Stocks Recover a Bit After Yesterday’s Sell-Off
5:04 pm Wednesday, January 19th, 2022
Wall Street’s main indexes rose on Wednesday after upbeat results from a host of companies partially offset a shaky start to the fourth-quarter reporting season, with the Nasdaq bouncing from its session low.
Today’s highs came shortly after the open, as high-profile earnings news and lower interest rates provided some much-needed relief for the market. Investors sold into the early strength, taking the market into the red, but they have since nibbled back into the market.
Eight of the 11 S&P 500 sectors are trading in positive territory, led by the counter-cyclical consumer staples (+1.3%), communication services (+1.3%), and utilities (+0.9%) sectors. The financials (-0.8%), consumer discretionary (-0.1%), and energy (-0.1%) sectors hold modest declines.
On the earnings front, Procter & Gamble (PG), UnitedHealth (UNH), Bank of America (BAC), and Morgan Stanley (MS) each beat EPS estimates.
Encouragingly, Bank of America and Morgan Stanley weren’t impacted as greatly as other banking peers by higher compensation costs while P&G still had the pricing power to overcome higher costs. P&G also upped its FY22 revenue guidance.
The decline in interest rates could be viewed as a supportive factor for the stock market right now, but they were trading lower when equities were trading at session lows. There could be some defensiveness behind the buying interest in Treasuries.
The 2-yr yield is down two basis points to 1.01% after flirting with 1.08% overnight, and the 10-yr yield is down three basis points to 1.84% after flirting with 1.90% overnight. The U.S. Dollar Index is down 0.2% to 95.57.
Separately, homebuilding stocks are underperforming despite better-than-expected housing starts and building permits data for December. The report was softer than the headline prints, as the increases were driven by multi-unit dwellings. KeyBanc Capital Markets downgraded several notable names in the space.
Housing starts increased 1.4% month-over-month in December to a seasonally adjusted annual rate of 1.702 million (consensus 1.650 million) while permits increased 9.1% month-over-month to 1.873 million (consensus 1.702 million).
