Dow Down For The Third Straight Day, Tesla Drops Nearly 2%

On Wednesday, U.S. stocks closed lower, marking the third consecutive trading day of decline for the Dow.

The market continues to focus on U.S. corporate earnings and the prospect of a rate cut by the Federal Reserve.

Strong retail sales data for December in the U.S. has diminished the likelihood of a Fed rate cut in March.

The Fed’s Beige Book report noted that almost all regions reported a cooling labor market.

The Federal Reserve released its Beige Book report on Wednesday afternoon, stating that most of the 12 Federal Reserve districts reported little to no significant change in economic activity since the last Beige Book release.

Quarterly reports of U.S. stocks remain a focal point, with corporate profit growth likely to be a significant test for the market, potentially setting the tone for the U.S. stocks in 2024.

Jeffrey Buchbinder, Chief Equity Strategist at LPL Financial, remarked, “While this reporting period may lack the eye-catching headline news of ‘the profit downturn has ended’ that we saw last quarter, it remains crucial as it sets the tone for 2024.

2023 was a year of strong returns driven by valuation improvement, and this year, corporate earnings may have to step up to the plate.”

U.S. Stock Market

Fundamental Analysis:

Large-cap tech stocks collectively declined, with Tesla dropping nearly 2%, Intel falling over 2%, and minor decreases for Amazon, Apple, and Google.

Precious metals and energy sectors led the declines, with Plug Power dropping over 10%, Pan American Silver falling over 6%, JinkoSolar dropping over 5%, and several other energy-related companies experiencing declines of over 3%.

The banking sector continued its downward trend, with major banks such as JPMorgan Chase and Goldman Sachs reporting declines.

Spirit Airlines plummeted over 22% after a U.S. judge blocked the merger between JetBlue Airways and Spirit Airlines on antitrust grounds.

Popular Chinese concept stocks mostly declined, with the Nasdaq Golden Dragon China Index dropping 2.59%. JD.com and XPeng Motors fell nearly 5%.

Meanwhile, Weibo, NIO, iQiyi, Tencent Music, and others saw declines of over 3%. Hong Kong’s FUTU Holdings experienced a slight increase.

Technical Analysis:   

(S&P 500 Index, 1-day chart)

Market Trends:

  • Dow Jones dropped 94.45 points, or 0.25%, closing at 37,266.67
  • Nasdaq fell 88.72 points, or 0.59%, closing at 14,855.62.
  • S&P 500 Index declined 26.77 points, or 0.56%, closing at 4,739.21.

Hong Kong Stock Market

Fundamental Analysis:

The three major Hong Kong indices fluctuated and showed repeated upward movements on the day.

Notable stock movements included gains in the tech sector, with Baidu rising over 3%, and gains for Netease, Meituan, and Alibaba by nearly 2%. JD.com saw a reverse trend, dropping nearly 1%.

Automotive stocks had mixed performances, with Yadea rising nearly 4% and XPeng dropping nearly 2%.

Shipping stocks rose uniformly, with China Feihe International surging over 6%.

Photovoltaic stocks performed well, with Xinyi Solar rising over 4%.

Petroleum stocks generally declined, with PetroChina dropping nearly 2%, while gold stocks collectively fell, led by Shandong Gold dropping nearly 3%.

Tech stocks in mainland China saw a broad increase, with Baidu rising over 3%, and Netease, Meituan, and Alibaba gaining nearly 2%.

JPMorgan Chase’s report stated that the overall performance of mainland Chinese tech stocks last year, influenced by the market’s downward forecast, is expected to continue providing good risk returns through investment-driven stock selection strategies this year.

Technical Analysis:  

(Hang Seng Index, 1-day chart)

Market Trends:

  • Hang Seng Index (HSI) increased by 0.64%, closing at 15,374.34.
  • Hang Seng Tech Index (HSTECH) rose by 0.54%, closing at 3,177.06.
  • Hang Seng China Enterprises Index (HSCEI.) rose by 0.58%, closing at 5,162.41.

FTSE China A50 Index

Fundamental Analysis:

A-shares saw a gap-down opening for the three major indices.

After the opening, the Shanghai Composite Index fluctuated downward, falling below 2800 points and briefly dropping over 2%, marking a new low since April 28, 2020.

The ChiNext Index turned red after an initial rise and fell back in fluctuations.

The market stabilized somewhat in the morning, with a slight narrowing of the Shanghai Composite Index’s decline and a return to gains for the ChiNext Index.

Among industry sectors, the photovoltaic equipment sector stood out, while the gaming, energy metals, and software development sectors saw relatively smaller declines.

The petroleum industry, commercial and retail, tourism and hotel, mining, and cement and building materials sectors led the declines.

Technical Analysis:

(SSE Composite Index, 1-day chart)

Market Trends:

  • Shanghai Composite Index (SHCOMP) dropped 1.59%, closing at 2,788.69.
  • Shenzhen Component Index (SZCOMP) dropped 0.91%, closing at 8,680.09.
  • ChiNext Index (CHINEXT) increased by 0.02%, closing at 1,700.02.
  • SSE STAR Market 50 Index (SSE50) dropped 0.95%, closing at 749.86.

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