Stock Market Recap: Tuesday, Jan. 12, 2021
Wall Street was choppy but closed higher ahead of a congressional vote on a resolution that calls for Vice President Mike Pence to invoke the 25th amendment and remove President Donald Trump from office — and more in Tuesday’s stock market recap.
The vaccine continues to be rolled out in the U.S. amid rising coronavirus cases, but the pace in some cities has been slower than anticipated and continues to weigh on sentiment.
Stock Market Recap
The Russell 2000 rallied 1.8% after trading to an all-time peak of 2,128.
The Nasdaq added 0.3% with the opening high hitting 13,105.
The Dow nudged up 0.2% following the intraday run to 31,114.
The S&P 500 was up over a point, or 0.04%, with the first-half high reaching 3,810.
Energy and Consumer Discretionary led sector strength after soaring 3.5% and 1.5%, respectively. Communication Services and Financials were the sector laggards after stumbling 1.6% and 1.1%.
Stock Market Movers
Shares of FuboTV Inc. (NYSE: FUBO) zoomed 34% after the company announced an agreement to acquire Vigtory, with plans to launch online gambling in 2021.
Stock Market Outlook
The start of the fourth-quarter earnings season is underway with a number of Financial companies announcing numbers ahead of Friday’s opening bell. The overall focus will be on expectations for full-year 2021 after a pandemic-plagued 2020. Estimates have been going up since early July, with S&P 500 earnings for the year expected to be up 22.7%.
For Q4 2020, S&P 500 earnings are expected to be down 10.4% on 0.3% higher revenues, which would follow a -7% earnings decline in the third quarter on -0.7% lower revenues.
For the Finance sector, Q4 earnings are expected to be down -7.6% on -2.9% lower revenues, which would follow a decline of -11.7% in earnings for Q3
For the Technology sector, Q4 earnings are expected to be down -0.3% on 9.2% higher revenues, which would follow the 13% Q3 earnings growth.
Looking at the calendar-year picture for the S&P 500 index, earnings are expected to decline -16.7% on -3.6% lower revenues in 2020 while increasing 22.7% on 7.6% higher revenues in 2021.
For the small-cap S&P 600 index, fourth-quarter earnings are projected to fall -17.9% on -3.1% lower revenues and would follow the -6.2% decline on -5% lower revenues in the third quarter.
For full-year 2020, the S&P 500 index is expected to post a -29.4% decline in earnings on -10.6% lower revenues, with easy comps pushing earnings growth to 35.8% in 2021.
Global Economy
The global stock market recap shows European markets closed higher on both sides of the ledger.
The Belgium20 added 0.5% and the Stoxx 600 was up 0.1%. The UK’s FTSE 100 fell 0.7% and France’s CAC 40 was off 0.2%. Germany’s DAX 30 dipped 0.1%.
Asian markets were also mixed as lockdowns returned in China following the worst virus outbreak in months.
China’s Shanghai soared 2.2% and Hong Kong’s Hang Seng jumped 1.3%. Japan’s Nikkei edged up 0.1%. South Korea’s Kospi fell 0.7% and Australia’s S&P/ASX 200 was down 0.3%.
U.S. Economy
January chain-store sales dropped -2.6% month-over-month for the week ending Jan. 9, according to Johnson Redbook, after sales had improved through December with a 0.5% gain over the five weeks ending Jan. 2. Sales for the week of Jan. 9 posted a 2.1% year-over-year increase compared to the same week last year. January sales are expected to post a -1.3% decline versus December, and register a 3.4% year-over-year rate of growth compared to January 2020.
Stock Market Sentiment
Kansas City Federal Reserve President Esther George said speculation about tapering quantitative easing is premature, while repeating that the FOMC needs to achieve its unemployment and inflation goals before making adjustments. She’s supporting a wait-and-see approach.
George added the delay in relief and the rise in the virus infections have stalled the economy, but the recent passage of stimulus, low inventories, and vaccine rollouts point to a stronger 2021. She is generally optimistic but says one of the most substantial risks is delay or disruption to vaccine distribution.
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) fell for the seventh straight session after trading to an intraday low of $149.93. Prior and upper support from mid-March at $150-$149.50 was breached but held. A move below the latter would suggest additional downside risk towards $148.50-$148.
Resistance remains at $151.50-$152.
Volatility Index
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was down for the fifth time in six sessions despite tapping a midday peak of 25.15. Near-term and lower resistance at 25-25.50 was breached but held.
The fade to 22.83 and close back below the 50-day moving average afterwards tripped but held current and upper support at 23-22.50.
Stock Market Analysis
The SPDR Dow Jones Industrial Average ETF (NYSE: DIA) rebounded after trading to an afternoon high of $311.25. Current and lower resistance at $311-$311.50 was cleared but held. A move above the $312 level and last week’s peak at $311.98 would signal a possible breakout towards the $313.50-$314 area.
Support is at $309-$308.50 followed by $307.50-$307.
RSI is back in a slight uptrend with key resistance at 70 holding. A close above this level and the early November peak would suggest strength towards 75 and late August/early September top. Support is at 65-60.
Sector
The Technology Select Sector SPDR Fund (NYSE: XLK) was down for the second straight session following the intraday pullback to $127.83. Near-term and upper support at $128-$127.50 was breached but held. A move below the latter would signal ongoing weakness towards $126.50-$126.
Resistance is at $129.50-$130.
RSI remains in a downtrend with upper support at 55-50 holding. A close below the latter would signal additional weakness towards 45-40 and levels from late October. Resistance is at 60-65.
Check back after the closing bell for the most important news and numbers in the WealthPress stock market recap.