Trading results for 16 January 2025
The results of last Thursday’s trading turned out to be somewhat disappointing. Many had hoped for a continuation of the rally seen on Wednesday when the market surged across the board after the release of positive macroeconomic data and solid quarterly reports from major US banks. It seemed likely that Thursday would bring something similar, perhaps not as strong a rise, but at least growth rather than decline. Indeed, trading began in positive territory, but the momentum quickly faded, and all indexes slipped below the breakeven line. The decline was minor, and there were even brief attempts to return to the green, but these were swiftly suppressed by bears, and prices dipped back into negative territory. The main trading session progressed in this sluggish manner, with relatively low turnover and moderate negativity. What was the source of this negativity? First, December’s retail sales data was slightly below expectations, showing month-on-month growth of 0.4% instead of the forecasted 0.5%. Second, the performance of a key company, UnitedHealth (UNH, -6.04%), left much to be desired. The company has faced challenges recently, including the murder of its CEO in November. UnitedHealth reported an increase in loss coverage expenses to nearly 87%, compared to the expected slightly over 85%. This clearly unsettled investors, causing the company to lose over 6% of its market capitalisation in a single day. In addition to UnitedHealth, a number of regional banks delivered underwhelming results, which overshadowed the positive reports from major banks like JPMorgan, Wells Fargo, Bank of America, and Citigroup. However, that was only part of the problem.
The main blow from bears was dealt to top-tier stars like Apple (AAPL, -4.04%) and Tesla (TSLA, -3.44%). Apple shares faced sell-offs due to reports of declining iPhone and iPad sales in China, where Apple has lost its leadership position and now ranks third in sales volume.
As for Tesla, investors were spooked by reports of discounts offered on its Cybertruck models. Since this is a new model, offering discounts this early seemed premature. Many investors interpreted it as a sign that Cybertruck sales were not going as well as expected, leading to significant market concerns.
As a result of these developments, Thursday’s volatile session ended with small losses across all indexes, including the major US indexes and the ITS index family. Losses in US indexes ranged from 0.16% for the Dow Jones (DJIA-30) to 0.89% for the NASDAQ Composite.
Losses in the ITS index family on Thursday were similar, with the ITS World Index (ITSW) down 0.82% and the ITS Shariah Index (ITSS) slightly better at -0.65%. Incidentally, the even nature of Thursday’s trading is evident from the near tie in the ITSW index, where 27 stocks gained, while 23 declined.
Despite potential disappointment among investors following Thursday’s session, it is worth noting that many analysts believe the drop in some stock prices is clearly emotional. A prime example is Bank of America (BAC), which delivered a strong report before the session opened, started the day in the green, but ended with a loss of nearly 1%. The same applies to UnitedHealth (UNH), whose report was far from disastrous, yet the stock experienced an unwarranted sell-off. This suggests one thing – it might be time to seize the moment and buy quality stocks that have temporarily dipped in value. However, the final decision always rests with the individual investor.