The Dow Jones Industrial Average closed sharply lower after testimony by Fed Chair Jerome Powell unleashed a wave of fear on Wall Street. An attempted fightback by Tesla faltered while rival EV stock Rivian Automotive plunged. JPMorgan Chase and Goldman Sachs lagged as financials tumbled.
It wasn't all bad news for investors, though. Airline stocks such as Delta Air Lines and United Airlines jumped after the Justice Department moved to block the JetBlue Airways merger with Spirit Airlines. Leaderboard stock Nextracker, a solar play, also shined.
Mr. Powell Goes To Washington, Issues Inflation Pledge
With hopes fading that inflation is coming under control, Powell's appearance before the Senate Banking Committee was key.
He conceded to lawmakers that recent economic data has come in "stronger than expected." In addition, he suggested that the top level of interest rates is likely to be higher than previously thought.
"If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes," he pledged.
After the Fed chair's appearance, the odds rose to 70% that rates will rise to 5.5%-5.75%. It had been priced at about 50-50 beforehand. Powell did not specify how high he thinks rates will end up having to go.
There was mixed action among Treasuries as the yield curve got more inverted. The 10-year yield slipped a single basis point to 3.97% while the two-year yield spiked 12 basis points to 5.02%.
Nasdaq Reverses, S&P 500 Tests Key Level
The Nasdaq saw a small early gain disappear as it knifed 1.3% lower. Sirius XM and Lucid both underperformed with dips of almost 6%.
The benchmark S&P 500 closed near lows for the day as it fell 1.5%. It is testing the 50-day moving average, which will be key going forward. Miner Freeport-McMoRan lagged here, skidding 6.1% as commodities were broadly lower.
The S&P 500 sectors were all red. Financials and real estate struggled most, while the defensive consumer staples sector fell the least.
Bears also feasted on small caps, with the Russell 2000 closing down 1.1%. Growth stocks actually held up better, with the Innovator IBD 50 ETF falling 0.6%.
Dow Jones Today: JPMorgan, Apple Stocks Tumble
The Dow Jones Industrial Average was slaughtered. It was down about 575 points, or 1.7%.
Apple saw some recent gains fade as it fell 1.5%. AAPL stock remains clear of the key 200-day moving average for now, MarketSmith analysis shows.
JPMorgan Chase and Goldman Sachs were among the worst performers on the Dow Jones today. JPM dipped 2.9% but remains positive for the year, while GS met resistance at the 50-day line and dropped 3.1%.
Walgreens Boots Alliance was the Dow's worst performer as it plunged 3.7%.
Merck was the only stock that turned in a gain on the Dow, though its rise was a miserly 0.2%.
Tesla Stock Falters As Rivian Plunges
TSLA tried to break into positive territory before being dragged down by the rampaging bears.
Tesla stock sold off sharply into the close, ultimately giving up 3.2%. Nevertheless, it remains up nearly 74% so far in 2023.
In contrast, upstart competitor Rivian Automotive was getting absolutely hammered. It ended the day down 14.5% after the company announced it is looking to sell $1.3 billion worth of bonds. The proceeds will be used to will help fund the launch of its R2 vehicles.
Rivian saw mammoth volume. It lost more ground on its major moving averages and is now down nearly 16% for the year.
Airline Stocks Lift On Justice Department JetBlue Move
Airline stocks in general were given a lift after the Justice Department announced it is suing to prevent the proposed JetBlue merger with Spirit Airlines.
In a court filing, the DOJ said JetBlue's plan "would eliminate the unique competition that Spirit provides." It also said it would "leave tens of millions of travelers to face higher fares and fewer options."
JetBlue stock skidded 2.9%. SAVE stock popped 4.6%, but it remains down almost 12% for the year.
American Airlines vaulted 1.5% while United Airlines popped 3%. Both closed off lows however.
Delta Air Lines was given an additional boost after it was upgraded to outperform from in-line by Evercore ISI. It ended the session with a 1.6% gain.
Outside Dow Jones: This Leader Looks Bullish
Another stock that managed to outperform was Leaderboard name Nextracker.
The solar stock was off highs for the day but nevertheless gained 4.6%. It is currently trading in a buy zone above an IPO base entry of 33.05. Volume was low on the move.
Management owns 1% of the 148.1 million shares outstanding, according to MarketSmith data. The float is small at 17.4 million.
Investors will need a strong stomach to own NXT stock as it has only been trading since Feb. 9 and has been volatile.
The company supplies solar tracking equipment and software for utilities and other organizations that run large-scale solar panel arrays.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
