Dow Ends Week Higher Despite Slip on Energy, Tech Woes

Investing.com

January 22, 2021 at 11:13 a.m.·2 min read

By Yasin Ebrahim

Investing.com - The Dow closed the week higher despite a slip on Friday, weighed down by energy stocks on falling oil prices and a slump in Intel and IBM on quarterly results that failed to impress investors.

The Dow Jones Industrial Average fell 0.57%, or 179 points. The S&P 500 was down 0.57%, while the Nasdaq Composite slipped 0.09%. All three indexes closed higher for the week and remained near record territory.

Intel (NASDAQ:INTC) fell 9% after reporting fiscal first-quarter results that topped consensus estimates, but the results were driven by a strong gains in its lower-margin PC-centric business. Wall Street analysts, meanwhile, were also cautious on the stock as they await a further update on Intel's long-term manufacturing plan.

"We think DC [data-centric] and share loss will likely occur in 2021E until a long-term manufacturing plan is in place," RBC said as it upgraded its price target on Intel to $47 from $40.

International Business Machines (NYSE:IBM) posted its fourth straight quarter of revenue declines amid underperformance in its cloud business, sending its shares down 10%.

"[IBM's] results continue to reflect an ongoing cannibalization phase of its legacy software/services revenue base (roughly 70% of mix), and potential share losses offset by a relatively underperforming (but growing) digital/cloud business," Wedbush said in a note.

The spotlight on tech will continue into next week as Apple (NASDAQ:AAPL) and Facebook (NASDAQ:FB) kick off of the quarterly earnings season for FAANG names.

Energy was among the biggest decliners, paced by a decline in oil prices after data showing an unexpected build in weekly inventories that stoked worries the underlying improvement in the supply-demand imbalance will come unstuck.

Crude inventories rose 4.35 million barrels, against expectations for a draw of 1.16 million barrels, the Energy Information Administration said Friday.

Airlines stocks continued to trend lower on expectations for tighter restrictions in Europe. France said it would be require Covid-19 tests on entry into the country from Sunday.

There was also some concern on the pandemic front after reports of fresh lockdowns in China as a rise in infections dented optimism on the global economic recovery.

In the U.S., meanwhile, further help may be on the way.

President Joe Biden is expected to sign executive orders on Friday focused on delivering boosting food stamps and stimulus checks to low-income Americans, and on raising the minimum wage to $15 for the federal workforce.

Airlines continued to trend lower expectations for the tighter restrictions in the Europe.

United Airlines (NASDAQ:UAL) American Airlines Group (NASDAQ:AAL), Southwest Airlines (NYSE:LUV) and Delta Air Lines (NYSE:DAL) traded lower.

In other news, GameStop (NYSE:GME) surged 51% as investors continued buy up the stock in the wake of short squeeze.

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