The stock market closed sharply lower on Tuesday, led downward by the tech-heavy Nasdaq, as rising Treasury yields put pressure on stocks at the start of a busy week for earnings reports. Growth and technology equities were especially hard hit. The energy sector gushed higher, however.
The Nasdaq composite fell 2.6%. The composite is now trading below the 200-day moving average. The S&P 500 lost 1.8%. The Russell 2000 gave up more than 3%.
Volume shot up more than 12% on the NYSE and Nasdaq compared with Friday's trading.
The Dow Jones Industrial Average fell 1.5% and is now below the 50-day moving average. Last week, the index managed to hold at that level.
Rising Yields Hurt Stock Market
The yield on the benchmark 10-year Treasury note rose 9 basis points to 1.86%, the highest level since the start of the pandemic. As the Federal Reserve aggressively moves to counteract the surge in inflation, investors have started selling bonds, which consequently pushes yields higher.
U.S. Stock Market Today Overview |
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|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 35369.39 | -542.42 | -1.51 |
| S&P 500 | (0S&P5) | 4577.34 | -85.51 | -1.83 |
| Nasdaq | (0NDQC ) | 14506.90 | -386.85 | -2.60 |
| Russell 2000 | 207.84 | -6.47 | -3.02 | |
| IBD 50 | 40.73 | -1.71 | -4.03 | |
Last Update: 4:34 PM ET 1/18/2022 |
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The rise in yields has hindered the majority of stocks with high price-to-earnings ratios and any companies that rely on debt. As such, many technology and growth stocks have struggled.
Technology Select Sector SPDR (XLK) fell 2.5%, while the growth-focused Innovator IBD 50 ETF (FFTY) sold off 4%. Elsewhere, Financial Select Sector SPDR (XLF) fell 2.2% and is now back below a 40.96 buy point it cleared Jan. 7.
It was not all bad news, however. Oil and gas stocks climbed. The price of U.S. crude rose 2.7% to top $86 a barrel, the highest since October 2014. Occidental Petroleum (OXY), Royal Dutch Shell (RDSB), Cactus (WHD) all passed key buy points, but Cactus reversed lower.
Earnings Drag Financials Down
Dow component Goldman Sachs sold off 7%, dropping further below its 200-day moving average and to the lowest price since June. Goldman is the latest big bank to fall after reporting earnings. The investment bank missed fourth-quarter profit expectations.
Charles Schwab also missed earnings estimates and fell 3.5%. The stock remains extended from the 84.59 buy point of a flat base. Several major banks and financial firms are reporting earnings this week, a key week for the sector.
Activision Blizzard skyrocketed nearly 26% after Microsoft agreed to acquire the video game company in a deal valued at $68.7 billion. The deal gives Microsoft's growing gaming business a stable of major game titles such as Call of Duty and World of Warcraft.
Microsoft shares fell 2.4% and continued to work on a base with a 349.77 buy point.
Oil Stocks Shine Amid Gloom
NMI Holdings rose above a 25.70 buy point but fell back into its base.
Iqvia Holdings fell further below its 200-day line. Brown & Brown is trading below its 50-day line for the first time since Oct. 1. Alpha & Omega Semiconductor also is below the 50-day line.
Among pharmaceuticals, a fourth dose of Pfizer (PFE) and BioNTech's (BNTX) Covid shot is only partially effective against omicron, according to an Israeli study released Tuesday that sent the vaccine stocks diving. Both vaccine stocks fell. Pfizer stock lost 1.5% and BioNTech stock dropped 13.7% to below 170.
Meanwhile, rival vaccine maker Moderna had its own problems as the stock fell 8.9% on Tuesday.
