U.S. stock markets closed sharply lower on Wednesday on the back of several weaker-than-expected quarterly earnings results. Moreover, investors’ sentiment also took a hit after the U.S. Federal Reserve stated in its latest policy statement that the pace of economic recovery has moderated. All the three major stock indexes ended the day in red, marking their biggest daily percentage decline since Oct 28, 2020.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 2.1%, or 633.87 points, closing at 30,303.17, marking its longest losing streak since Feb 28, 2020. Notably, 26 components of the 30-stock index ended in red while 4 finished the day in green.
The tech-heavy Nasdaq Composite closed the day at 13,270.60, down 2.6% or 355.47 points, marking second consecutive day of losses, on the back of weak performance by large-cap technology stocks. The S&P 500 dipped 2.6%, closing the day at 3,750.77, continuing its two-day losing streak. The Communication Services Select Sector SPDR (XLC) and the Consumer Discretionary Select Sector SPDR (XLY) plunged 3.2% and 3.1%, respectively. Notably, all eleven sectors of the benchmark index closed in the negative zone.
The fear-gauge CBOE Volatility Index (VIX) was up 61.6% to 37.21. A total of 23.42 billion shares were traded on Wednesday, higher than the last 20-session average of 14.31 billion. Decliners outnumbered advancers on the NYSE by a 4.91-to-1 ratio. On Nasdaq, a 5.36-to-1 ratio favored declining issues.
Earnings Results Disappoint
Anthem, Inc. (ANTM – Free Report) came out with quarterly earnings of $2.54 per share, missing the Zacks Consensus Estimate of $2.57 per share. ()
The Boeing Co. (BA – Free Report) incurred adjusted loss of $15.25 per share for fourth-quarter 2020, much wider than the Zacks Consensus Estimate of a loss of $1.78. Moreover, the bottom line deteriorated from the year-ago quarter’s loss of $2.33. ()
Hope Bancorp, Inc. (HOPE – Free Report) came out with quarterly earnings of $0.23 per share, missing the Zacks Consensus Estimate of $0.25 per share. This compares to earnings of $0.34 per share a year ago. ()
Consequently, shares of Anthem, Boeing and Hope Bancorp dipped 7.2%, 4%, and 5.9%, respectively. Notably, Anthem carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Federal Reserve Sees Economic Recovery Moderating
In the latest FOMC Policy Statement, the U.S. Federal Reserve noted that in recent months, the pace of recovery in economic activity and employment has moderated with the weakness being concentrated in sectors which were most adversely affected by the COVID-19 pandemic. Notably, the Fed decided to keep the target range for federal funds rate at 0% to 0.25% and expected to maintain its “accommodative stance” of monetary policy.
Other Economic Data
The Energy Information Administration reported that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) for the week ending Jan 22, decreased by 9.9 million barrels per day from the previous week. However, crude oil inventories are above the five-year average by about 5%.
The U.S. Census Bureau reported that new orders for manufactured durable goods increased 0.2% in December, marking the eighth successive month of gains, compared to 1.2% growth in November (revised), missing the consensus estimate of 1.2% increase.
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