Stock Market Wrap Up: Stocks Close Mixed ahead of Apple's Earnings

Wall Street closed on a mixed note on Tuesday, with the S&P 500 losing 0.2%, ahead of a big batch of earnings reports. The market has heard its share of guidance cuts during the Q4 earnings season so far, which presumably led investors to employ some caution in front of Apple's (AAPL 154.68, -1.62, -1.0%) report after Tuesday's close.

The blue-chip Dow Jones Industrial Average gained 0.2%, the tech-sensitive Nasdaq Composite lost 0.8%, and the small-cap Russell 2000 lost 0.1%.

The S&P 500 communication services (-1.1%), information technology (-1.0%), and consumer discretionary (-0.8%) sectors underperformed the broader market. Conversely, the industrials (+1.4%), materials (+1.1%), and real estate (+0.8%) sectors outperformed.

Buying interest was largely absent within the market's most heavily-weighted tech sector in front of Apple's earnings report. Investors were perhaps fearful that there could be some cautious-minded guidance, with a nod to weakness in China, that could drive a spillover effect to Apple suppliers and the broader tech sector.

Dow component 3M (MMM 196.95, +3.75, +1.9%) for its part lowered its fiscal 2019 guidance, in part due to slowing segments in China. The stock outperformed, though, helped by an earnings beat and by the view that its guidance cut was better than feared.

Fellow Dow components Pfizer (PFE 40.77, +1.24, +3.1%) and Verizon (VZ 53.28, -1.79, -3.3%) also reported better-than-expected profit estimates and issued underwhelming guidance. Pfizer guided fiscal 2019 earnings and revenue below consensus, and Verizon issued mixed guidance for fiscal 2019.

In other earnings news, Xerox (XRX 27.07, +2.77, +11.4%), Corning (GLW 33.72, +3.36, +11.1%), and Whirlpool (WHR 136.49, +12.03, +9.7%) all climbed after impressing investors with their corporate results.

U.S. Treasuries edged higher, pushing yields lower across the curve. The 2-yr yield decreased one basis point to 2.57%, and the 10-yr yield decreased three basis points to 2.71%. The U.S. Dollar Index gained 0.1% to 95.82. WTI crude rose 2.4% to $53.22/bbl.

Overseas, the UK Parliament backed an amendment to renegotiate a Brexit deal, according to Bloomberg. The outcome produced little effect on U.S. markets, but the voting was seen as a victory for UK Prime Minister Theresa May.  The offset to the news is that the EU has said the Brexit deal is not renegotiable, particularly with respect to the Irish backstop worked out previously in the Withdrawal Agreement.

Reviewing Tuesday's economic data, which included the Conference Board's Consumer Confidence Index for January and the S&P Case-Shiller Home Price Index for November:

• The Conference Board's Consumer Confidence Index dropped to 120.2 in January (consensus 126.1) from a downwardly revised 126.6 (from 128.1) in December. 
  • The key takeaway from the report is that it showed the outlook among consumers was dampened by the volatility in financial markets and the government shutdown, which threatens to register in consumer spending data that would be a drag on first quarter GDP.
• The S&P Case-Shiller Home Price Index for November increased 4.7% (Briefing.com consensus 4.9%), down from an unrevised increase of 5.0% in October.

Looking ahead, investors will receive the FOMC Rate Decision for January, Pending Home Sales for December, the ADP Employment Change for January, and the weekly MBA Mortgage Applications Index on Wednesday.

• Russell 2000 +9.1% YTD
• Nasdaq Composite +5.9% YTD
• Dow Jones Industrial Average +5.4% YTD
• S&P 500 +5.3% YTD
  

Advanced Micro reports EPS in-line, misses on revs; guides Q1 revs below consensus; sees high single digit FY19 revenue growth (19.25   -0.93)

• Reports Q4 (Dec) earnings of $0.08 per share, excluding non-recurring items, in-line with the S&P Capital IQ Consensus of $0.08; revenues rose 5.9% year/year to $1.42 bln vs the $1.45 bln S&P Capital IQ Consensus.
  • Computing and Graphics segment revenue was $986 million, up 9 percent year-over-year and 5 percent compared to the prior quarter driven by strong sales of Ryzen processors. Operating income was $115 million compared to $33 million a year ago and $100 million in the prior quarter. The year-over-year improvement was primarily driven by the ramp of Ryzen processors. The improvement compared to the prior quarter was primarily driven by Ryzen processors and datacenter GPUs, which more than offset the benefit of IP-related revenue in the third quarter of 2018. Client processor average selling price (ASP) was up year-over-year and sequentially driven by Ryzen processor sales. GPU ASP was up year-over-year and sequentially primarily due to higher datacenter GPU sales.
  • Enterprise, Embedded and Semi-Custom segment revenue was $433 million, flat year-over-year. Revenue declined 39 percent compared to the prior quarter driven by seasonally lower semi-custom sales, partially offset by strong EPYC datacenter processor sales.
• Co issues downside guidance for Q1, sees Q1 revs of $1.20-1.30 bln vs. $1.47 bln S&P Capital IQ Consensus. The sequential decrease is expected to be primarily driven by continued softness in the graphics channel and seasonality across the business. The year-over-year decrease is expected to be primarily driven by lower graphics sales due to excess channel inventory, the absence of blockchain-related GPU revenue and lower memory sales. In addition, semi-custom revenue is expected to be lower year-over-year while Ryzen, EPYC and Radeon datacenter GPU product sales are expected to increase. AMD expects non-GAAP gross margin to be approximately 41 percent in the first quarter of 2019. In addition, the Company expects to record a $60 million IP licensing gain which will be a benefit to operating income and recorded on the licensing gain line of the P&L.
• For full year 2019, AMD expects high single digit percentage revenue growth vs. +7.5% consensus, driven by Ryzen, EPYC and Radeon datacenter GPU product sales as the Company ramps 7nm products throughout the year. AMD expects non-GAAP gross margin to be greater than 41 percent for 2019.
• AMD announced it entered into a seventh amendment to its wafer supply agreement with