The Dow Jones Industrial Average gave back strong gains in today's stock market and reversed sharply lower in the final hour of trading. The Nasdaq composite and S&P 500 also turned decidedly into the red. The indexes appear to be continuing a recent pattern of strong opens followed by weak closes.
Stock Market Today
At the close, the Dow Jones industrials traded down 0.9%, gutting gains of over 1%. The Nasdaq composite and the S&P 500 fell 1.3% and 1.1%, respectively. Meanwhile, the Russell 2000 small-cap index sank 1.8%. Early data showed volume was running higher on the Nasdaq and lower on the NYSE vs. the close on Wednesday.
The indexes attempted to rebound on Thursday after this week's heavy sell-off but weakened substantially into the market close. Wednesday's session pushed the Nasdaq composite down more than 10% off its highs. A drop of this size generally qualifies as an intermediate-term correction. IBD changed the market outlook to "in correction" earlier in the week.
Additionally, the market is showing signs of distribution, including trading higher at the open, then selling off into the close. Given current market conditions, investors should be taking a defensive position and raising cash. Now is not the time to be aggressively buying stocks, but market engagement is still key. Be sure to watch the indexes daily for signs of support and accumulation.
U.S. Stock Market Today Overview |
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|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 34714.14 | -314.51 | -0.90 |
| S&P 500 | (0S&P5) | 4482.56 | -50.20 | -1.11 |
| Nasdaq | (0NDQC ) | 14154.02 | -186.24 | -1.30 |
| Russell 2000 | 200.77 | -3.68 | -1.80 | |
| IBD 50 | 38.64 | -0.82 | -2.08 | |
Last Update: 4:34 PM ET 1/20/2022 |
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According to Wednesday's The Big Picture column, "After breaching multiple support levels, it's difficult to determine where the stock market indexes could find a bottom. The Nasdaq might test its October low near 14,180. The S&P might test its November and December lows around 4500. The Dow is nearing the 200-day moving average, where it found support twice in December."
Stocks may have been hindered by initial jobless claims, which rose for the second straight week to 286,000 early Thursday. This was well above Econoday's forecast for 207,000 claims and follows the 52-year low of 188,000 made in December.
Netflix Falls On Earnings
Netflix reported fourth-quarter earnings after Thursday's close. Despite beating both top and bottom-line expectations, Netflix shares plummeted 11% in after-hours trading. Investors were disappointed that Netflix only added 8.28 million global paid net subscribers, falling below the streaming giant's expected 8.5 million net subscriber gain.
According to Refinitiv, the company earned $1.33 a share, beating estimates for 82 cents a share. Netflix reported $7.71 billion in sales, exactly in line with estimates.
Shares have slid below key moving averages, including the long-term 200-day line, in recent weeks while the RS line continues to weaken.
Dow Jones Today
The Dow Jones was boosted by strong gains in Travelers and Goldman Sachs, up 4.7% and 1.6% at one point, respectively. Insurance giant Travelers reported earnings ahead of the market open and easily beat EPS and sales estimates. The stock retook a 163.39 buy point in strong volume Thursday and remains above support at the 21-day and 50-day lines.
Goldman Sachs has had a difficult week, and is down more than 8%, despite Thursday's slim 0.2% gain. The firm was one of many major banks reporting earnings this week. The investment bank missed fourth-quarter profit expectations but exceeded sales estimates. Shares undercut the 200-day moving average on Tuesday and reached the lowest price since June.
Microsoft was also among top performers early on, but gains faded and it closed up just 0.6%.
Meanwhile, Apple surrendered early gains of nearly 2% to fall about 1% as shares struggled to hold support at the 10-week line. Apple is among the many major tech stocks reporting earnings next week. The iPhone maker will announce fiscal Q1 2022 financial results on Thursday after the market closes.
Stocks Making Notable Moves
Crude oil prices moved slightly lower on Thursday, down 0.7% to around $86 a barrel. However, the Energy Select Sector SPDR held up with a gain of 0.7%. The ETF is extended from a recent 59.51 flat base buy point.
Baker Hughes, an oil and gas drilling machinery company, gained 2% after reporting mixed results early today. Shares briefly rose above a 27.76 buy point of a cup base. Baker Hughes earned an adjusted 25 cents a share vs. a year-ago loss of 7 cents a share. The 25-cent EPS was below estimates for a profit of 28 cents a share. Sales of $5.5 billion were in line with estimates and results for the same quarter a year ago.
IBD 50 ETF
Elsewhere, the growth-focused Innovator IBD 50 ETF reversed gains of over 1% to a 2% loss. On the bright side, MarketSmith Growth 250 stock and shipping transportation stock Matson rallied 7% and broke out from a 93.27 cup-with-handle buy point. The Ocean transport leader rose in heavy volume after late Tuesday preannouncing Q4 EPS that well exceeded estimates.
Shares gapped up but faded from the buy point in afternoon trading. Shares feature a relative strength line that's also making a new high alongside the breakout, according to MarketSmith chart analysis, a bullish indicator.
"Continued strong demand for the China service was the primary driver of the increase," CEO Matt Cox said in a release. He forecasts demand will continue to remain "elevated" for the remainder of 2022.
Follow Rachel Fox on Twitter at @IBD_RFox for more Dow Jones and stock market commentary.
