The Buzz on Business for Wednesday, January 24th, 2024

The 3M Company ruined what otherwise was a pretty good day for the markets on Tuesday. The stock got crushed, dropping almost 12% on the day and pulling the Dow Jones Industrials—of which it is a member—down along with it.

So, what happened?

Beats me!

Stock Market Report

The indexes were mixed on Tuesday.

• The Dow Jones Industrial lost ninety-six points, or three-tenths of a percent and closed back below 38,000 at 37,905. More on 3M in just a minute.
• The S&P 500 was up three-tenths, fourteen points, and it closed at 4,865.
• The tech-heavy Nasdaq Composite actually had a pretty good day. It was up four-tenths of a percent and closed at 15,426, that’s a gain of sixty-six points.
• The RSP managed a small gain, just a minuscule five one-hundredths of a percent. But hey! A win is a win! The SOXL was up 1.9% on the session.

Bond Market Report

Bonds were also mixed.

• The yield on the 2-year treasury was off two basis points, and it closed at 4.372%
• The 20-year closed at 4.479%, up four ticks.

Oil, Gold, and Bitcoin

• We’ve been watching oil with a bit more interest in recent weeks as tensions in the Middle East have escalated, and we have expected the price of a barrel to break out to the upside. The chart seemed to be signaling a breakout on Monday, but the price fell on Tuesday. It closed at $74.44, off thirteen cents.
• Gold was up $8.40 and closed at $2,030.60 a troy ounce.
• And Bitcoin had another bad day. It closed at $39,237.92, off $383.97 or about one percent as we write this.

Wall Street Punishes 3M Despite Exceeding Targets

So, what happened to 3M?

Well, it just beat Wall Street expectations for earnings, which came in at $2.42 per share versus expectations of $2.31. It also met Wall Street expectations for revenue.

Apparently, the company issued guidance for 2024 that was below what Wall Street was expecting. Not that the company was going to lose money or even that it was going to have a bad year in 2024. 3M said it would earn between $9.35 and $9.75 a share in the coming year. It earned $9.24 a share in 2023, and in the last twenty-three quarters, the company has exceeded expectations in all but five.

Nevertheless, Wall Street was expecting the company to say that it would earn $9.81 in 2024, so the stock got crushed. Because, as we never tire of saying, Wall Street is an expectations game!

We would not be surprised if 3M, which is a well-managed company that has had more than its share of challenges in recent years, exceeds expectations over the next four quarters and if yesterday’s sell-off turns out to be a buying opportunity.

Netflix, by contrast, actually missed expectations, although that announcement came out after the bell. The narrative, thus far, seems to be that, well, it exceeded expectations for subscriber growth. Whatever! We can’t help but wonder. . .

You know, you’ll just have to keep it right here!