Wall Street traded substantially lower as investors digested a mixed bag of corporate earnings and awaited the Federal Open Market Committee’s (FOMC) latest monetary policy decision — and more in Wednesday’s stock market recap.
The major indexes recovered some of their losses as the FOMC stated interest rates will remain unchanged as the recovery speed in economic activity and employment has moderated in recent months. However, losses accelerated into the closing bell as the major indexes suffered their biggest losses in three months.
The Nasdaq fell 2.6% with the afternoon low reaching 13,192.
The S&P 500 also dropped 2.6% following the second-half pullback to 3,732.
The Dow plummeted 2.1% with the late-day low tagging 30,206.
The Russell 2000 stumbled 1.9% after trading to a morning low of 2,088.
Communication Services and Consumer Discretionary were the weakest sectors after tumbling 3.2% and 3.1%, respectively. There was no sector strength.
Shares of GameStop Corp. (NYSE: GME) skyrocketed 135% as the frenzy continues to drive the stock up on a massive short squeeze. The stock has become a favorite of online traders who target companies highlighted on social media sites like the Reddit forum WallStreetBets.
The battle between retail traders and Wall Street hedge funds made major headlines throughout the week with huge winners and losers on both sides.
Tesla Inc. (Nasdaq: TSLA) will announce quarterly results after the close with Wall Street mainly focused on the company’s growth outlook for 2021. The company is expected to report a profit of $1.01 a share on revenue of $10.32 billion. The high estimate is at $1.43 a share with the low forecast at 61 cents a share and would equate to a 42-cent beat or a 50-cent miss.
The company beat forecasts in the past four quarters by 18, 48, 29 and seven cents a share. There are 22 analysts that cover the stock with four Strong Buy ratings, four Buys, eight Hold and six Underperform recommendations.
Earlier this month, Tesla said it delivered 180,570 electric vehicles in the fourth quarter and produced 179,757 vehicles total. The company also said it delivered 499,550 vehicles in 2020 versus its recent guidance of 500,000 vehicles, and produced 509,737 total.
From the global stock market recap, European markets closed lower across the board.
The Belgium20 sank 2.1% and Germany’s DAX 30 tanked 1.8%. The UK’s FTSE 100 gave back 1.3% while France’s CAC 40 and the Stoxx 600 fell 1.2%.
Asian markets were mixed.
South Korea’s Kospi declined 0.7% and Australia’s S&P/ASX 200 was down 0.6%. Hong Kong’s Hang Seng was lower by 0.3%. Japan’s Nikkei added 0.3% and China’s Shanghai edged up 0.1%.
MBA Mortgage Applications dropped -4.1% last week following the -1.9% slide in the prior week. The 12-month pace of applications slowed slightly to 56.8% year-over-year versus 59.1% previously. The refi component fell -5% after the prior -4.7% decline, with the index dipping to a 83.4% year-over-year clip versus 86.7% previously. The purchase index was down -4% after posting gains in the prior two weeks. The 12-month rate edged up to 16% year-over-year versus 14.7% previously. The 30-year mortgage rate inched up to 2.95% while the 5-year ARM dipped to 2.60% from 2.76% previously.
Durable Goods Orders rose 0.2% in December, with November orders readjusted to a 1.2% gain from 1%). Most of the misses were in transportation orders, which declined -1% after rising 1.9% previously. Excluding transportation, orders were up 0.7% versus the prior 0.8% gain. Defense orders dropped -5.3%. Nondefense capital goods orders — excluding aircrafts — increased 0.6% following an upwardly revised 1% increase. Shipments jumped 1.4% versus the prior 0.4% increase. Nondefense capital goods shipments were up 0.5%, the same as November. Inventories dipped -0.2% following the prior 0.9% surge. The inventory-sales ratio slid to 1.68 from 1.7.
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) was up for the third time in four sessions after testing an intraday high of $154.50. Fresh and lower resistance from early November at $154.50-$155 was tapped but held. A close above the latter would signal ongoing strength towards $156-$156.50.
New support is at $153.50-$153 followed by $152-$151.50.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was up for the third time in four sessions after closing on the session high of 37.21. Prior and lower resistance from late October at 37-37.50 was breached and failed to hold.
New support is 36-35.50 followed by 34.50-34.
The Wilshire 5000 Composite Index (NYSE: WLSH) was down for the second straight session following the morning tumble to 39,605. Prior and upper support at 39,750-39,500 was breached but held. A move below the latter would indicate continued weakness towards 39,250-39,000.
Lowered resistance is at 40,250-40,500 followed by 40,750-41,000 with Tuesday’s all-time peak at 41,097.
RSI (relative strength index) is in a downtrend with key support at 50 failing to hold. Continued closes below the latter would indicate additional weakness towards 45-40 and levels from early November. Resistance is at 55-60.
The Communication Services Select Sector SPDR (NYSE: XLC) had its seven-session losing streak snapped following the intraday pullback to $67.44. Fresh and upper support is at $67.50-$67 was tripped but held. A close above the latter would suggest further weakness towards $66.50-$66 and the 50-day moving average.
Resistance is at $69-$69.50 with Tuesday’s record peak at $70.30.
RSI is back in a downtrend with upper support at 55-50 failing to hold. A drop below the latter would indicate additional weakness towards 45-40 and levels from earlier this month. Resistance is at 60.
Check back after the closing bell for the most important news and numbers in the WealthPress stock market recap.