The stock market reversed early gains and turned in slight losses Tuesday afternoon. Investors are cautiously positive and have high levels of liquidity as profits begin to trickle in. Earnings of the major banks varied, with contrasting results from market leaders. Dow component Travelers (TRV) suffered heavy losses following winter storms.
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January’s Empire State manufacturing index came in at a dismal -32.9 vs. -8.1 after the -11.2 in December. The low number flashes a sign of recession.
The New York Fed polls manufacturing managers about how busy they are, their view of the future, commodity prices and their input on inflation. The Fed and the market watch the results for inflation signals.
The S&P 500, Nasdaq and Russell 2000 posted small losses. The Dow Jones Industrial Average fell more than 1%. Volume on the NYSE and Nasdaq was slightly up from the same time on Friday.
Mixed January signals
Major indices posted gains at the start of the year, with small caps leading the pack, up more than 7% year-to-date in January. 2023 “Value stocks” are in demand after losing growth status during the 2022 bear market. Major themes may take longer to evolve, suggesting continued caution but positive outlook.
The Dow is holding above its 50-day and 21-day exponential moving averages. The S&P 500 found support at its 200-day moving average on Friday and the Nasdaq remains above its 50-day line.
The tech-heavy Nasdaq 100-tracking Invesco QQQ trust ETF (QQQ) gained 0.1%.
Crude oil jumped 0.5% above the $80 level at $80.27 a barrel.
Bulls are looking for a run to the $100 psychological level as they keep an eye on Ukraine. The war could flare up as we approach the spring months. The Energy Select Sector SPDR ETF (XLE) was unchanged. Natural gas was up 6.5%, but is still below $4 per million UK thermal units.
The 10-year Treasury yield added 2 basis points to 3.52%. The odds of a 25 basis point hike at the February Fed meeting rose to 93.2%. That would push the fed funds rate into the range of 4.5%-4.75%, according to the CME Group FedWatch Tool.
The Innovator IBD 50 ETF (FFTY) remained unchanged.
European equity markets were mixed, with the German DAX up 0.4% and the Paris CAC 40 up 0.5%. The London FTSE lost 0.1% in afternoon trading.
Stock Market Movers: Gaming Stock Pops, Insurance Stock Tanks
Dow Jones component Goldman Sachs (GS) fell 7.5% after missing Q4 top- and bottom-line estimates. Investment banking expenses were down 48% compared to the same quarter in 2021, due to lower equity and debt insurance income. The meager results represent the biggest miss in 10 years. The bank stock is the biggest loser of the Dow and S&P today.
Bank stock is in a double bottom, pulling back from the 378.66 buy point. A new base emerged from a cup-with-handle base after hitting a high 389.58 in November. Equities found support from the 50-day moving average. GS is on track for its biggest percentage drop since January 18, 2022, when it fell 6.97%.
Travelers also weighed on the Dow as morning losses widened, down 6.1% after major losses from December’s winter storms. The property and casualty insurer simultaneously plummeted below the 21-day, 50-day and 200-day moving averages.
Morgan Stanley (MS) was up 6.3% in heavy volume after reporting better-than-expected Q4 EPS and sales.
The investment banking and asset management company increased their loan loss provision from $5 million in the prior year to $87 million. The stock was trading in a long choppy base with support at its 50-day line. It leads the S&P 500. The company pays a hefty 3.4% annualized dividend yield to shareholders.
Gaming and entertainment stock roblox (RBLX) was up 13% in heavy volume after reporting bookings in December that beat expectations.
Supplier of business cloud solutions CDW (CDW) was up 1.2%, breaking out of a long cup-with-handle base to reach the buy point of 197.10 on the MarketSmith chart.
Futures: Market rally pauses as Tesla jumps
Exchange movers: payment stock higher on upgrade
Tesla (TSLA) gained 5.2%, though several analysts lowered price targets.
Payment technology provider Worldwide payments (GPN) rose 3.3% after Morgan Stanley upgraded the stock to overweight of equal weight and raised its price target from 124 to 135.
Chinese e-commerce company alibaba (BABA) turned in early morning gains, down 1.6% after activist Ryan Cohen pressured Alibaba to speed up and boost its share buyback program.
Crypto-related stocks are making a comeback with Bitcoin
Bitcoin futures are up 8.7% to USD 21,250.
Cryptocurrency related exchange Silvergate capital (SI) boomed more than 9%, despite missing Q4 EPS of 27% year-over-year. Management pointed out that the industry is going through a “transformative shift.” It reported a loss of $1 billion, above analyst estimates.
Fintech company in cryptocurrency Coin base (COIN) soared 4.1% as bitcoin posted another strong day.
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