U.S. Stocks Open Lower, Signaling Muted End to Strong Week
January 22 2021 - 10:07AM
Dow Jones News
By Joe Wallace
U.S. stocks declined Friday, signaling a muted end to a strong
week on Wall Street as investors awaited data on how the economy
performed at the start of 2021.
The Dow Jones Industrial Average fell 181 points, or 0.5%,
shortly after the opening bell. The S&P 500 slipped 0.4%,
backing away from Thursday's record, and the Nasdaq Composite lost
0.3%.
Markets appeared to be pausing after rallying for much of
January, with money managers saying there was no clear catalyst for
the decline. Investors have been cheered in recent days by a solid
start to earnings season, though some are concerned that high
valuations in corners of the market will leave stocks vulnerable in
the coming months.
"With a lack of new ammunition, people are simply stopping off,"
said Lars Skovgaard Andersen, investment strategist at Danske Bank
Wealth Management.
Investors are cautious of adding new positions ahead of the
Federal Reserve's decision on monetary policy and earnings from
major companies including Facebook, Apple and Tesla next week, he
added.
Shares of International Business Machines fell 9.3% after the
company said it expected to return to revenue growth this year,
following a 4.6% decline in 2020. Intel fell 5% after the chip
maker posted net income for 2020 of $20.9 billion, down from $21.1
billion a year earlier.
Paint maker PPG Industries said sales volumes fell in the fourth
quarter, pushing shares down 2.4%.
Of the 62 companies on the S&P 500 that had reported results
by the end of Thursday, 89% have beaten analysts' expectations,
according to FactSet.
"So far, so good," said Fredrik Öberg, chief investment officer
for private banking at SEB, highlighting results from Netflix,
BlackRock and several banks.
In the bond market, yields on 10-year U.S. Treasury notes
slipped to 1.092% from 1.107% Thursday. Yields fall as prices rise.
The WSJ Dollar Index added 0.3%.
Stocks broadly retreated in overseas markets and oil prices
dropped amid worries that coronavirus restrictions were crimping
demand for crude. Surveys of purchasing managers in Europe showed
that high coronavirus rates and government curbs were increasing
the risk of the second recession since the pandemic struck.
Parallel IHS Markit surveys due at 9:45 a.m. ET are expected to
show that the U.S.'s manufacturing and services sectors continued
to grow in January. Also Friday, data on existing-home sales are
predicted to show a decline for a second-consecutive month in
December.
The pan-European Stoxx Europe 600 index fell 0.7%, led lower by
energy companies and travel-and-leisure firms, whose profits are
closely tied to the fortunes of the economy. Brent-crude futures,
the benchmark in international energy markets, slid 2% and West
Texas Intermediate, the U.S. oil benchmark, fell 2.4%.
Political uncertainty pressured assets in Italy, where the
benchmark FTSE MIB index dropped after a local newspaper reported
that Prime Minister Giuseppe Conte was considering a snap election.
Mr. Conte is under pressure to strengthen parliamentary support for
his government, a task that appears increasingly difficult, raising
the prospect of fresh elections in the spring.
The probability of an election "has likely risen in the past few
days, and markets are discounting it," said Francesco Pesole,
foreign-exchange strategist at ING Groep.
Cautiously optimistic comments from European Central Bank
President Christine Lagarde about Europe's recovery also weighed on
Italian bonds, analysts said.
Among individual European stocks, Siemens rose after the German
engineering company said preliminary quarterly results were broadly
ahead of market expectations.
In Asia, Hong Kong's Hang Seng Index ended 1.6% lower after a
local newspaper reported that the city would place tens of
thousands of people in lockdown to control Covid-19. China's
Shanghai Composite fell 0.4%.
Mr. Andersen said he was closely watching outbreaks of
coronavirus in China and Hong Kong, after many Asian economies
rebounded quickly from the pandemic last year.
"It is of course a risk that this locomotive in Asia could be
hurt by this, but we think they have it under control," he
said.
Write to Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires
January 22, 2021 09:52 ET (14:52 GMT)
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