economic slowdown in China.
Goldman Sachs fell 3.5% after reporting a larger-than-expected decline in quarterly earnings, which particularly affected Dow Jones.
Morgan Stanley jumped 4.4% after beating analyst estimates for fourth-quarter earnings as its trading division received a boost from market volatility.
“Widely expected to be very poor, Goldman Sachs’ quarterly results were more miserable than expected,” said Octavio Marenzi, CEO of Ubimas Advisory.
Microsoft shares fell 0.4 percent and weighed on the Nasdaq after Guggenheim downgraded its rating from “neutral” to “sell”. Other growths and “big tech” stocks were mixed.
The balance sheets of Goldman Sachs and Morgan Stanley are ending a season of mixed results for major US banks, with most of them committing resources to preparing for an imminent recession.
Investors will be watching US economic data, including retail sales, for the rest of the week, as well as comments from Federal Reserve officials looking for clues about the path of interest rate hikes by the US central bank.
Market participants currently expect a 25 basis point hike in the Fed rate in February and see a peak of 4.94% in June.
US-listed Chinese companies such as JD.Com, Baidu and Bilibili fell between 4.9% and 6.4% after Chinese economic growth slumped in 2022 to one of its worst levels in nearly half a century.
“I think it’s a combination of a little profit-taking after a very strong rally last week and the news coming out of China,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
At 1:26 pm (Brasilia time), the Dow Jones index fell 1.11% to 33,921.12 points, while the S&P 500 lost 0.31%, to 3,986.61 points. The Nasdaq Composite Technology Index fell 0.36% to 11,039.00 points.
(Reporting by Shubham Batra, Shriyashi Sanyal and Amruta Khandekar in Bengaluru; Additional reporting by Bansari Mayur Kamdar)