Stock Market

Dow Jones Closes Lower As Financial Stocks Get Hit; Nasdaq Ekes Out Slight Gain As Techs, Tesla Shine

The stock market erased early gains to close mostly lower, although the Nasdaq did eke out a slight gain. Weak earnings from Goldman Sachs (GS) and Travelers (TRV) dragged down financial stocks. Tesla (TSLA) led blue-chip advancers as weekly China vehicle registration showed an initial sales boost for the global EV giant.




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The Nasdaq composite gained 0.1% while the S&P 500 closed 0.2% lower. The Dow Jones Industrial Average was the worst of the major indexes, dropping 1.1%. The small-cap Russell 2000 index fell 0.2%.

Volume fell on the Nasdaq but rose on the NYSE, according to preliminary data.

The Dow is holding above its 50-day and 21-day exponential moving averages. The S&P 500 is holding above its 200-day moving average, and the Nasdaq remains above its 50-day line.

Techs Lead Stock Market

The S&P Technology Select Sector ETF (XLK) led all 11 S&P sectors, closing up 0.5%, while financials, industrials, materials and communications services were the worst-performing sectors.

While earnings season started just a week ago, so far investors are treating earnings as a negative. But Jeffrey Buchbinder, chief equity strategist at LPL Financial, says the pessimism “may be overdone.”

“Lackluster global growth, ongoing profit margin pressures from inflation, and negative currency impacts are likely to translate into a year-over-year decline in S&P 500 index earnings for the quarter,” said Buchbinder. “As always, guidance matters more as market participants look forward. The key question coming into this earnings season is whether the pessimism surrounding 2023 earnings has gone too far.”

The January Empire State manufacturing index came in at a dismal -32.9 vs. estimates for -8.1 after December’s -11.2 reading. The low number flashes a recessionary sign.

The New York Fed surveys manufacturing executives about how busy they are, their views of the future, commodity prices and their input on inflation. The Fed and the stock market watch the results for inflation signals.

The yield on the benchmark 10-year Treasury note rose 2 basis points to 3.53%. Odds for a 25-basis-point hike at the February Fed meeting rose to 93.2%. That would take the fed funds rate to the 4.5%-4.75% range, according to the CME Group FedWatch Tool.

Oil Prices Climb Above $80 Per Barrel

Crude oil prices rose 1.4% to $81 per barrel, the first time this year they have climbed above $80.

The Innovator IBD 50 ETF (FFTY) closed 0.2% lower.

Defense contractor Heico (HEI) broke out of a flat base, gaining 0.1% and closing just below its buy point. The stock is trading well above its 50-day and 200-day moving averages, according to MarketSmith.

Computer hardware and software distributor CDW (CDW) rose 1.4% and broke out of a flat base with a 197.10 buy point, according to MarketSmith.

Emerson Electric (EMR) gapped down below the 50-day line in heavy volume, triggering a sell signal. It announced that it’s buying National Instruments (NATI). National Instruments confirmed it received Emerson’s $53 per-share buyout bid, but stressed that it would continue its previously announced review of strategic options.

Tesla stock gained 7.4% Tuesday as weekly China vehicle registration data showed an initial sales boost for the global EV giant after it slashed China prices during the first week of January.

Tesla China EV registrations were 12,654 for in the week of Jan. 9-15, up 500% from 2,110 in the prior week. Overall sales of all passenger cars in China came in at 437,700 units in the week. That is down 14% vs. last year and up 50.5% vs. the previous week.

Tesla China rival BYD (BYDDF) continued to lead the field of automakers with 40,420 registrations.

TSLA stock continues to bounce from the Jan. 6 bear-market low of 101.81.

Goldman Falls On Lack Of Investment-Banking Deals

Dow Jones component Goldman Sachs dropped 6.4% after missing Q4 top- and bottom-line estimates. Investment banking fees fell 48% compared with the same quarter in 2021, due to lower equity and debt underwriting revenue. The paltry results represent the largest miss in 10 years. The bank stock was one of the Dow’s and S&P’s biggest losers today.

The banking stock was forming a double-bottom base, but today’s sell-off altered the chart. Shares are falling below the 50-day moving average.

Not all financial stocks did poorly. Morgan Stanley (MS) rocketed 5.9% in heavy volume after reporting better-than-expected Q4 EPS and sales.

The investment banking and wealth management firm raised its provision for credit losses to $87 million from $5 million in the prior year. The stock has been trading in a long choppy base with support at its 50-day line. It leads the S&P 500 today. The company pays a hefty 3.4% annualized dividend yield to shareholders.

Dow component Travelers dropped 4.6% after big losses from December’s winter storms. The property and casualty insurer plummeted below the 21-day and 50-day moving averages.

Stock Market Movers: Chip Stocks, Roblox, CDW, COIN

Chip stocks continued their rally Tuesday, with Lattice Semiconductor (LSCC), Allegro MicroSystems (ALGM), Axcelis Technologies (ACLS) and Broadcom (AVGO) all posting small gains. The chip industry is building on a tech rally that began this month and gained strength as lower inflation rates seemed to indicate the Fed may tame its aggressive rate-hike policy.

Gaming and entertainment stock Roblox (RBLX) popped 11.8% in heavy volume after reporting December bookings that beat expectations.

Cryptocurrency fintech company Coinbase (COIN) jumped 8.3% as Bitcoin posted another strong day. Bitcoin futures gained 1% Tuesday to $21,344 after Friday’s 11% jump.

Cryptocurrency-related bank Silvergate Capital (SI) reversed earlier gains but still closed up 1% on Tuesday. SI missed Q4 EPS estimates in a 27% year-over-year decline. Management pointed to the industry going through a “transformational shift.” The company reported a $1 billion loss, above analyst estimates.

Payment technology provider Global Payments (GPN) rose 3.5% after Morgan Stanley upgraded the stock to overweight from equal weight and raised its price target to 135 from 124.

Follow Michael Molinski on Twitter @IMmolinski

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