The stock market closed lower yet again on Wednesday as corporate earnings were not strong enough to allay investor concerns about next week's scheduled Fed rate hikes. Tesla and Apple stock both fell Wednesday as technology and consumer discretionary stocks absorbed the brunt of the decline.
The Nasdaq composite fell 0.5% while the S&P 500 lost 0.2%. The Dow Jones Industrial Average was flat. The small-cap Russell 2000 index fell 0.3%.
Volume fell on the NYSE and the Nasdaq vs. the same time on Tuesday, according to early data.
It was the fourth straight down day on the Nasdaq and the fifth straight down day on the S&P 500. The Dow has managed to be more consistent and has lost only 2.9% over the past five trading sessions.
The yield on the benchmark 10-year Treasury note fell 11 basis points to 3.42%.
Crude oil fell 2.8% to $72.20 per barrel.
All 11 S&P sectors were mixed Wednesday, closing within one percentage point up or down.
With the Federal Reserve meeting set for next week, investors expect yet another round of aggressive rate hikes. Currently, the Street pegs the probability the Fed will raise rates by 0.5% in its meeting next week at 74.7%. Odds for a 75-basis-point hike are 25.3%, according to the CME FedWatch tool.
Stock Market Falls As Tech, Consumer Discretionary Slide
Mortgage applications fell 1.9% for the week while revised Q3 productivity rose a better-than-expected 0.8%. Q3 unit labor costs rose a smaller-than-expected 2.4%.
"If 2022 was about recognizing imbalances in the economy and starting to address them, we believe 2023 will be about setting ourselves up for what comes next as the economy and markets find their way back to steadier ground — even if the adjustment period continues," said Barry Gilbert, LPL Financial's asset allocation strategist, in the firm's 2023 outlook, released Wednesday.
The S&P Bank ETF lost nearly 6% in the last week, indicating that overly-aggressive rate hikes could trigger a recession.
Bank of America slid another 0.8% after dropping 4.3% Tuesday along with several other big banks.
Thor Industries reported first-quarter 2023 earnings that topped views early Wednesday. But the stock fell 4.8% as demand for RVs appears to be retreating from pandemic highs.
Lithium stocks climbed Wednesday as spot prices for lithium carbonate in China, the biggest EV market and a huge user of lithium, climbed to a record $84,000 per ton in November. The Benchmark Minerals' Lithium Price index has soared more than 180% in the past year. The precious metal was around 560,000 yuan, or $79,500, per ton this week in China, which also handles most of the world's lithium refining.
Lithium stock SQM climbed 1.6%.
Stock Market Movers And Shakers
Tesla fell 3.2% and was approaching its 52-week-low of 166.19, which it hit on Nov. 22.
Apple fell 1.4% as technology and consumer discretionary stocks led declines.
Campbell Soup jumped 6% after the company easily beat earnings estimates. It reported $1.02 earnings per share, easily beating Wall Street's consensus estimate of 87 cents a share. The stock is now extended past its buy zone from a cup-with-handle buy point of 51.73. It was the highest close since June 15, 2017, when it closed at 56.96.
Discount retailer Ollie's Bargain Outlet plunged 17.5% after missing earnings estimates for its October-ended quarter.
Exxon Mobil slid 0.2%, for a fifth straight decline after dropping out of its buy zone from a 105.67 entry. It's now trading below the 50-day moving average.
Meme stock GameStop plunged 4.8% ahead of third-quarter earnings after Wednesday's closing bell. Analysts expect another losing quarter. Losses are forecast to grow to $1.37 per share in 2023.
Cheap Stocks To Buy And Watch: 5 To Observe Right Now
Earnings On Deck: Costco, Lululemon, Broadcom
Gun maker Smith & Wesson Brands crashed 19.6% to a two-year low. The company reported October-quarter sales and earnings that missed estimates, according to FactSet.
Pinterest closed 0.3% lower after reporting the social media platform has entered into a long-term cooperation agreement with activist fund Elliott Investment Management. The deal includes the appointment of Elliott senior portfolio manager Marc Steinberg to the board.
Costco, Lululemon and Broadcom are set to report earnings Thursday.
Shares of Costco have fallen below the 50-day line as the retailer continues a steep decline.
The Innovator IBD 50 ETF gained 0.1%, lifted partly by gains in solar stock Enphase Energy and cosmetics retailer Ulta Beauty.
Ulta stock is extended past a 426.99 buy point from a cup with handle.
Follow Michael Molinski on Twitter @IMmolinski
