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Entrepreneur
Kurra Bewarse
Username: Entrepreneur

Post Number: 3957
Registered: 05-2011
Posted From: 24.164.46.35

Rating: N/A
Votes: 0

Posted on Friday, January 21, 2022 - 2:20 pm:   

Midday Market Summary: Sellers have a tight grip on the market

The S&P 500 is down another 1.0%, as the market struggles to overcome relentless selling pressure, which has Netflix (NFLX 400.94, -107.44, -21.1%) tumbling over 20% on disappointing Q1 guidance. Today, the benchmark index has been down as much as 1.4% and up as much as 0.3%.

The Dow Jones Industrial Average (-0.5%) and Russell 2000 (-0.6%) are down modestly while the Nasdaq Composite underperforms with a 1.4% decline.

Eight of the 11 S&P 500 sectors are trading lower, with communication services (-2.2%), consumer discretionary (-1.6%), energy (-1.6%), financials (-1.1%), and materials (-1.1%) down more than 1.0%.

Accordingly, investors have assumed a defensive posture: the consumer staples (+0.3%), utilities (+0.3%), and real estate (+0.4%) sectors are trading higher, and the 10-yr yield is trading lower by eight basis points to 1.75% in a flight to safety.

Regarding Netflix, the company forecasted slower paid subscriber growth for Q1, as well as a smaller operating margin compared to last year's quarter amid higher programming costs. The latter, combined with downside Q1 EPS guidance from PPG Industries (PPG 156.84, -2.86, -1.8%), has tugged on profit-margin concerns.

Netflix, like Peloton (PTON 27.03, +2.79, +11.5%) yesterday, has fueled a sense of caution in investing in highly-valued growth stocks due to the potential for huge losses if they disappoint with their growth stories -- even as many growth stocks trade at 52-week lows.

Furthermore, the inability to sustain any sort of rebound effort has been detrimental for risk sentiment. Notably, the S&P 500 peaked above its flat line earlier today after finding technical support just below its 200-day moving average (4429). Traders might be watching to see if the benchmark index holds this level on a closing basis.

In other corporate news, Intel (INTC 52.37, +0.33, +0.6%) announced plans for an initial investment of more than $20 billion in the construction of two chip factories in Ohio. CSX (CSX 34.09, -1.16, -3.3%) beat top and bottom-line estimates, but shares are down 3% despite the good news.

Today's economic data was limited to the Conference Board's Leading Economic Index for December, which increased 0.8% (Briefing.com consensus 0.8%) following a revised 0.7% increase (from 1.1%) in November.

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