Wall Street closed slightly lower on Tuesday, having traded in green earlier in the day. The technology and consumer discretionary sectors were a major drag on the broader market, with two mega-cap giants slipping on fourth-quarter performance and outlook. Energy prices went down with demand weakening in China. All three major indexes ended in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) remained virtually flat, falling 10.88 points to close at 33,136.37. Eleven components of the 30-stock index ended in positive territory, one remained unchanged, while 18 ended in negative.
The S&P 500 lost 0.4% or 15.36 points to close at 3,824.14. Six of the 11 broad sectors of the benchmark index ended in negative territory. The Energy Select Sector SPDR (XLE), the Technology Select Sector SPDR (XLK) and the Consumer Discretionary Select Sector SPDR (XLY) went down 3.5%, 1% and 0.6%, respectively, while the Communication Services Select Sector SPDR (XLC) progressed 1.3%.
The tech-heavy Nasdaq dipped 0.8% or 79.50 points to finish at 10,386.99.
The fear-gauge CBOE Volatility Index (VIX) increased 5.7% to 22.90. A total of 10.6 billion shares were traded on Tuesday, lower than the last 20-session average of 10.8 billion. Advancers outnumbered decliners on the NYSE by a 1.42-to-1 ratio. On Nasdaq, a 1.20-to-1 ratio favored advancing issues.
Apple and Tesla Weigh on the Market
After the pre-markets opened in the green, business on Wall Street was pulled down by shares of Tesla, Inc.
TSLA
and Apple Inc.
AAPL
performing badly. Both mega-cap companies weighed on the broader market and continued to follow the trend from 2022 when large-cap growth stocks were hit hard by the Fed raising interest rates.
Apple shares declined 3.74% and hit their lowest level since June 2021. This massive drop happened due to reports that it will cut production on weak demand as purchasing power wanes. Also, production cuts in a covid-ravaged China were a major concern. Apple became a significant drag on the technology sector as it became one of the worst-hit sectors of the day.
An even bigger drag was Tesla, which fell 12.24%, hitting its lowest level since August 2020, following disappointing fourth-quarter deliveries. The company said that its deliveries were hit by ongoing logistical issues and growing demand concerns. Tesla, which is still the world’s most valuable carmaker even after shedding 65% of its value last year, continues to be on its tumultuous journey and became the single biggest drag on the consumer discretionaries sector at the very offset of a new year.
This bleak sentiment may continue in 2023 as the Fed seems poised to continue to hike rates in the coming months, stoking fears that the U.S. economy may fall into a recession. Apprehensive investors keenly await the minutes of the Fed December meeting to gauge the central bank’s mood.
Energy Prices Slide on Weak Demand From China
Oil prices dropped 4% in volatile trade on Tuesday as reports emerged on demand weakening in China, the world’s largest oil importer. The Energy Select Sector SPDR (XLE) slid 3.5% on the first day of the new year after a blockbuster 2022. Brent crude fell $3.81, or 4.4%, to settle at $82.10/barrel, the largest single daily decline in more than three months. WTI crude fell $3.33 to settle at $76.93/barrel, a 4.1% loss, its biggest fall over a month. Both benchmarks had risen $1 a barrel early in the session before reversing course.
Consequently, shares of ConocoPhillips
COP
and Exxon Mobil Corporation
XOM
fell 4.1% and 3.4%, respectively. Both carry a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Economic Data
The U.S. Census Bureau reported that Construction spending for November 2022 increased 0.2% from October. The October numbers were revised up to a 0.2% fall from a previously reported 0.3% fall.
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