The Dow fell 300 points, weighed down by Goldman Sachs stocks

Traders work on the floor of the New York Stock Exchange during morning trading on January 17, 2023 in New York City.

Michael M. Santiago | Good pictures

The stock market was divided on Tuesday as investors struggled to build momentum for early 2023 and weighed the latest earnings results.

The Dow Jones industrial average lost 335 points, or 1%, dragged down by falling Goldman Sachs shares. The Nasdaq composite rose 0.2%. The S&P 500 hovered around the flatline.

Goldman fell about 6% after the bank’s announcement Worst revenue miss in a decade For the fourth quarter. Its results were pressured by declines in investment banking and asset management revenues. Meanwhile, rival Morgan Stanley posted better-than-expected numbers, in part due to record wealth management revenue. Its shares rose 6%.

The results come after other major banks such as JP Morgan and Citigroup reported mixed quarterly results.

“Goldman and Morgan Stanley have almost mirrored price action today following their earnings,” BMO Chief Investment Strategist Yung-Yu Ma told CNBC. “Even within the financial sector, individual business lines are very different and Morgan Stanley’s wealth management division provided a strong position.”

“These differences are indicative of what we expect this earnings season – varying fortunes by industry and sub-industry,” he added.

According to FactSet, the S&P 500 posted gains of about 7% through Tuesday morning. 70% of those companies beat expectations. United Airlines will report its quarterly results later in the day.

Wall Street is coming off a positive week to start the new year, but investors may have entered a hall of mirrors, according to Mike Wilson, chief U.S. equity strategist at Morgan Stanley.

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“This year’s boom has been led by low quality and very low stocks. However, it has seen strong movement in cyclical stocks compared to defensive stocks. This move in particular has made investors feel they are missing something and need to be repositioned.” Wilson said.

“Frankly, it’s been a powerful shift, but we recognize that bear markets have a way of fooling everyone before they end,” he added. “We are not biting this particular head fake/bear market rally because our mission and process is very solid and we believe in it.”

Dow Jones Industrial Average YTD

Year-to-date, the Nasdaq composite is leading by 6% as investors bought beat-up tech stocks amid hopes of an improving landscape for growth stocks. The S&P 500 and Dow have advanced 4% and 2%, respectively, since the start of the year.

The gains came on the back of a first harvest of inflation-related data that investors saw as a sign of a contracting economy, with hopes that the Federal Reserve would justify cutting interest rates once again. Last week, the consumer price index for December showed a 0.1% cooling from the previous month, but prices were 6.5% higher than the same month a year ago.

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