NEW YORK, Jan 18 ― The Dow fell more than 1 per cent yesterday as weak earnings from Goldman Sachs dragged the index lower, but a jump in Tesla shares helped the Nasdaq stay positive as the corporate earnings season took centre stage.
Analysts are anxious to hear from corporate America about the demand environment amid signs of an upward trend in the economy, said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan. Goldman Sachs Group Inc slumped 6.44 per cent after the bank reported a bigger-than-expected drop in quarterly profit and was the biggest drag on the price-weighted index. A stock's share value is proportional to its contribution to the index, in contrast to the market capitalisation-weighted S&P 500.Also weighing on the blue-chip Dow index was insurer Travelers Cos Inc, which fell 4.60 per cent after forecasting fourth-quarter earnings below estimates.
Analysts expect year-over-year earnings from S&P 500 companies to decline 2.4 per cent for the quarter, according to Refinitiv data, compared with a 1.6 per cent decline at the start of the year. Money market participants are currently expecting a 25-basis point interest rate hike from the US central bank on February 1 and see rates peaking at 4.9 per cent in June and then falling. The Fed projects rates will be more than 5 per cent into next year.