Closing Stock Market SummaryToday's trade looked a lot different at the open compared to where things ended up. Valuation concerns following Microsoft's (MSFT 240.61, -1.43, -0.6%) disappointing fiscal Q3 outlook and expected growth deceleration for its Azure business fueled a broad retreat to kick off the session.
Investors also had a negative reaction initially to results and/or guidance from the likes of Dow component Boeing (BA 212.68, +0.70, +0.3%), Texas Instruments (TXN 175.04, -2.00, -1.1%), Kimberly-Clark (KMB 132.06, -2.57, -1.9%), and Norfolk Southern (NSC 242.97, -12.91, -5.1%). This added to the early weakness and the sense that the market might have gotten ahead of itself with the January rally.
There was also an element of geopolitical angst in play after Germany and the U.S. reached an agreement to supply tanks to Ukraine for its fight against Russia.
Sentiment started to shift, however, when buyers showed up fairly quickly after the S&P 500 slipped below its 200-day moving average (3,961). Most stocks either narrowed their losses or completely recovered and closed the session with a gain. The Invesco S&P 500 Equal Weight ETF (RSP) was down 1.4% at its low for the day, but managed to close with a 0.2% gain.
Even Microsoft, which had been down as much as 4.6%, briefly tipped into positive territory before settling with a slim loss.
The resilience to early selling efforts became its own upside catalyst and the rebound effort picked up steam in the afternoon trade, likely driven by some short-covering activity and a fear of missing out on a potential breakout move. The main indices ultimately closed near their best levels of the day, which had the S&P 500 above the 4,000 level and the Dow Jones Industrial Average in positive territory.
Market internals highlight the strong reversal seen today. Early on, decliners led advancers by a 4-to-1 margin at the NYSE and a nearly 3-to-1 margin at the Nasdaq. At the close, advancing issues had the lead over decliners by a slim margin at both the NYSE and the Nasdaq.
Roughly half of the 11 S&P 500 sectors closed with a gain led by financials (+0.7%) thanks to an earnings-driven gain in Capital One (COF 116.09, +9.58, +9.0%). The defensive-oriented utilities sector (-1.3%) was the worst performer and the only sector to move more than 1.0%.
Notably, the Russell 2000 (+0.3%) and S&P Mid Cap 400 (+0.3%) outpaced the three main indices today to close with a modest gain.
- Nasdaq Composite: +8.1% YTD
- Russell 2000: +7.3% YTD
- S&P Midcap 400: +6.5% YTD
- S&P 500: +4.6% YTD
- Dow Jones Industrial Average: +1.8% YTD
Reviewing today's economic data:
- Weekly MBA Mortgage Applications Index 7.0%; Prior 27.9%
- Weekly EIA Crude Oil Inventories +0.533M; prior +8.41M
Looking ahead to Thursday, market participants will receive the following economic data:
- 8:30 ET: Advance Q4 GDP (consensus 2.6%; prior 3.2%), advance Q4 Chain Deflator (consensus 3.2%; prior 4.4%), December Durable Orders (consensus 2.9%; prior -2.1%), Durable Orders ex-transportation (consensus -0.2%; prior 0.2%), weekly Initial Claims (consensus 205,000; prior 190,000), Continuing Claims (prior 1.647 mln), December advance goods trade deficit (prior -$83.30 bln), December advance Retail Inventories (prior -0.3%), and December advance Wholesale Inventories (prior 1.0%)
- 10:00 ET: December New Home Sales (consensus 614,000; prior 640,000)
- 10:30 ET: Weekly natural gas inventories (prior -82 bcf)
Valero Energy (VLO), Comcast (CMCSA), Archer-Daniels (ADM), American Airlines (AAL), Dow (DOW), Northrop Grumman (NOC), Southwest Air (LUV), Mastercard (MA) and Blackstone (BX) are some of the notable names reporting earnings ahead of tomorrow's open.