- US stocks lower on rate hike and mixed earnings.
- Dow, S&P, Nasdaq close negative; tech hardest hit.
- Strong GDP and jobless claims not enough to boost sentiment.
On Thursday, US stocks closed with significant losses in a tumultuous trading session. Investors struggled to balance the Federal Reserve's plans for multiple interest rate hikes this year with positive economic data and mixed corporate earnings reports. All three major indexes closed in the red.
Dow Jones Industrial Average (DJI) ended the day down by 7.31 points, or less than 0.1%, closing at 34,160.78 points. At one point, the blue-chip index gained 600 points but eventually lost almost all of its gains.
The S&P 500 dropped by 23.42 points, or 0.5%, closing at 4,326.51 points and narrowly avoiding correction territory. Real estate and consumer discretionary stocks performed the worst. Real Estate Select Sector SPDR (XLRE) declined by 1.8%, while Consumer Discretionary Select Sector SPDR (XLY) lost 2.4%. Five of the 11 sectors in the benchmark index closed in the negative.
Nasdaq, a tech-heavy index, finished down 1.4% or 189.34 points, closing at 13,352.78 points. The index had previously been in positive territory. Shares of Netflix gained 7.5%, while Salesforce rose 0.8%, both having a Zacks Rank #1 (Strong Buy).
The CBOE Volatility Index (VIX), a gauge of fear, was up 1.19% to 18.65. Thursday saw a trading volume of 13.29 billion shares, higher than the 20-session average of 11.56 billion. Decliners outnumbered advancers on NYSE by a ratio of 2.65-to-1, and on Nasdaq, a 3.71-to-1 ratio favored declining issues.
The markets' gains from Wednesday were lost after Federal Reserve Chair Jerome Powell hinted at the possibility of multiple rate hikes starting as early as March. This news continued to dent investor confidence and weighed on stocks on Thursday.
The S&P 500 managed to close just above the correction mark of 4,316.905, a 10% decline from its recent record close. The mixed corporate results and the interest rate worries added to the downward pressure on stocks, despite some uplifting economic data. All three indexes are now down for the week, with the Dow and S&P 500 on track for their worst monthly performance since 2020, and Nasdaq is nearing its worst month since October 2008.
Economic data released on Thursday included impressive fourth quarter GDP growth of 6.9%, surpassing economists' expectations of 5.5%, according to the Commerce Department. The National Association of Realtors reported a 3.8% decline in pending home sales in December, while durable goods orders rose 0.9% in December, higher than expected. The Labor Department reported a decline in initial jobless claims to 260,000, a decrease of 30,000 for the week ending January 22. However, continuing claims increased by 51,000 to 1,675,000.