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Stock Market News for Jan 20, 2023

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Wall Street closed lower on Thursday, primarily on robust labor market data. Recession fears gripped markets as a strong labor market continued to keep investors nervous that the Fed would be deterred from going slow in its policy measures. All three major indexes ended in the red.

How Did the Benchmarks Perform?

The Dow Jones Industrial Average (DJI) fell 0.8%% or 252.4 points to close at 33,044.56. Sixteen components of the 30-stock index ended in negative territory, while 14 ended in positive.

The S&P 500 lost 0.8% or 30.01 points to close at 3,898.85. Eight of the 11 broad sectors of the benchmark index ended in negative territory. The Industrials Select Sector SPDR (XLI), the Consumer Discretionaries Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) fell 2.1%, 1.7% and 1.2%, respectively, while the Energy Select Sector SPDR (XLE) rose 1.2%.

The tech-heavy Nasdaq decreased 1% or 104.74 points to finish at 10,852.27.

The fear-gauge CBOE Volatility Index (VIX) increased 0.9% to 20.52. Decliners outnumbered advancers on the NYSE by a 1.49-to-1 ratio. On the Nasdaq, a 1.70-to-1 ratio favored declining issues. The S&P 500 recorded one new 52-week high and three new lows; the Nasdaq posted 46 new highs and 33 new lows.

Jobless Claims Number Weighs on The Market

After a couple of good weeks to start off the new year, Wall Street seems all set to close its first losing week. On Thursday, the Dow and the S&P 500 extended their losing streak to three consecutive sessions as the fear of recession loomed large on the market. The woes of the day can primarily be blamed on the weekly jobless claims, released first up in the morning, which came in lower than expected.

The Labor Department said on Thursday that initial jobless claims fell to 190,000, decreasing 15,000 for the week ending Jan 14, from the previous week's unrevised level of 205,000. The four-week moving average decreased to 206,000, marking a fall of 6,500 from the previous week’s unrevised average of 212,500.

Continuing claims came in at 1,647,000 for the week ending Jan 7, increasing 17,000 from the previous week’s revised level. The previous week's numbers were revised down by 4,000 from 1,634,000 to 1,630,000. The 4-week moving average came in at 1,673,000, a decrease of 5,500 from the previous week's revised average. The previous week's average was revised down by 1,000 from 1,679,500 to 1,678,500.

In recent weeks, investors have been looking for signs of weakness in the labor market for the Fed to start slowing down its policy tightening, and hence, a strong labor market continues to keep them on tenterhooks.

Consequently, shares of Enphase Energy, Inc. (ENPH - Free Report) and Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) slid 10.9% and 4.8%, respectively. Both carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Fed Vice Chair’s Comments Come As a Relief

Even as stocks declined on the day, they emerged from their session-lows with dovish comments coming in from Fed Vice Chair Lael Brainard. "Inflation has been declining over the past several months against a backdrop of moderate growth," Brainard said in a symposium at the Booth School of Business, mentioning "significant weakening in the manufacturing sector.” And even as the central bank continues to probe for the right level of interest rates to control inflation, according to Brainard, the chances of a "soft landing" for the U.S. economy appear to be growing.

Economic Data

The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly reported that building permits in December were at a seasonally adjusted annual rate of 1,330,000. This is 1.6% below the revised November rate of 1,351,000.

Housing starts in December came in at a seasonally adjusted annual rate of 1,382,000. This is 1.4% below the revised November estimate of 1,401,000.

Per a government report, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 8.4 million barrels from the previous week.


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