Wednesday, January 19, 2022

DJIA: 35,028.65, down 339.82
S&P 500: 4,532.76, down 44.35
Nasdaq: 14,340.25, down 166.65
Equity rout deepens; yields stabilize

U.S. stocks finished lower on Wednesday as jitters surrounding the prospect of tighter monetary policy overshadowed corporate earnings. The major averages fluctuated between gains and losses throughout the session as lingering inflationary concerns and a backdrop of higher Treasury yields continued to pressure sentiment. The S&P 500 shed 1%, slipping below its 100-day moving average, a closely watched technical level. The Nasdaq Composite fell 1.2%, dropping into correction territory, (defined as a 10% drawdown from its November peak). The tech-heavy benchmark is positioned for its worst month since March 2020 (-8.3% month-to-date). The Dow lost 339 points for its fourth straight daily decline, while the small-cap Russell 2000 slumped roughly 1.4%.

Nine of 11 S&P 500 sectors closed in negative territory, with Consumer Discretionary, Financials, and Tech the worst performers. Consumer Staples bucked the downtrend, with Procter & Gamble Co. up 3.4% following a boost to its organic growth forecast. In bank earnings, Morgan Stanley climbed 1.8% after topping consensus profit estimates amid an active quarter for dealmaking and surprise increase in equities-trading revenue. Meanwhile, Bank of America Corp. added 0.4% as a rebound in its loan growth helped fuel a bottom line beat. In other corporate news, Take-Two Interactive Software Inc. jumped 6.1% following an analyst upgrade.

Treasuries strengthened, with the yield on the 10-year note down four basis points (0.04%) to 1.84%. On the data front, housing starts posted a surprise increase in December, while building permits unexpectedly surged 9.1% during the period, the largest advance since January 2021. In commodities, West Texas Intermediate crude gained 1.2% to $86.47/barrel, a more than seven-year high.

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