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Wall Street edges lower as earnings kick into high gear

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Jan 24 (Reuters) –

Wall Street slipped on Tuesday after industry bellwethers 3M, Johnson & Johnson and GE warned of a challenging year ahead, while a technical issue at the New York Stock Exchange briefly halted trading in some stocks shortly after the opening bell.

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More than 80 NYSE-listed stocks were affected by the

glitch

, with shares of companies including Nike Inc and Walmart Inc seeing big swings in opening prices.

The problem sowed confusion among traders on an earnings-heavy day, where the market reaction to the quarterly results of some of the biggest companies was in focus.

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Industrial conglomerate 3M Co fell 5.7% as it forecast a gloomy first quarter.

Verizon Communications Inc dropped 0.4% after forecasting annual profit below estimates, while Johnson & Johnson fell 1.3% as it warned that a surge in China COVID-19 cases could dent the first half sales in 2023.

General Electric Co fell 0.2% on a disappointing profit forecast for the year, despite topping quarterly earnings estimates.

“The problem today is mainly earnings,” said Fall Ainina, research director at James Investments. “Now many are forecasting a profit recession, which is back-to-back quarters of negative earnings.”

Wall Street’s main indexes started the week on a strong note amid renewed appetite for growth stocks following a battering last year.

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After logging its biggest gain in over two months on Monday, Advanced Micro Devices Inc slipped 3.2% as Bernstein downgraded it to “market-perform” from “outperform.”

The Philadelphia SE Semiconductor index dropped 0.7% to slip from its one-month high.

Big Tech earnings could also determine whether renewed enthusiasm for growth stocks will be sustained.

“In the near-term, the answer seemingly lies with tech earnings … longer-term, if we do experience a Fed pivot this year, then would anticipate a strong, positive buying impulse for tech,” JPMorgan analysts wrote in a client note.

Microsoft Corp is scheduled to report quarterly earnings after the bell.

Analysts now see fourth-quarter earnings for S&P 500 companies dropping 2.9% year-on-year, according to Refinitiv data.

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The fourth-quarter earnings season is keenly watched as companies are expected to feel the full impact of the Federal Reserve’s rate-hike campaign. The central bank is expected to raise rates by another quarter of a percentage point next week.

At 12:31 p.m. ET, the Dow Jones Industrial Average was up 0.20 points, or 0.00%, at 33,629.76, the S&P 500 was down 5.95 points, or 0.15%, at 4,013.86, and the Nasdaq Composite was down 14.26 points, or 0.13%, at 11,350.15.

Travelers Companies

added 2.6% after the insurer reported better-than-expected fourth-quarter revenue.

Other major growth stocks also dipped, with Alphabet Inc down 1.1%. The U.S. Justice Department will be joined by about eight states in an antitrust lawsuit against Alphabet’s Google that is expected to be filed this week.

Advancing issues outnumbered decliners by a 1.13-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.08-to-1 ratio on the Nasdaq.

The S&P index recorded 27 new 52-week highs and 10 new lows, while the Nasdaq recorded 60 new highs and 18 new lows. (Reporting by Shreyashi Sanyal and Johann M Cherian in Bengaluru; Editing by Vinay Dwivedi and Anil D’Silva)

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