Stock Market Today: Dow Closes Up, But Turbulent Tech Trips Up Nasdaq

The market continued its recent split, with cyclical sectors such as energy (+3.0%) and financials (+1.5%) building upon yesterday's gains while mega-cap technology and tech-esque stocks receded again.

President Joe Biden on Tuesday announced the release of 50 million barrels of oil from the nation's strategic reserves to rein in high gas prices. And yet, U.S. crude oil futures jumped 2.3% to $78.50 per barrel, buoying most of the energy sector, especially exploration and production plays such as Occidental Petroleum (OXY, +6.4%) and EOG Resources (EOG, +5.8%).

Michael Reinking, senior market strategist for the New York Stock Exchange, lays out three potential reasons for the counterintuitive move:

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"First, there is the 'sell the rumor, buy the news'; second, there is the belief that this will not have a long-term impact on prices; and lastly, there is some concern that this could lead to a showdown with OPEC+, who warned there would be a response if this action was taken," he says.

Also Tuesday, IHS Market's flash purchasing managers' index for November showed slowing but still strong private-sector growth in November, with its reading declining to 56.5 from 57.6 in October. (Any reading above 50 indicates expansion.)

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Rising Treasury rates – the 10-year T-note's yield climbed to just under 1.67% – helped keep financials such as Bank of America (BAC, +2.6%) and JPMorgan Chase (JPM, +2.4%) aloft. But they weighed on tech names such as Advanced Micro Devices (AMD, -1.7%) and Adobe (ADBE, -1.3%).

The end result was a 0.6% gain to 35,813 for the Dow Jones Industrial Average, and a more modest 0.2% improvement to 4,690 for the S&P 500. Tech weakness, and a 4.1% shot to Tesla (TSLA), pulled the Nasdaq Composite 0.5% lower to 15,775.

Other news in the stock market today:

• The small-cap Russell 2000 declined 0.2% to 2,327.
• Gold futures notched a fourth straight loss, falling 1.2% to settle at $1,783.80 an ounce.
• Bitcoin finally gained some footing, rebounding 3.7% to $57,886.03. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
• Zoom Video Communications (ZM) slumped after the video conferencing company reported earnings after Monday's close. In its third quarter, ZM recorded adjusted earnings of $1.11 per share on $1.05 billion in revenue, both figures higher than analysts were expecting. However, "Revenue from customers with under 10 employees was down sequentially in the third quarter and should be again in the fourth quarter," says UBS analyst Karl Keirstead. He also pointed to concerns over deferred revenue for the fourth quarter, after Kelly Steckelberg, Zoom's chief financial officer, said in the earnings call that growth in this segment should fall to the mid-20s in Q4 after being up by 39% in Q3. While the analyst maintained his Neutral (Hold) rating on ZM, he joined several other firms in lowering his price target – specifically, to $250 from $285. ZM closed today down 14.7% to $206.64.
• Best Buy (BBY) was another post-earnings loser, sinking 12.3% in the wake of its results. The big-box retailer reported higher than anticipated adjusted earnings of $2.08 per share and revenue of $11.91 billion in its third quarter and lifted its full-year revenue forecast, now expecting sales to arrive between $51.8 billion and $52.3 billion compared to its previous forecast for $51 billion and $52 billion. As for today's selloff? "BBY's comparable sales year-over-year were disappointing, up only 2.0%, as online sales were 10.2% lower," says CFRA Research analyst Kenneth Leon. "There was also a sales drag from Best Buy's largest product category, computing and mobile phones." Leon also pointed to declining gross margins in the quarter as he downgraded the stock to Hold from Buy.

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