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    Tuesday, January 16, 2024

    Wall Street Declines as Big Banks Slide; Tesla, Apple Weigh

    Wall Street's main indexes fell on Tuesday, as banks came under pressure after mixed earnings from Goldman Sachs and Morgan Stanley kept investors cautious about the health of capital markets and dealmaking, while declines in Tesla and Apple also weighed.

    Tesla (TSLA.O) shed 2.2%, steering a 1% drop in the S&P 500 consumer discretionary sector (.SPLRCD), after CEO Elon Musk said he would be uncomfortable growing the automaker to be a leader in artificial intelligence and robotics without having at least 25% voting control of the company.

    Apple (AAPL.O) fell 2.4% after offering rare discounts on its iPhones in China on competition pressures, just days after it was overtaken by Microsoft (MSFT.O) as the world's most valuable firm.

    On the fourth-quarter earnings front, Goldman Sachs(GS.N) reported a 51% rise in profit, as its traders capitalized on a nascent market recovery and its asset and wealth business revenue rose. However, Morgan Stanley's(MS.N) profit declined, while revenue surpassed expectations on a rebound in dealmaking activity. Their shares were down 0.8% and 3.4%, respectively.

    "Morgan Stanley, Goldman Sachs tend to service the wealthier high-net-worth clients, and have much less loan loss reserves," said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest.

    "Overall, I think the banks (results) came in pretty good shape and the banking sector is pretty well-capitalized at this point."

    Wells Fargo (WFC.N), Bank of America (BAC.N), Citigroup (C.N) and JPMorgan Chase (JPM.N) dropped between 1.6% and 2.7% after reporting lower profits on Friday.

    The broader banks index (.SPXBK) slid to an over one-month low on Tuesday.

    Wall Street finished the previous week higher as investors continue to price in an around 70% chance of the Federal Reserve delivering a 25-basis-point rate cut in March - despite mixed inflation data and a lack of supporting voices among policymakers for a quick start to monetary policy easing.

    UBS Global Research boosted its 2024 year-end target for the S&P 500 (.SPX) on Tuesday to 5,150, representing a nearly 8% upside from current levels.

    Despite briefly surpassing its previous record closing high last week, the benchmark index has faced resistance to breaching its highest intra-day level, hit in January 2022.

    Investors will parse Fed Board Governor Christopher Waller's remarks during the day, after Atlanta Fed President Raphael Bostic warned about cutting rates too soon.

    At 9:48 a.m. ET, the Dow Jones Industrial Average (.DJI) was down 226.52 points, or 0.60%, at 37,366.46, the S&P 500 (.SPX) was down 26.82 points, or 0.56%, at 4,757.01, and the Nasdaq Composite (.IXIC) was down 89.39 points, or 0.60%, at 14,883.37.

    Dow-component Boeing (BA.N) declined 4.7%, as the Federal Aviation Administration extended the grounding of its 737 MAX 9 airplanes indefinitely and brokerage Wells Fargo downgraded the stock to "equal weight" from "overweight".

    Applied Digital(APLD.O) slumped 22.3% after the data-center services provider posted downbeat second-quarter revenue.

    Declining issues outnumbered advancers for a 4.43-to-1 ratio on the NYSE and for a 3.17-to-1 ratio on the Nasdaq.

    The S&P index recorded 16 new 52-week highs and one new low, while the Nasdaq recorded 30 new highs and 77 new lows.

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