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Wall Street drops as bargain-hunting loses steam

Stock MarketsJan 20, 2022 08:26PM ET
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© Reuters. FILE PHOTO: The Nasdaq logo is displayed at the Nasdaq Market site in Times Square in New York City, U.S., December 3, 2021. REUTERS/Jeenah Moon/File Photo

By Lewis Krauskopf, Bansari Mayur Kamdar and Shreyashi Sanyal

(Reuters) - Wall Street's main indexes ended sharply lower on Thursday and a rally in U.S. stocks evaporated late in the session as investors considered whether equities were bargains after a sell-off to start the year that has seen the Nasdaq fall into correction territory.

Major U.S. indexes had been gaining solidly for much of the day, following a steep drop to start the week.

The Nasdaq on Wednesday closed more that 10% below its November all-time high, confirming it was in a correction. The tech-heavy index has now fallen nearly 12% from its record high and on Thursday closed at its lowest level since June.

“There seems to be a whole lack of conviction," said Randy Frederick, vice president of trading and derivatives for Charles Schwab (NYSE:SCHW). "The dip-buyers step in, but then they run out of momentum.”

The Dow Jones Industrial Average fell 313.26 points, or 0.89%, to 34,715.39, the S&P 500 lost 50.03 points, or 1.10%, to 4,482.73 and the Nasdaq Composite dropped 186.24 points, or 1.3%, to 14,154.02.

Of 11 major S&P 500 sectors, 10 finished lower, with the consumer discretionary sector falling 1.9%. Utilities eked out a 0.1% gain.

Putting a further damper on growth stocks, shares of Peloton Interactive (NASDAQ:PTON) tumbled nearly 24% after CNBC reported that the exercise bike maker is pausing production of its connected fitness products as demand wanes and the company looks to control costs. Peloton was one of the mainstays of the stay-at-home trade in 2020.

After the bell, shares of Netflix (NASDAQ:NFLX) dropped sharply after the company fell short of Wall Street forecasts for new subscribers at the end of last year and offered a weaker-than-expected forecast for early 2022.

Stocks have gotten off to a rocky start in 2022, as a fast rise in Treasury yields amid concerns the Federal Reserve will become aggressive in controlling inflation has particularly hit tech and growth shares. The benchmark S&P 500 is down nearly 6% so far this year.

"I just think we're in for a kind of rocky period here for the month of January," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. "Valuations are high, rates are going up, the outlook is murky -- there's more to worry about now than there was several months ago."

Investors are also turning to fourth-quarter earnings reports as they start to roll in.

Shares of Travelers (NYSE:TRV) Cos rose 3.2% after the property and casualty insurer reported a record quarterly profit.

Baker Hughes shares climbed 1.6% after the company reported an adjusted quarterly profit and topped analysts' earnings expectations as higher energy prices fuel demand for its equipment and services.

Data on Thursday showed the number of Americans filing new claims for unemployment benefits unexpectedly rose last week, likely as a winter wave of COVID-19 infections disrupted business activity.

The NYSE Tick index, which measures stocks making an uptick and subtracts stocks making a downtick, plunged to a low of -2,007 late in the session. That was the sixth lowest intraday tick in history using Refinitiv data back to early 1989.

Declining issues outnumbered advancing ones on the NYSE by a 2.75-to-1 ratio; on Nasdaq, a 2.39-to-1 ratio favored decliners.

The S&P 500 posted 12 new 52-week highs and eight new lows; the Nasdaq Composite recorded 18 new highs and 545 new lows.

About 11.9 billion shares changed hands in U.S. exchanges, compared with the 10.1 billion daily average over the last 20 sessions.

Wall Street drops as bargain-hunting loses steam
 

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Comments (11)
Ac Tektrader
Ac Tektrader Jan 21, 2022 1:48AM ET
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jakub....any good technical analysist could have predicted that,,, no big deal.
Ac Tektrader
Ac Tektrader Jan 21, 2022 1:13AM ET
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russian fear and incompetence is wy the Russian economy is in shambles.
Gershom Zvi
Gershom Zvi Jan 20, 2022 9:44PM ET
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Is that new February March 2020 or not ?
Chad RicherThanYou
Chad RicherThanYou Jan 20, 2022 9:55AM ET
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China and Russia are laughing at the weak embarrassing USA and their record trade deficits/ debt to GDP
Stanislav Angelov
Stanislav Angelov Jan 20, 2022 9:55AM ET
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Go buy evergrande stock then, or tencent, or baba lol
Chad RicherThanYou
Chad RicherThanYou Jan 20, 2022 9:55AM ET
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Stanislav Angelov I am ALL IN BABA
Jakub Menderski
Jakub Menderski Jan 20, 2022 9:51AM ET
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as i said last night. We will see big suprise in inexes highs today and tomorrow. Watch. That was just the beginning:
Jakub Menderski
Jakub Menderski Jan 20, 2022 9:50AM ET
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i said last night indexes will be bought whole night. And I was not wrong. That is just a beginning
PRAVIN PARMAR OK LIFE CARE
PRAVIN PARMAR OK LIFE CARE Jan 20, 2022 9:45AM ET
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new high
Alpha Omega
Alpha Omega Jan 20, 2022 9:44AM ET
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If the government prints extra money( as it has done the past 10 years) ,and distributes it it creates inflation which WORKS AGAINST YOUR POCKET. If you're making money in the stock market YOU'RE BREAKING EVEN  🍸 🚬 CHEERS 👍
Ron Love
Ron Love Jan 20, 2022 9:44AM ET
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Inflation rate 7% YoY but I made 140% last year in the market. Is that breaking even?
Bhagwan Dass
Bhagwan Dass Jan 20, 2022 9:44AM ET
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No big demand of any commodity.who is playing big game to take prices up
Alpha Omega
Alpha Omega Jan 20, 2022 9:39AM ET
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Stock investing is gambling. Think For Yourself. 👍
 
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