Market Snapshot
briefing.com
| Dow | 35111.16 | -518.17 | (-1.45%) | | Nasdaq | 13878.81 | -538.73 | (-3.74%) | | SP 500 | 4477.44 | -111.94 | (-2.44%) | | 10-yr Note | -27/32 | 1.840 |
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| | NYSE | Adv 586 | Dec 2658 | Vol 905.0 mln | | Nasdaq | Adv 946 | Dec 3305 | Vol 4.2 bln |
Industry Watch
| Strong: Utilities, Financials |
| | Weak: Communication Services, Consumer Discretionary, Information Technology |
Moving the Market
-- Meta Platforms (FB) sinks 25% on disappointing earnings results and guidance
-- Interest rates rise following ECB and Bank of England policy meetings
-- Growth stocks lag
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Stocks tumble as Meta disappoints and rates move higher
03-Feb-22 16:20 ET
Dow -518.17 at 35111.16, Nasdaq -538.73 at 13878.81, S&P -111.94 at 4477.44
[BRIEFING.COM] The S&P 500 fell 2.4% on Thursday, pressured by disappointing earnings results and guidance from Meta Platforms (FB 237.76, -85.24, -26.4%) and an increase in interest rates. The Nasdaq Composite dropped 3.7%, but the Dow Jones Industrial Average (-1.5%) and Russell 2000 (-1.9%) didn't fare as bad.
Meta's 26% drop reverberated throughout the growth-stock space, especially weighing on shares of companies scheduled to report earnings after the close like Amazon.com (AMZN 2776.91, -235.34, -7.8%) and Snap (SNAP 24.50, -7.57, -23.6%). The Russell 3000 Growth Index fell 3.7%, versus a 1.1% decline in the Russell 3000 Value Index.
There weren't any convincing efforts to buy the dip, and the longer this went on, the more it seemed to weigh on overall risk sentiment. Ten of the 11 S&P 500 sectors closed lower in a steady decline.
The S&P 500 communication services (-6.8%), consumer discretionary (-3.6%), and information technology (-3.1%) sectors fell between 3-7% amid weakness in the mega-cap stocks. The consumer staples sector (+0.01%) closed fractionally higher due to its defensive qualities.
Besides Meta, Qualcomm (QCOM 179.10, -9.10, -4.8%), Merck (MRK 79.01, -3.00, -3.7%), Honeywell (HON 191.75, -15.80, -7.6%), and Spotify (SPOT 159.76, -32.16, -16.8%) were other laggards following their earnings reports, while T-Mobile US (TMUS 120.78, +11.20, +10.2%) stood out with a 10% gain.
Interest rates moved higher following policy meetings from the European Central Bank (ECB) and the Bank of England. ECB President Lagarde expressed concerns about inflation and said she couldn't rule out a rate hike this year. The Bank of England raised its key lending rate by 25 basis points for the second consecutive meeting, and four of the nine voting members preferred a 50-bps increase.
The 2-yr yield rose four basis points to 1.19%, and the 10-yr yield rose six basis points to 1.83%. The U.S. Dollar Index fell 0.6% to 95.38 amid a stronger euro, which keyed off rate-hike expectations due to inflationary pressures. Crude futures topping $90 per barrel ($90.22, +2.05, +2.3%) fueled the inflation angst.
Today's losses tested the resolve of dip-buyers from the previous days, but investors could at least take solace in the S&P 500 closing above its 200-day moving average (4442). The Nasdaq 100, however, fell back below its 200-day moving average (15032).
Reviewing Thursday's economic data:
- The ISM Non-Manufacturing Index for January decreased to 59.9% (Briefing.com consensus 60.0%) from an upwardly revised 62.3% (from 60.0%) in December. The dividing line between expansion and contraction is 50.0%. The January reading marks the 20th straight month of growth for the services sector, albeit at a slightly slower pace.
- The key takeaway from the report is that growth moderated some for the non-manufacturing sector in January with Omicron and supply-related pressures seen in the slippage of indexes for production and employment, and the uptick in the supplier deliveries index, which is indicative of a worsening in the pace of deliveries.
- Initial jobless claims for the week ending January 29 decreased by 23,000 to 238,000 (Briefing.com consensus 245,000) while continuing claims for the week ending January 22 decreased by 44,000 to 1.628 million.
- The key takeaway from the report is the turn lower in initial claims, which suggests there has been an easing of the Omicron impact that contributed to the higher initial claims levels in recent weeks.
- Q4 nonfarm business sector labor productivity increased 6.6% (Briefing.com consensus 2.7%) with output increasing 9.2% and hours worked increasing 2.4%. Unit labor costs increased 0.3% as hourly compensation increased 6.9% versus the 6.6% increase in productivity.
- The key takeaway is that the healthy increase in productivity in Q4 helped keep unit labor costs in check, but it isn't necessarily resonating as a staying factor given the steady acknowledgment of rising labor costs heard from companies reporting Q4 earnings.
- Factory orders for manufactured goods decreased 0.4% m/m in December (Briefing.com consensus -0.4%) following an upwardly revised 1.8% increase (from 1.6%) in November. Shipments of manufactured goods jumped 0.4% after increasing 0.7% in November.
- The key takeaway from the report is the uptick in order growth for nondefense capital goods, excluding aircraft -- a proxy for business spending.
- The final IHS Markit Services PMI for January increased to 51.2 from 50.9 in the preliminary reading.
Looking ahead, investors will receive the Employment Situation report for January on Friday.
- Dow Jones Industrial Average -3.4% YTD
- S&P 500 -6.1% YTD
- Nasdaq Composite -11.3% YTD
- Russell 2000 -11.3% YTD
Crude futures top $90 per barrel
03-Feb-22 15:30 ET
Dow -380.57 at 35248.76, Nasdaq -431.81 at 13985.73, S&P -88.02 at 4501.36
[BRIEFING.COM] The S&P 500 continues to struggle with a 1.9% but is trading slightly off session lows (-2.2%).
One last look at the sector performances shows communication services (-6.4%), consumer discretionary (-3.0%), and information technology (-2.2%) down between 2-6%, while the consumer staples (+0.1%) outperforms with a modest gain.
WTI crude futures settled higher by 2.3%, or $2.05, to $90.22/bbl. |
