Stock Market Slides As Yields Keep Rising; 3 Stocks In Energy Sector Top Buy Points

The stock market traded near session lows at midday Tuesday, as rising Treasury yields put pressure on stocks, especially growth and technology equities. The energy sector climbed, however.

X

The Nasdaq composite, which has a higher weighting in tech than other major indexes, skidded 1.8%. The composite is now trading below the 200-day moving average, where it had bounced on Jan. 10 and on Friday. The move adds more risk to a stock market already acting uncertain.

The S&P 500 lost 1.5%. The Russell 2000 gave up 2%.

Volume rose on the NYSE and Nasdaq compared with the same time on Friday. Decliners led advancers by roughly 5-to-1 on the Nasdaq and NYSE.

The Dow Jones Industrial Average fell 1.5% and is now below the 50-day moving average. Last week, the stock managed to hold at that level.

Stock Market Hits Goldman, Schwab Earnings

Dow component Goldman Sachs (GS) sold off nearly 8%, dropping further below its 200-day moving average and to the lowest price since June. Goldman is the latest big bank to fall after reporting earnings. The investment bank missed fourth-quarter profit expectations.

Charles Schwab (SCHW) also missed earnings estimates and fell nearly 6%. The stock remains extended from the 84.59 buy point of a flat base. PNC Financial (PNC) fell 1.6% after it reported fourth-quarter results early today. The stock is back to its 217.70 buy point.

Several major banks and financial firms are reporting earnings this week, a key week for the sector.

The yield on the benchmark 10-year Treasury note rose 6 basis points to 1.83%, the highest level since the start of the pandemic. Investors are selling bonds, whose prices move opposite of yields, as the Fed moves aggressively to put down a surge in inflation.

Higher borrowing costs should calm rising prices, but they also hurt companies that rely more on debt, such as many techs and startups.

Technology Select Sector SPDR (XLK) slid 1.5% at midday. Financial Select Sector SPDR (XLF) fell 1.7%, and Consumer Discretionary Select Sector SPDR (XLY) dropped 1.5%. The financial ETF is below a 40.96 buy point it cleared Jan. 7.

The iShares Russell 2000 Growth ETF (IWF) tumbled 1.6% and remains near a three-month low.

Stock Market News: Microsoft To Buy Activision

Activision Blizzard (ATVI) skyrocketed 27% after Microsoft (MSFT) agreed to acquire the video game company in a deal valued at $68.7 billion. The deal gives Microsoft’s growing gaming business a stable of major game titles such as Call of Duty and World of Warcraft.

Microsoft shares fell 1.5% and continued to work on a base with a 349.77 buy point.

Oil and gas stocks climbed, still providing a pocket of strength for the stock market. The price of U.S. crude rose 1% to top $85 a barrel, the highest since October 2014. Global oil prices are rising on geopolitical tensions in major oil producers, notably Russia and United Arab Emirates. Also, oil demand has remained firm despite the fast spread of the omicron variant of Covid-19.

Several oil stocks broke out past buy points.

Occidental Petroleum (OXY) broke out of a cup without handle base and remains in buy range from the 35.85 buy point. Royal Dutch Shell (RDSB) cleared a cup base. Cactus (WHD) rose above the 47.04 buy point of another cup base in heavy trading.

Innovator IBD 50 ETF (FFTY) plunged 2.5% as a dozen stocks fell more than 4%.

NMI Holdings (NMIH) rose above a 25.70 buy point but fell back into its base. The mortgage insurance firm had been rallying for weeks.

Iqvia Holdings (IQV) fell further below its 200-day line. Brown & Brown (BRO) is trading below its 50-day line for the first time since Oct. 1. Alpha & Omega Semiconductor (AOSL) also is below the 50-day line.

YOU MIGHT ALSO LIKE:

2022 Stock Market Forecast Brings Unfamiliar Risks For Investors

Get Free IBD Newsletters: Market Prep | Tech Report | How To Invest

What Is CAN SLIM? If You Want To Find Winning Stocks, Better Know It

IBD Live: Learn And Analyze Growth Stocks With The Pros