Investors didn’t get a full reprieve from yesterday’s heavy selling, but they were at least allowed to catch their breath in a calmer Thursday session that saw the major indexes finish modestly lower.
The first unemployment-benefits data of the new year was a tad disappointing, with the Labor Department reporting 207,000 initial claims for the week ending Jan. 1, higher than estimates for 195,000.
Treasury yields also continued to rise, with the 10-year touching 1.75% from 1.68% yesterday; that helped lift the financial sector (+1.5%), primarily regional bank companies such as Fifth Third Bancorp (FITB, +4.2%) and PNC Financial Services (PNC, +3.9%).
Heading in the other direction were health insurers, which tumbled as a group after Humana (HUM, -19.4%) drastically lowered its membership-growth expectations for Medicare Advantage products, to 150,000 to 200,000 members from 325,000 to 375,000 previously. Names including UnitedHealth Group (UNH, -4.1%), Cigna (CI, -3.8%) and Anthem (ANTM, -4.1%) fell in sympathy.
The indexes were far less rowdy. The Dow Jones Industrial Average led the decline, off 0.5% to 36,236, while the S&P 500 (-0.1% to 4,696) and Nasdaq Composite (-0.1% to 15,080) also slipped again.
Other news in the stock market today:
- The small-cap Russell 2000 was up 0.6% to 2,206.
- Gold futures plunged 2% to end at $1,789.20 an ounce after Wednesday’s minutes from the latest Federal Open Market Committee (FOMC) meeting suggested the central bank could hike interest rates sooner than anticipated.
- Bitcoin dropped yet again, by 1.8% to $43,217.10, amid unrest in Kazakhstan, which is actually the world’s second-largest source of bitcoin mining. That mining was disrupted as Kazakh President Kassym-Jomart Tokayev ordered the national telecom provider to shut down internet service, taking numerous miners offline. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
- Bed Bath & Beyond (BBBY) stock jumped 8.0%, even after the home goods retailer reported dismal fiscal third-quarter results. Over the three-month period, BBBY recorded an adjusted per-share loss of 25 cents versus analysts’ consensus estimate for the company to breakeven on a per-share basis. On the top line, Bed Bath & Beyond brought in $1.88 billion, falling short of the $1.95 billion analysts’ were expecting. Pouring salt on the proverbial wound, same-store sales fell 10% year-over-year and the retailer lowered its full-year forecast to account for continued supply-chain headwinds.
- MGM Resorts International (MGM) improved by 3.0% after Credit Suisse analysts Benjamin Chaiken and Sarah Murray named the casino stock a “top pick” for 2022. “We see upside to MGM based on accelerating trends in Vegas, a more simplified operating structure that should aid valuation, an attractive capital structure (net cash position), upside to 2023 estimates and improving investor sentiment,” they wrote in a note. With today’s pop, MGM stock is now up more than 46% on a 12-month basis.
A Big Year for Energy Ahead?
Tops today, though, were energy stocks (+2.2%), which were the best S&P sector in 2021 with 53% total returns (price plus dividends) and are again leading the way with a 9.0% gain this year.
Thursday’s gains came on the back of crude oil futures’ 2.1% gain to $79.46 per barrel amid the aforementioned turmoil in major oil producer Kazakhstan, where protests over fuel prices have turned into broader anti-government riots.
It’s a temporary tailwind for a sector most of Wall Street was bullish about heading into 2022 – though the pros had their own, longer-term reason. Specifically, an eventual full reopening of the global economy whenever COVID finally fades is expected to bolster energy demand, which should keep prices on the upward trajectory they traveled throughout 2021.
Today, we provide the last of our 11 annual sector look-aheads – our best energy stocks to buy for 2022. The energy sector often moves in unified fashion, with a rising tide of high commodity prices typically lifting most boats. But a few stocks seem better positioned than others to leverage those prices into shareholder gains in 2022.