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Stock Market News for Jan 18, 2023

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Wall Street had a mixed session on Tuesday, primarily driven by the earnings reported by mega-cap banks. Chinese companies listed in the United States slumped on abysmal Chinese economic growth numbers for 2022. Two of the three major indexes ended in the red, while one ended in the green.

How Did the Benchmarks Perform?

The Dow Jones Industrial Average (DJI) fell 1.1% or 391.76 points to close at 33,910.85, snapping a four-session winning streak. Twenty-four components of the 30-stock index ended in negative territory, while six ended in positive.

The S&P 500 lost 0.2% or 8.12 points to close at 3,990.97, its highest level since Dec 13. Six of the 11 broad sectors of the benchmark index ended in negative territory. The Materials Select Sector SPDR (XLB), the Communication Services Select Sector SPDR (XLC) and the Industrials Select Sector SPDR (XLI) fell 1%, 0.9% and 0.9%, respectively, while the Technology Select Sector SPDR (XLK) rose 0.5%.

The tech-heavy Nasdaq increased 0.1% or 15.96 points to finish at 11,095.11, a seventh straight session gain.

The fear-gauge CBOE Volatility Index (VIX) decreased 0.7% to 19.36. A total of 11.1 billion shares were traded on Tuesday, higher than the last 20-session average of 10.8 billion. Advancers outnumbered decliners on the NYSE by a 1.17-to-1 ratio. On the Nasdaq, a 1.07-to-1 ratio favored advancing issues.

Goldman Sachs Pulls Down, Tesla Pushes Up

Shares of The Goldman Sachs Group, Inc. (GS - Free Report) plunged 6.4% after it reported fourth-quarter earnings of $3.32 per share, massively missing the Zacks Consensus Estimate of $5.25 per share. The mega-cap bank became the biggest drag on the market on Tuesday, almost single-handedly weighing down on the Dow Jones Industrial Average. The banks’ woes have been caused by the decline in its asset management revenues and investment banking — the one factor ailing the banking sector the most in 2022. CEO David Solomon confirmed that the bank was about to cut around 3,200 jobs, and was making changes to the consumer business to prepare for an uncertain 2023.

Another big drag on the market was the insurance giant The Travelers Companies, Inc. (TRV - Free Report) , which, in a preliminary statement, reported that it expected its fourth-quarter earnings and revenues to be at a level that is way below expectations. Its shares fell 4.6% on the news.

Good news, however, came in from an unlikely source if one were to analyze recent sessions. Tesla, Inc. (TSLA - Free Report) , with a 7.4% jump, became the largest gainer on both the S&P 500 and Nasdaq, almost single-handedly pushing the latter to a seventh winning day. As reported by China Merchants Bank International, retail sales numbers for the automotive behemoth spiked in China in January after it cut prices for its top-selling models earlier in the month. Average daily sales for Tesla in China from Jan 9 to Jan 15 increased 76% compared to the same period in 2022. Total sales were 12,654 vehicles over that period. In the earlier sessions, Tesla shares had fallen on its price cuts. This came as a good payback.

China’s Q4 Economic Growth Slows Down

China's economic growth in 2022 fell to one of its worst levels in the last five decades, primarily caused by stringent COVID measures and a property market slump. On a summary level, the quarterly growth and important indicators, such as retail sales in December, beat expectations, but the overall economic signals remain weak. The stringent measures, as well as the abrupt withdrawal of the same, have led the Chinese markets to chaos. Just as opening the markets has raised hopes of an economic revival, a resultant sharp rise in COVID cases might act as a deterrent to that revival.

In 2022, Chinese GDP increased 3.0%, widely missing the official target of 5.5% and finishing way below the 8.4% growth in 2021. If one were to exclude the 2.2% expansion from the COVID affected 2020, this has been the worst showing since 1976.

China continues to keep market participants nervous, as whatever happens in the country, good or bad, can adversely impact the market. A strong rebound in China could help soften the impact of an expected global recession, but it could also cause more inflationary headaches worldwide. Chinese stocks on Wall Street, suffered as a result.

Consequently, shares of Baidu, Inc. (BIDU - Free Report) and JD.com, Inc. (JD - Free Report) slid 6% and 5.7%, respectively. Both carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

Per the Fed, business activity contracted sharply in New York state, according to firms responding to the January 2023 Empire State Manufacturing Survey. The headline general business conditions index fell 22 points to -32.9. In December, it had fallen to an unrevised 11.2.

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