S&P 500 gains on Tuesday as it heads for best January since 2019

Lucid‘s recent pop will likely be short-lived, Morgan Stanley said.

The electric vehicle maker rallied 43% Friday on the back of reports indicating Saudi Arabia’s Public Investment Fund was considering buying the more than 30% of shares it does not already own.

But analyst Adam Jonas expects the stock to hit $5 in the next 12 months — meaning it would fall 57.4% from where it closed Monday and reach a new all-time low — due to what he sees as a tough road ahead. The stock previously reached an all-time intraday low of $6.09 and closing low of $6.17 earlier this month.

“We believe the fundamental outlook facing Lucid is more likely deteriorating than improving,” Jonas said in a note to clients Tuesday.

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The S&P 500 was up 0.6% during Tuesday morning trading, with nearly all sectors trading in positive territory.

Ten out of 11 sectors were higher on the day. Consumer discretionary, materials and real estate led the gains, up about 1.5%, 1.1% and 1%, respectively.

— Sarah Min

Consumer discretionary stocks led gains in the S&P 500 on Tuesday, with the sector up about 1% during morning trading.

General Motors was the biggest advancer in the sector. The stock jumped more than 8% after the automaker reported strong earnings.

Meanwhile, utilities underperformed the broader market index, down nearly 0.9%.

— Sarah Min

March copper contracts fell as low as $4.1185 per pound Tuesday, but still left Dr. Copper up about 8.7% in January and on pace for a third straight monthly gain. January is poised to become the best start to the year for the metal since 2017.

Meanwhile, London Metal Exchange aluminum on Tuesday matched Monday’s low of $2,555, still leaving aluminum higher by 8.5% in January and on course for its third gain in four months and the best start to a year since 2012.

Metals traders are awaiting this week’s central bank rate decisions from the Federal Reserve, European Central Bank and Bank of England, while Reuters reported that copper demand in China remains stagnant.

— Scott Schnipper, Gina Francolla

Atlantic Equities moved to the sidelines on Bank of America as the firm sees net interest margins weakening for banks.

Analyst John Heagerty downgraded the stock to neutral from overweight and lowered his price target by $5 to $40. The new target implies a 13.3% upside from where the stock closed Monday.

Heagerty said it will be difficult to have operating leverage as net interest income, which finds the difference between revenue from interest-bearing liabilities and the cost to the bank of servicing them, slows for Bank of America and other financial services names.

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— Alex Harring

March West Texas Intermediate crude oil contracts fell as low as $76.55 per barrel Tuesday, the lowest in about three weeks, and leaving crude on the verge of declining for the seventh month in eight. Moreover, crude is on pace to settle below its 50-day moving average ($77.62), also for the first time in nearly three weeks.

WTI is also on course in January to decline for a third straight month.

The Energy Select Sector SPDR Fund (XLE) is off about 0.3% premarket Tuesday, on course for a third straight decline. Exxon (XOM) (earnings), SLB and Devon (DVN) are all down about 1% in early Tuesday trading.

Month-to-date, the Energy ETF is still up about 1%, and on the verge of advancing for the third month in four.

— Scott Schnipper, Gina Francolla

There are contrarian indicators coming from the futures market that have Wolfe Research turning more positive on stocks. Nasdaq 100 futures are down 29% from the peak and now large speculators have flipped to their most aggressive short position in over two years, analyst Rob Ginsberg wrote in a note Monday.

“With the Fed on Wednesday and earnings from AAPL, AMZN and GOOGL on Thursday, the contrarian in me is getting increasingly bullish,” he said.

In other words, given that a lot of bad news has already been priced in, anything positive from earnings or the Federal Reserve could be good for stocks.

On Wednesday, the central bank is set to announce another rate hike, which is expected to be one-quarter of a percentage point. Investors will also be watching to see what the Fed indicates about any future increases.

— Michelle Fox

Compensation costs for civilian workers increased at a slower pace in the fourth quarter, the Bureau of Labor Statistics reported Tuesday.

The employment cost index, an important inflation gauge for the Federal Reserve, showed compensation increased 1% for the October-to-December period. That was a touch below the 1.1% estimate from Dow Jones. It also was lower than the 1.2% increase in the third quarter.

On a 12-month basis, the ECI rose 5.1%, up slightly from the 5% gain in the third quarter.

—Jeff Cox

Here are some companies making the biggest moves before the bell:

• McDonald’s — Shares dipped more than 1% after McDonald’s reported its latest quarterly results. The fast food giant topped earnings and revenue estimates, saying customers are increasingly visiting its restaurants. Still, McDonald’s CEO Chris Kempczinski said he expects “short-term inflationary pressures to continue in 2023.”
• United Parcel Service – Shares of UPS rose 1.9% after the company reported earnings that beat analyst expectations. The company posted adjusted earnings per share of $3.62 on $27.08 billion in revenue. Analysts had forecast earnings of $3.59 per share and $28.09 billion in revenue, per Refinitiv.
• Exxon Mobil — The oil giant was under pressure despite reporting upbeat financial results for the latest quarter. The company, whose stock price rallied more than 80% last year, saw a tightening in supplies as economies began recovering, CEO Darren Woods said in a statement. Shares fell more than 1%.

For more stocks making moves in premarket trading, click here.

— Hakyung Kim

Pfizer shares dipped more than 2% after the vaccine maker said it expects 2023 sales to fall by as much as 33% compared to a record 2022.

The pharmaceutical company issued sales guidance of $67 billion to $71 billion for 2023. Last year, Pfizer booked $100.3 billion in revenue, which was an all-time high boosted by Covid vaccine and antiviral sales.

— Sarah Min, Spencer Kimball

McDonald’s shares dipped more than 2% in premarket trading after the fast food company reported its latest quarterly results. The fast food giant topped earnings and revenue estimates, saying customers are increasingly visiting its restaurants.

The company posted earnings per share of $2.59, better than the $2.45 expected by analysts polled by Refinitiv. It reported revenue of $5.93 billion, greater than the forecasted $5.68 billion.

McDonald’s CEO Chris Kempczinski said he expects “short-term inflationary pressures to continue in 2023.”

— Sarah Min, Amelia Lucas

Shares of Exxon Mobil fell more than 3% despite the oil giant reporting earnings and revenue that beat analyst expectation.

Exxon earned $3.40 per share on Revenue of $95.43 billion. Analysts expected earnings per share of $3.29 per share on revenue of $94.67 billion.

“While our results clearly benefited from a favorable market, the counter-cyclical investments we made before and during the pandemic provided the energy and products people needed as economies began recovering and supplies became tight,” CEO Darren Woods said in a statement.

Exxon shares rallied more than 80% in 2022 thanks in large part to higher oil prices.

Caterpillar shares fell more than 2% after the industrial giant posted a its latest quarterly results. The company reported adjusted earnings of $4.27 per share, above a Refinitiv consensus estimate of $4.02 per share. Caterpillar’s bottom line excludes an “unfavorable ME&T foreign currency impact in other income (expense) of $0.41 per share.”

— Fred Imbert

Correction: Caterpillar reported adjusted earnings per share of $4.27, according to Refinitiv. A previous version of this story used the company’s adjusted $3.86 figure, which did not strip out for a “foreign currency impact.”

General Motors reported quarterly earnings that beat analyst expectations, sending the auto stock up more than 3% in the premarket.

GM earned $2.12 per share in the fourth quarter, beating a Refinitiv forecast of $1.69 per share. The company’s revenue of $43.11 billion also beat a consensus estimate of $40.65 billion. Additionally, GM forecast another strong year.

— Fred Imbert, Michael Wayland

The International Monetary Fund on Monday revised upward its global growth projections for the year, but warned that higher interest rates and Russia’s invasion of Ukraine would likely still weigh on activity.

In its latest economic update, the IMF said the global economy will grow 2.9% this year — which represents a 0.2 percentage point improvement from its previous forecast in October. However, that number would still mean a fall from an expansion of 3.4% in 2022.

It also revised its projection for 2024 down to 3.1%.

Read the full story here.

– Silvia Amaro

Stocks have so far posted a strong start to the year after the worst year for stocks since 2008. This is where all the major averages stand ahead of the final trading day of January.

Dow Jones Industrial Average:

• Up 1.72% for the month and year
• On pace for third positive month in four

S&P 500:

• Up 4.64% this month
• On track for best January since 2019
• Headed for third positive month in four

Nasdaq Composite:

• Up 8.86% in January
• On pace for best monthly performance since July

— Samantha Subin, Chris Hayes

These are some of the stocks moving the most in overnight trading:

NXP Semiconductors — NXP Semiconductors’ stock dropped more than 3% after its revenue outlook for the first quarter fell short of analysts’ expectations, according to FactSet.

Whirlpool — Whirlpool shares gained more than 1.9% in extended trading after the appliance maker shared…