Traders work on the floor of the New York Stock Exchange during morning trading on January 17, 2023 in New York City.
Michael M. Santiago | Getty Images
The stock market was divided on Tuesday as investors struggled to continue building on the momentum from early 2023 and weighed the latest earnings results.
The Dow Jones Industrial Average lost 335 points, or 1%, dragged down by the drop in shares of Goldman Sachs. The Nasdaq Composite rose 0.2%. The S&P 500 flatlined.
Goldman fell about 6% after the bank reported its worst earnings miss in a decade in the fourth quarter. Its results were pressured by falling income from investment banking and asset management. Meanwhile, rival Morgan Stanley posted better-than-expected numbers thanks in part to record wealth management income. Its shares rose 6%.
These results came after other major banks such as JPMorgan and Citigroup reported mixed quarterly results.
About 7% of the S&P 500 has reported gains through Tuesday morning, according to FactSet. Of these companies, 70% have exceeded expectations. United Airlines will report its quarterly results after the bell.
Wall Street is coming off consecutive positive weeks to start the new year, but investors may have entered a hall of mirrors, according to Mike Wilson, chief US strategist at Morgan Stanley.
“This year’s recovery has been led by low-quality, heavily shorted stocks. However, there has also been a strong movement in cyclical stocks compared to defensive stocks. This movement, in particular, is convinced to investors that something is being lost and that they need to reposition themselves.” said Wilson.
“The truth is, it’s been a powerful shift, but we also recognize that bear markets have a way of fooling everyone before they’re over,” he added. “We are not biting into this false / bear market rally in particular because our work and process is so compelling on the downside and we trust it.”
Dow Jones Industrial Average YTD
Year to date, the Nasdaq Composite is leading a 6% rise as investors bought ailing tech stocks amid rising hopes of an improving outlook for growth stocks. The S&P 500 and Dow have advanced about 4% and 2%, respectively, since the beginning of the year.
The gains came on the back of the first crop of inflation-related data that investors saw as pointing to a contracting economy, hoping it will give the Federal Reserve justification to hold back interest rate hikes once month. Last week, the consumer price index for December showed that prices cooled by 0.1% from the previous month, but prices were still 6.5% higher than the same month last year. last year.