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Dow Slips as Earnings Fall Short of Expectations

Stock MarketsJan 27, 2021 02:14PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com -  The Dow fell Wednesday, as sea of red swept through Wall Street on mostly weaker quarterly earnings, while an unchanged Fed decision did little to alter market direction. 

The Dow Jones Industrial Average fell 1.30%, or 403 points. The S&P 500 was down 1.59%, while the Nasdaq Composite slipped 1.13%.

The Federal Open Market Committee kept its benchmark rate in a range of 0% to 0.25% and maintained its $120 billion monthly pace of bond purchases. The central bank reiterated that the path of the economy will "depend significantly on the course of the virus, including progress on vaccinations,"  though acknowledged that "the ongoing public health crisis continues to weigh on economic activity."

Major Dow component Boeing (NYSE:BA) fell 4% following a wider than expected quarterly loss of $15.25 per share. The loss was largely driven by an $8.3 billion hit relating the ground of the 737 Max and a delay in the 777-X program.

Starbucks (NASDAQ:SBUX) slumped more than 6% as the coffee chain reported U.S. same-store sales fell 5% in its fiscal first quarter owing to the impact of further restrictions to curb the spread of the virus.

Chipmakers were also under pressure, down more than 2%, paced by weakness in Advanced Micro Devices (NASDAQ:AMD) despite posting better-than-expected earnings of 52 cents per share.

Microsoft (NASDAQ:MSFT), however, bucked the trend, rising more than 1% after reporting earnings of $2.04 a share that markedly beat analyst estimates thanks to growth in its cloud business Azure.

The slew of earnings come ahead of quarterly reports from Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB) and Tesla (NASDAQ:TSLA) due after the markets close on Wednesday.

Heading into Tesla's report, analysts have earmarked guidance on deliveries as key to further support the electric vehicle's growth story.

"A positive guide on 2021 deliveries, combined with commentary that will reinforce the growth narrative, could serve as a positive catalyst for the stock, even despite its robust valuation," Credit Suisse (SIX:CSGN) said in a note.

Energy was the only sector in the green as oil prices turned positive as data showed weekly U.S. crude stockpiles unexpectedly dropped.  

Investor attention was also captivated by an ongoing short-squeeze on Wall Street, led by a cohort of mainly retail traders, coalescing on Reddit forums, who appear to bidding on stocks with short-interest that exceeds the float.

Melvin Capital and Citron Research, both of whom were sellers of GameStop (NYSE:GME), were forced to close positions on the video game retailer's shares with huge losses following a more than 700% rally in the stock.  

AMC Entertainment (NYSE:AMC) short sellers were also caught up in squeeze as the stock rallied more than 200%

Dow Slips as Earnings Fall Short of Expectations
 

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Comments (9)
Tenemos Avoir
Tenemos Avoir Jan 27, 2021 4:46PM ET
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Another look at the Biden bounce.
Nicolas Polania
Nicolas Polania Jan 27, 2021 4:17PM ET
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nada que el mercado no estuviera esperan, era obvio las cosas con boeing, el mercado esta nervioso por otras razones
Mario tragik
Mario tragik Jan 27, 2021 4:15PM ET
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fall short lol. okay, why not write dow slips because the sky is cloudy.
Rob Fordham
Rob Fordham Jan 27, 2021 3:56PM ET
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Ok yea boeing missed but that was to be expected they are not selling planes but Microsoft, and AMD blew away expectations so the market just is nervous due to all this GME stuff and some hedge funds are selling to cover that debacle is my guess
michael engel
michael engel Jan 27, 2021 3:01PM ET
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The DOW took out 14 TD SLs. The DOW will reach the cloud and bounce back up. The DOW  will build  PnF cause with Nov 9 high. This cause will send the DOW to targets further down south.
Aditya Aditya
Aditya Aditya Jan 27, 2021 3:01PM ET
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you 👌
Rob Fordham
Rob Fordham Jan 27, 2021 3:01PM ET
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So u shorting then?
Irvin Mermelstein
Irvin Mermelstein Jan 27, 2021 3:00PM ET
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I don't buy stocks that don't report earnings. This Robin Hood plague will end soon enough. This looks so much like the eve of the Great Crash in 1929, when everyone was playing the market comes to an and everyone was rich. The prices of stocks like AMC and GameStop are going to collapse. The shorts are making money today, which isn't supposed to happen under the RH "theory." And if the market has just a normal period of correction, I think these folks are more prone to panic selling them experienced investors.
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David Lousada
David Lousada Jan 27, 2021 3:00PM ET
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dont cry
Fomo Yolo
Fomo Yolo Jan 27, 2021 3:00PM ET
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C'mon, Irvin, you can still be on board...
Robert Cox
Robert Cox Jan 27, 2021 3:00PM ET
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This movement just creates a better start for a short position. Eventually, GME will sell off and the people following the Reddit posts will lose heavily.
Ehrin Poklen
Ehrin Poklen Jan 27, 2021 3:00PM ET
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Yeah because you were around in 1929 LOL??
Ehrin Poklen
Ehrin Poklen Jan 27, 2021 3:00PM ET
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Buy Bitcoin - Problem solved
Mike Nordic
MikeNordic Jan 27, 2021 2:57PM ET
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What earning fall? No earnings have fallen significantly. Even Boeing that was reported here here to have lower earning, they were not even marginally different from what was expected. Wall Street is manipulating the market clearly. After GME they want to short squeeze the whole market.
Ronald Warren
Ronald Warren Jan 27, 2021 2:57PM ET
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Mike. Boeing lost 15.00 a share. Estimates were -$1.50.
Rob Fordham
Rob Fordham Jan 27, 2021 2:57PM ET
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Ronald Warren who thought boeing would make money this quarter they cant sell planes surprised they did anything but they will
Jake Preston
Jake Preston Jan 27, 2021 2:49PM ET
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The end is near people......
Edward Chong
Edward Chong Jan 27, 2021 2:49PM ET
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yeap. a bull is coming haha.
John Patrick
John Patrick Jan 27, 2021 2:46PM ET
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40% of companies aren't declaring earnings either. I hope they are taken into consieration
 
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