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S&P 500 on Back Foot as Goldman Leads Rout in Financials

Stock MarketsJan 18, 2022 03:43PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com – The S&P 500 fell Tuesday, paced by a slump in Goldman Sachs that triggered a rout in financials after the investment bank’s quarterly results fell short of expectations.

The S&P 500 fell 1.8%, the Dow Jones Industrial Average slipped 1.5%, or 542 points, the Nasdaq lost 2.5%.

Goldman Sachs (NYSE:GS) continued the wave of mostly underwhelming quarterly results from major Wall Street banks after missing expectations on the bottom line as revenue declined and expenses rose. Its shares fell 7%.

This earnings miss triggered further selling in Wall Street banks. Morgan Stanley (NYSE:MS), which reports quarterly results on Wednesday, was down more nearly 5%, while JPMorgan (NYSE:JPM) added to losses from a week earlier, down more than 4%.

A jump in Treasury yields, typically a tailwind for banks, failed to stem the selling, but market participants continue to bet that higher interest rates will ultimately support cyclical sectors of the market such as financials and energy.

“We also see more opportunities in select cyclical and growth sectors, driven by the tailwinds from continued economic growth, a higher interest rate environment, stronger commodity prices, and our preference for higher-quality companies amid many uncertainties in 2022,” Wells Fargo said in a note.

The selloff in tech stocks, meanwhile, showed no sign of abating, as Meta Platforms (NASDAQ:FB) and Alphabet (NASDAQ:GOOGL) led the sector to the downside.

Microsoft (NASDAQ:MSFT) fell more than 2% after the technology giant revealed a $69 billion acquisition of struggling video game company Activision Blizzard (NASDAQ:ATVI), which soared 26%.

”Acquiring Activision will help jump start Microsoft’s broader gaming endeavors and ultimately its move into the metaverse with gaming the first monetization piece of the metaverse in our opinion,” Wedbush said in a note.

Alibaba (NYSE:BABA) slipped more than 2% as the White House is reportedly is looking into the Chinese tech firm’s cloud business practices, particularly the storage of data from U.S. clients, to establish if it poses a risk to U.S. national security.

The recent sea of red on Wall Street has been attributed to concerns that elevated inflation will pressure the Federal Reserve to raise rates and tighten monetary policy faster than expected.

“We are seeing broad-based de-risking once again this morning, as traders and investors remain focused on inflationary pressures and potential Fed action just ahead,” Janney Montgomery Scott said in a note. “The Street has priced in up to 4 rate hikes this year, but concern is growing that something must be done sooner than anticipated.”

S&P 500 on Back Foot as Goldman Leads Rout in Financials
 

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Comments (6)
Ac Tektrader
Ac Tektrader Jan 18, 2022 6:39PM ET
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the markets are signaling a possible significant rally over the next 48 hrs. then a retest of short term lows......there is a dire technical signal that has appeared on the daily chart for the S&P...time will tell.
Ac Tektrader
Ac Tektrader Jan 18, 2022 6:25PM ET
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fiat currency is alive and well ..with so many touting gold it maybe time to Short gold in the short term.
Casador Del Oso
Casador Del Oso Jan 18, 2022 3:59PM ET
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VIX 60 coming soon.
Stan Smith
Stan Smith Jan 18, 2022 3:45PM ET
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Goldman Lost $500MM Trading Stocks In Q4 and It Quietly Sold Even More Billions In Equities. Shhh...don't let the bag holders know!
Mitchel Pioneer
Mitchel Pioneer Jan 18, 2022 3:15PM ET
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200 points in losses miraculously vanish from the system.  "Rallies" occur without inhibition, yet every loss is mitigated.  Only in the flagrantly manipulated, biggest investment JOKE in the world, the US Ponzi Scheme.  Charles Ponzi would cry tears of joy if he could see the ultimate incarnation of his work in action.
Chad RicherThanYou
Chad RicherThanYou Jan 18, 2022 3:10PM ET
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Total asset price collapse due to a debt market crisis is coming. Get into gold and silver. China will announce their digital yuan is backed by Gold reserves. You’re welcome for the warning.
Stan Smith
Stan Smith Jan 18, 2022 3:10PM ET
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Agreed...Fiat currencies are depreciating at an alarming rate. Just buy physical Gold and Silver and forget about all the market noise and stock Shills. You will be handsomely rewarded when this financial farce implodes
 
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