The Dow Jones Industrial Average tumbled after Federal Reserve Chair Jerome Powell spoke on inflation and interest rates. Netflix stock rocketed on earnings. Tesla dived after CEO Elon Musk made a Cybertruck warning. Microsoft gained.
Meanwhile, a trio of noteworthy stocks held strong near buy points. HealthEquity, Vistra and Cencora are all worth watching as they build bullish bases.
Powell Makes Pledge On Interest Rates, Inflation
Stocks whipsawed after Powell spoke at the Economic Club of New York today before they tumbled in the final 90 minutes. The head of the central bank said he remains committed to "proceeding carefully," signaling the Fed chief is in no rush to hike rates again.
Rising Treasury yields have being doing some of the heavy lifting for the Fed, with Powell also saying this a key area to watch.
"We remain attentive to these developments because persistent changes in financial conditions can have implications for the path of monetary policy," Powell said.
Nevertheless, he also stressed more tightening could be warranted if the recent run of strong economic data continues. Some investors also remain worried about the possible impact of the unwinding of the central bank's gargantuan balance sheet.
Treasury yields were mixed. The 10-year yield soared 8 basis point to 4.98%, with the 5% level now looming large. In contrast, the two-year yield slid 6 basis points to 5.15%. The yield curve remains inverted.
Today's economic data was not ideal for Powell. Weekly first-time claims for unemployment assistance surprisingly fell to 198,000 last week, Labor Department data showed. Claims were expected to come in flat vs. the previous week 's 211,000. The jobs market continues to be robust despite higher interest rates.
In addition, the Philadelphia Fed's Manufacturing Index improved to -9.0 in October after wild swings in August and September.
Nasdaq Slips As Small Caps Stumble
The tech-heavy Nasdaq fared worst out of the major indexes. It briefly rallied out of negative territory then ended the session with a hefty 1% loss. Lam Research was a laggard here as it tumbled 6.3% after its earnings report.
The S&P 500 had a wibbly-wobbly day before it ultimately skidded 0.9%. AT&T was a noteworthy mover here, gaining 6.6% as it popped on an earnings beat.
The S&P 500 sectors were virtually all negative. Consumer discretionary and real estate lagged the most in the stock market today. Only the S&P Communication Services sector rose, though its gain was meager.
Small caps got bitten by the bears after trying to rally, with the Russell 2000 falling 1.5%. The index has seen its 50-day line undercut the 200-day moving average, a negative sign. Growth stocks were given the harshest spanking, with the Innovator IBD 50 ETF sliding 2.3%.
Pressure Mounts As Yields Flirt With 5%; This Market Gauge Offers Hope
Dow Jones Today: Verizon, Microsoft Stocks Shine
The Dow Jones Industrial Average whipsawed but was ultimately dragged lower as the bears asserted control. The blue chip index skidded around 251 points, or 0.8%.
Verizon Communications popped following AT&T's report, gaining 1.7%. It remains stubbornly below the 200-day and 50-day moving averages, MarketSmith analysis shows.
Salesforce and McDonald's also moved higher. Leaderboard Watchlist name CRM lifted 1.7% while MCD rose 0.9%.
Microsoft was another of the best performing components. But MSFT ended well off session highs as it rose 0.4%, though it did pull further away from its 50-day moving average. Old rival Apple lost 0.2%.
In fact, there was plenty of action on the downside. Insurance stock Travelers lagged most on the Dow Jones today as it slid 2.4% a day after its earnings report.
Caterpillar and Walt Disney also lagged. CAT dipped 2.4% while DIS fell 1.7%.
Netflix Earnings Send Stock Soaring
One stock that bucked the bearish trend was streaming giant Netflix. The stock rocketed 16.1%, smashing through its 200-day line and retaking the 50-day after the company crushed Wall Street views for new subscribers in the third quarter.
It beat earnings expectations with EPS of $3.73, well clear of views for $3.49. Sales of $8.54 billion were only in line with expectations.
The firm said its cheaper ad-supported service and an ongoing crackdown on account sharing had helped bring in more subscribers. Wall Street was delighted with the subscription growth, with Morgan Stanley rewarding Netflix stock with a rating upgrade to overweight from equal weight.
While its clearance of the 200-day and 50-day moving averages could be seen as an early buying opportunity among aggressive investors, waiting to see if it proves itself above the 50-day line could be a more prudent strategy. Keep in mind that market risk is high.
Tesla Earnings, Elon Musk Warnings Hit Stock
In contrast, Tesla stock got mauled in a painful bear attack. It fell 9.3%, though slightly off session lows, after the EV company missed earnings and sales views.
Investors were also far from impressed after CEO Elon Musk also warned that "there will be enormous challenges in reaching volume production with the Cybertruck, and then in making the Cybertruck cash flow positive."
As if that wasn't enough, Musk also struck a gloomy tone on the broader economy, saying rising interest rates make it harder for consumers to buy new vehicles.
"We have to make our products more affordable so people can buy it," Musk said.
A cup-with-handle base it was forming is dead in the water after TSLA plunged about 12% below its 50-day line. It could also be set for a test of support at its 200-day moving average.
Outside Dow Jones: 3 Stocks Eye Entries
With the stock market under pressure, it is currently a good time to build up one's watchlist.
HealthEquity made progress toward a cup-with-handle entry of 76.30, MarketSmith analysis shows. Overall performance here is very strong, with HQY holding an IBD Composite Rating of 97 out of 99.
Vistra is building a flat base with an ideal entry point of 34.28. While it is a utilities play, Vistra is among the top 4% of stocks in terms of price performance over the past 12 months, defying its industry's long slump.
Wholesale drug supplier Cencora is close to a cup base buy point of 194.79. The relative strength line has hit fresh heights, a good sign.
Please follow Michael Larkin on X, formerly known as Twitter, at @IBD_MLarkin for more analysis of growth stocks.
