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Market Snapshot: Dow, S&P 500, and Nasdaq struggle for direction in first session in February

U.S. stocks moved between modest gains and losses Tuesday, marking a wobbly February start for Wall Street after the worst month since March 2020.

Investors were weighing manufacturing and jobs data, while earnings from Exxon Mobil Corp. and other corporate heavyweights were in the spotlight.

How are stocks trading?

The Dow Jones Industrial Average DJIA, -0.12% was down 36 points, or 0.1%, at around 35,095.
The S&P 500 SPX, -0.23% fell over 8 points, or 0.2%, to 4,507.
The Nasdaq Composite COMP, -0.23% ticked down over 4 points, or less than 0.1%, to 14,234.

Stocks rose sharply on Monday, but still logged big monthly declines. The Dow suffered a 3.3% January decline, the biggest monthly fall since November 2021. The S&P 500 saw a 5.3% monthly drop, the biggest since March 2020, while the Nasdaq Composite dropped 9%, its biggest monthly drop since March 2020 and worst January performance since 2008.

What’s driving the markets?

Investors on Tuesday indicated some hesitancy to follow up Monday’s strong gains, which were a bright note after a dismal January performance for stocks, as investors fretted in part over worries about the prospects for higher U.S. interest rates. European markets gained on back of Wall Street’s rally, even amid Wall Street’s follow-through struggle. Chinese and some other Asian markets were closed for the Lunar New Year holiday.

The Labor Department said job openings rose by 150,000 to 10.9 million on the last day of December, indicating the labor market remains tight. Economists surveyed by The Wall Street Journal had forecast a 10.5 million figure.

The closely followed Institute for Supply Management barometer of manufacturing activity slipped to a 14-month low of 57.6% in January as a torrent of omicron cases hit the U.S. economy and shortages of labor and supplies hindered production. Economists had forecast a decline to 57.7% from 58.8% in December. Any number above 50% signifies growth.

Investors, however, were more focused on the survey’s index of prices paid, which rose to 76.1% from 68.2% in December, triggering some renewed selling that took stocks to session lows, said Louis Ricci, head of trading at Emles Advisors, a New York money management firm.

That said, the reading isn’t likely to change the path of the Federal Reserve, which has already signaled plans to begin raising rates in March and otherwise, said Ricci, who argued stocks are on track to rise after January’s stumble.

Small-cap stocks have fallen into a bear market, with a more than 20% fall from record highs by the Russell 2000 RUT, +0.63%, which historically points to strong returns over the following 12 months, Ricci said, in a phone interview. Meanwhile, companies appear aggressive again on buybacks, with Exxon Mobil announcing a $10 billion buyback and Swiss banking giant UBS Group AG UBS, +7.71% UBSG, +8.04% committed to up to $5 billion in buybacks.

See: JPMorgan’s Kolanovic is again pounding the table for stocks—but one market is close to triggering an ominous signal

“Investors continue to buy the dips almost everywhere this week, with market sentiment boosted by a strong earning season so far where most companies have beaten expectations,” said Pierre Veyret, technical analyst at ActivTrades, in a note to clients.

Read: You can still find a haven in tech stocks: These 20 offer the safety net of highly stable profit

“Technically speaking, most indexes have registered solid rebounds over major support zones and are now challenging key resistance levels. If cleared, these resistances could open the doors to an extended rally, potentially driving prices up to new record highs on the short to midterm basis,” he said.

Also see: Bears beware. Past corrections for the S&P 500 are only 15% on average, outside of recessions

What companies are in focus?

AT&T Inc. T, -4.47% on Tuesday said it would spin off its interest in WarnerMedia following the unit’s merger with Discovery. AT&T also said its board approved an annual dividend of $1.11 a share, down from $2.08, to account for the Warner Bros. spinoff. AT&T shares fell 4.8%.
Tesla Inc. TSLA, -1.53% will recall 53,822 vehicles because of an issue with its “rolling stop” functionality. Shares rose 0.3%.
Shares of United Parcel Service UPS, +13.62% surged more than 15% after the package delivery giant reported earnings and revenue well above expectations.
Exxon Mobil stock XOM, +5.22% rose 6.6% after the energy giant reported an earnings beat, though revenue fell short of consensus.
AMC Entertainment shares AMC, +9.71% jumped 12.3% after the cinema -chain operator offered fourth-quarter guidance, with revenue ahead of consensus, though a net-loss range bigger than expected.
Sirius XM stock SIRI, +3.62% rose 3.9% after the satellite radio company topped profit and revenue expectations, and provided an upbeat outlook, along with declaring a special dividend.

How are other assets trading?

The yield on the 10-year Treasury note  TMUBMUSD10Y, 1.793%  rose 2.8 basis points to 1.808%. Yields and debt prices move opposite each other.
The ICE U.S. Dollar Index  DXY, -0.13%, a measure of the currency against a basket of six major rivals, was down 0.1%.
West Texas Intermediate crude for March delivery  CLH22, -0.41%  rose 0.6%. Gold’s April futures contract GCJ22, +0.38%  rose 0.6% to $1,806.60 an ounce.
Bitcoin  BTCUSD, +0.82%  was trading up 1.5% just shy of $39,000.
In European equities, the Stoxx Europe 600  SXXP, +1.28%  rose 1.3%, while London’s FTSE 100 UKX UKX, +0.96%  gained 1%.
The Nikkei 225 NIK NIK, +0.28%  finished up 0.2%. Markets in China and in other parts of Asia are closed for Lunar New Year.

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