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Stock market sets new highs but closes flat
22-Jan-20 16:20 ET
Dow -9.77 at 29186.18, Nasdaq +12.96 at 9383.79, S&P +0.96 at 3321.75

https://www.briefing.com/stock-market-update

[BRIEFING.COM] The stock market hit new highs on Wednesday in an early advance led by IBM (IBM 143.89, +4.72, +3.4%) and the technology sector, but stocks steadily pulled back during the day. The S&P 500 (+0.03%) and Nasdaq Composite (+0.1%) eked out slim gains, while the Dow Jones Industrial Average (-0.03%) and Russell 2000 (-0.1%) dipped lower.

IBM beat earnings estimates and issued upside FY20 EPS guidance, but the resilience in Apple (AAPL 317.70, +1.13, +0.4%) and the semiconductor space should not be overlooked. Bloomberg reported that Apple will begin producing low-cost iPhones next month and asked Taiwan Semi (TSM 58.35, +0.11, +0.2%) to increase its chip supply to meet strong iPhone demand.

The S&P 500 information technology sector rose as much as 1.1% but ended the session up just 0.4%. This was still good for today's leadership position. The pullback presumably coincided with an underlying view that an overbought market had gotten too ahead of itself.

Losses were made most pronounced in the energy sector (-0.9%), which was hit by a 2.2% decline in WTI crude ($56.68, -1.28), and the industrials sector (-0.6%), which was dragged lower by another decline in Boeing (BA 309.00, -4.27, -1.4%). BA was downgraded to Hold from Buy at Vertical Research.

Sellers were unable to exert that much influence on the broader market, though. Factors that might have explained this included 1) better-than-expected existing home sales for December, 2) an assertion from JPMorgan Chase (JPM 136.68, -0.16, -0.1%) CEO Jamie Dimon that high stock prices are justified by the growing economy, and 3) actions taken by China to control the coronavirus.

Separately, Netflix (NFLX 326.00, -12.11, -3.6%), United Airlines (UAL 83.34, -2.45, -2.9%), and Johnson & Johnson (JNJ 148.25, -1.02, -0.7%) finished lower, as investors reacted negatively to their earnings reports. Tesla (TSLA 569.56, +22.36, +4.1%) rose as much as 8.6% after Wedbush raised its price target to $550 from $370, but gains were cut in half.

U.S. Treasuries finished little changed in a muted session. The 2-yr yield declined one basis point to 1.51%, and the 10-yr yield was unchanged at 1.77%. The U.S. Dollar Index finished flat at 97.52.

Reviewing Wednesday's economic data, which shed some light on the housing sector:

Existing home sales increased 3.6% m/m in December to a seasonally adjusted annual rate of 5.54 million units (Briefing.com consensus 5.42 million) from 5.35 million in November. Total sales were up 10.8% year-over-year.
The key takeaway from the report is that there are serious inventory constraints in the existing home sales market, which is driving up prices and underscoring the importance of mortgage rates staying low.
The FHFA Housing Price Index increased 0.2% in January after increasing 0.2% in December.
The weekly MBA Mortgage Applications declined 1.2% following a 30.2% surge in the prior week.

Looking ahead, investors will receive the weekly Initial and Continuing Claims report and the Conference Board's Leading Economic Index for December on Thursday.

Nasdaq Composite +4.6% YTD
S&P 500 +2.8% YTD
Dow Jones Industrial Average +2.3% YTD
Russell 2000 +1.0% YTD

Market Snapshot
Dow 29186.18 -9.77 (-0.03%)
Nasdaq 9383.79 +12.96 (0.14%)
SP 500 3321.75 +0.96 (0.03%)
10-yr Note +1/32 1.763
NYSE Adv 1424 Dec 1431 Vol 864.0 mln
Nasdaq Adv 1568 Dec 1595 Vol 2.7 bln

Industry Watch
Strong: Information Technology, Utilities
Weak: Energy, Industrials, Real Estate

Moving the Market

-- Stock market hit new highs in early action, but stocks lost steam throughout the day

-- Relative strength in the tech sector after IBM (IBM) provided positive earnings, guidance

-- Relative weakness in energy sector amid weaker oil prices

-- Better-than-expected existing homes sales report for December