The stock market has been in rally mode for the past week and a half, and positive momentum continued to carry markets higher in premarket trading on Tuesday morning. As of 8:15 a.m. EDT, futures contracts on the Dow Jones Industrial Average (^DJI -0.51%) were up 169 points to 35,302. S&P 500 (^GSPC -0.27%) futures had gained 22 points to 4,500, and Nasdaq Composite (^IXIC -0.18%) futures were higher by 64 points to 15,355.

Given the upward movement, you might expect the latest earnings results from consumer giants Procter & Gamble (PG -0.32%) and Johnson & Johnson (JNJ 1.49%) were favorable. Yet both stocks lost ground in premarket trading. Below, we'll look at the factors affecting these two massive businesses and what they could mean for the broader stock market in the long run.

Inflation ahead for P&G

Shares of Procter & Gamble were down almost 2% before the opening bell on Tuesday morning. The household and personal care products giant posted solid results, but its outlook was somewhat troubled because of challenges caused by the current business environment.

Person in store aisle looking at a bottle of dishwashing soap.

Image source: Getty Images.

P&G's fiscal first-quarter numbers were somewhat mixed on their face, yet they were generally stronger than most investors had expected. Revenue rose 5% on a 4% gain in organic sales, with the company's healthcare segment standing out with the biggest volume and revenue growth. Earnings were down 1% year over year to $1.61 per share, but that was better than the $1.58 per share consensus forecast among those following Procter & Gamble.

Yet investors focused largely on the cost pressures that P&G is seeing. Gross margin fell almost 4 percentage points, most of which came from increases in costs of the commodities that go into manufacturing the company's products. Even substantial savings on overhead expenses weren't enough to avoid reduced operating margin levels, and Procter & Gamble warned that the combination of higher prices of freight services and raw materials will cost it $0.90 per share in total earnings for fiscal 2022.

Procter & Gamble expects full-year sales growth of 2% to 4% and core earnings growth of 3% to 6%. That's not terrible for a company of P&G's size, but it still highlights some of the difficulties that the consumer giant could face in the year ahead.

J&J hits half a billion in COVID-19 vaccine sales

Elsewhere, Johnson & Johnson saw its stock fall just a fraction of a percent. The healthcare conglomerate  performed strongly in the third quarter of 2021, and investors are weighing the positive business impact of COVID-19 vaccine sales against nervousness about what the future might bring.

J&J's results showed considerable growth. Total sales climbed almost 11%, while adjusted earnings of $2.60 per share topped expectations and were higher by 18% year over year. The revenue figures were actually slightly below what Johnson & Johnson investors had hoped to see, showing just how much demand there has been for pharmaceuticals, medical devices, and consumer health products.

Johnson & Johnson saw its international business pick up by nearly 14%, outpacing U.S. sales gains of 8%. As we've seen repeatedly for years now, J&J's pharmaceutical division had the strongest growth at 13.8%, but solid gains of 8% for medical devices and 5.3% for the consumer health division showed the triple threat that the conglomerate's business provides. J&J's COVID-19 vaccine sales came in at $502 million for the period, bringing vaccine revenue for the first nine months of 2021 to $766 million.

The news led J&J to boost its guidance for 2021, pushing the lower end of its sales ranges nearly to their previous midpoint. The company set new expectations for adjusted earnings of $9.77 to $9.82 per share, up from past guidance of $9.60 to $9.70 per share.

Johnson & Johnson has been able to keep its margins strong despite cost pressures, showing the value of its brand and the pricing power it has. That will be a key strategy for other companies to follow if they can, and those that pass through cost increases to consumers could fare better than those that have to absorb those higher costs on their own.