https://www.morganstanley.com/content/m ... e-20220121
Introduction:
(Morgan Stanley) US stocks traded lower on Friday as the S&P 500 declined 1.9% to close at 4,398. With the sell-off, the index is now down 7.7% year to date.
US equities extended their losing streak into the weekend, as the S&P 500 fell for the fourth straight session. On a holiday shortened week, with markets closed on Monday in celebration of MLK day, the S&P 500 declined 5.7% while technology stocks continued their recent underperformance, as the Nasdaq 100 fell 7.5%. Recent weakness has coincided with markets digesting a hawkish Federal Reserve and a higher interest rate environment, while Q421 earnings has been in particular focus this week. Friday's sell off appeared to be magnified by a large cap media and streaming company missing subscriber estimates on Thursday afternoon, which weighed on related Communication Services stocks and the broad market. Q421 earnings will continue be the focal point as more than 30% of the S&P 500 market cap reports next week, while Wednesday's FOMC meeting will also be closely watched.
Ten of the 11 S&P 500 sectors traded lower on Friday, with Consumer Staples (+0.02%) and Real Estate (-0.04%) outperforming the broader market, while Consumer Discretionary (-3.1%) and Communication Services (-3.9%) lagged.
Rates were lower across the curve, with the 10-year Treasury yield falling to 1.76% as of the 4 p.m. equity market close. Gold was modestly lower on the day while WTI oil was also lower at just under $85 per barrel. The US dollar was modestly weaker on the trading session, as measured by the US Dollar Index.