ECONOMIC SILUET: Nasdaq closes in correction territory | P&G, Bank of America’s earnings beats

Rabu, 19 Januari 2022

Nasdaq closes in correction territory | P&G, Bank of America’s earnings beats | Inflation could boost these stocks

WED, JAN 19, 2022

EVENING BRIEF

AS OF WED, JAN 19, 2022 • 05:01 ET

DJIA		35028.65
		-0.96%	-339.82

S&P 500		4532.76
		-0.97%	-44.35

NASDAQ		14340.25
		-1.15%	-166.64

Most Active

DOW
NAME	LAST	CHG	%CHG
AAPL	166.23	-3.57	-2.10%
MSFT	303.33	+0.68	+0.22%
INTC	53.62	-1.14	-2.08%

S&P 500
NAME	LAST	CHG	%CHG
F	22.45	-1.93	-7.92%
AAPL	166.23	-3.57	-2.10%
BAC	46.44	+0.18	+0.39%

NASDAQ
NAME	LAST	CHG	%CHG
AAPL	166.23	-3.57	-2.10%
AMD	128.27	-3.66	-2.77%
NVDA	250.67	-8.36	-3.23%

EDITOR'S NOTE

The Nasdaq Composite is officially in correction territory.

The technology-focused index lost 1.15% on Wednesday, dragging it 10.7% from its most recent record close in November 2021.

Rising government bond yields are the culprit of the Nasdaq's weakness in 2022. The U.S. 10-year Treasury hit 1.9% earlier on Wednesday, its highest level since December 2019. The bond rate has rallied nearly 40 basis points this year as investors prepare for an aggressive rate-hiking cycle from the Federal Reserve in order to combat inflation.

Technology stocks are disproportionally affected by rising interest rates as their future earnings appear less attractive to investors. Pandemic-era winners like Zoom Video have pulled the growth-centered index into its correction.

"I would call what we are experiencing in rates markets a healthy case of indigestion. … Those moments of pivot from rates that were, in the second half of last year, stable or even declining, into one where they are rising is bound to cause ramifications in market volatility," said Lauren Goodwin, economist and director of portfolio strategy at New York Life Investments.

"Any asset class or sector or even security that struggles to pass inflation on to consumers or is more rate sensitive is going to be more impacted by these moves than others," she added.

The other major indexes continued their weak streak on Wednesday as investors looked past better-than-expected earnings. Strong results from Procter & Gamble and UnitedHealth couldn't hold up the Dow Jones Industrial Average, which fell nearly 340 points. The S&P 500 declined close to 1%.

Earnings season continues on Thursday with key reports from American Airlines and Netflix.

Of the 44 S&P 500 companies that have reported quarterly results, nearly 73% have topped Wall Street's expectations as of Wednesday's close, according to FactSet.