Microsoft Joined Hi-Tech Redundancies Saga by Announcing Job Cuts

U.S. equities began the reduced, due to Monday’s holiday, trading week mixed as more corporate earnings reports kept navigating investors’ sentiment. Producer prices in the U.S. declined by 0.5% in December on a monthly basis. Final demand prices advanced just 0.2 % in November. Prices for final-demand goods moved down 1.6% in December, the largest decrease since falling 1.8% in July.

Yesterday, the Dow Jones lost almost 400 points, sent lower by concerns about lackluster earnings of Goldman Sachs (GS) and The Travelers Companies (TRV). The S&P 500 lost ground, while the Nasdaq had a modest gain, posting its seventh-straight winning session.

Goldman Sachs (GS) shares dropped 6% after the investment bank reported a big decline in investment banking revenue along with higher costs. Shares of JPMorgan Chase (JPM) and Bank of America (BAC) also fell. However, strong earnings from Morgan Stanley (MS) sent its shares soaring.

The Travelers said catastrophe losses from the big winter storm at the end of 2022 negatively impacted its bottom line, and shares declined nearly 5% (more below). Shares of rivals Allstate (ALL) and Progressive (PGR) dropped as well. Along with Goldman and Travelers, shares of 12 other companies in the Dow lost more than 1%, with Honeywell (HON), Dow (DOW), 3M (MMM), and Verizon (VZ) shares tumbling 2%.

Tesla (TSLA) was the best-performing stock in the S&P 500 as sales in China surged after the electric carmaker reduced prices there. Shares of Nvidia (NVDA) jumped on positive comments from Bank of America analysts. Church & Dwight (CHD) shares rose as both Morgan Stanley and Credit Suisse upgraded the stock. CarMax (KMX) shares climbed on speculation the used car retailer may be targeted for a takeover by an activist investor.

Microsoft (MSFT) said it plans to cut jobs in a number of engineering divisions, joining the ranks of technology giants that are scaling back as the industry prepares for a prolonged slump in demand. Microsoft most recently shrank its workforce in October and July, and has eliminated open positions and paused hiring in various groups.

Over in Europe, European stocks gave up their gains as investors remained on the edge over the direction of monetary policy and corporate earnings. At the time of writing, the German DAX rebounded just 0.1%. At the same time, the French CAC 40 grew by 0.36%. The British FTSE 100, conversely, lost 0.08%. The Euro Stoxx 600 gained 0.41% concurrently.

Eurostat's preliminary report showed earlier today that the regional construction output in the euro area fell 0.8% in November MoM, however, rising 1.3% on an annual basis. Meanwhile, in the entire European Union, the indicator was down 0.4% MoM, but up 1.8% compared to the same period in 2021.

ECB’s Governing Council member Francois Villeroy de Galhau dismissed suggestions that the monetary authority is likely to slow down to a smaller pace of rate increases from March, saying that ECB President Christine Lagarde's guidance from the previous meeting remains unchanged.

Earlier this morning, the Bank of Japan said it’s pushing back against increasing market speculations of monetary policy change by ramping up the defense of its stimulus framework, prompting declines in the yen and bond yields.