The Dow Jones Industrial Average reversed higher despite a spate of negative economic data. Tech stocks such as Apple, Alphabet and Amazon slid due to a worrying guidance update from Snap.
Three stocks are worth keeping tabs on after they flashed a bullish sign. Pfizer, BP Prudhoe Bay Royalty Trust and SM Energy all saw their relative strength lines hit new highs.
Volume was higher on both the Nasdaq and the New York Stock Exchange according to early data. This is a negative sign when stocks are falling.
Meanwhile, the yield on the benchmark 10-year Treasury note tumbled 10 basis points to 2.76%. West Texas Intermediate crude fell slightly but was still trading around $110 per barrel.
Economic Data Disappoints, Raises Recession Fears
A raft of worse-than-feared economic data stoked worries that a recession could be on the way.
The Composite Purchasing Managers' Index came in below economists' estimates, according to Econoday. The flash composite index for May was 53.8, down from 56.0 in April and below the consensus estimate of 55.5.
The Richmond Fed Manufacturing Activity report was also poor, coming in well below the most pessimistic forecast. It fell to -9 in May, from 14 in April, the lowest reading since May 2020. Economists polled by the Wall Street Journal expected the indicator to come in at 10. Two of the three components of the index were negative, while a modest improvement in supply-chain issues was the only positive.
There was a big miss on April new-home sales as well, suggesting the housing market may have peaked. New residential sales dipped 16.6% to 591,000 homes, while analysts had expected 700,000-765,000. Housing prices are still rising, but this is actually acting as a demand dampener.
"The U.S. economy is not falling apart, but the weakness it is experiencing is much worse than many expected," Oanda senior market analyst Edward Moya said in a note to clients.
Nasdaq Mauled As Small Caps Tumble
The tech-heavy Nasdaq fared worst out of the major indexes. It fell 2.4%. Zoom Video Communications was a silver lining as it rose 5.6%.
The S&P 500 also managed to fight back from lows, but still gave up 0.8%. Norwegian Cruise Line was a laggard as it plunged 12%.
U.S. Stock Market Today Overview |
||||
|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 31931.06 | +50.82 | +0.16 |
| S&P 500 | (0S&P5) | 3942.21 | -31.54 | -0.79 |
| Nasdaq | (0NDQC ) | 11264.45 | -270.83 | -2.35 |
| Russell 2000 | 175.57 | -2.64 | -1.48 | |
| IBD 50 | 30.33 | -0.23 | -0.75 | |
Last Update: 4:06 PM ET 5/24/2022 |
||||
The S&P sectors closed mixed. Consumer discretionary, communication services and technology fared worst. Utilities and consumer staples, defensive areas, made the best gains.
The hungry bears also feasted on small caps, with the Russell 2000 sliding 1.5%.
Growth stocks also dipped. The Innovator IBD 50 ETF, a bellwether for growth stocks, fell almost 0.8%.
Dow Jones Falls As Apple Stock Gets Lashed
The Dow Jones Industrial Average managed to fight back to end the day mildly positive. It ended the day up about 200 points, or 0.2%.
Apple stock was one of the worst performers on the Dow Jones today. Nevertheless it closed well off lows as it fell 1.9%. The stock remains stuck below its major moving averages, according to MarketSmith.
But it was Walt Disney that fared worst of all, dropping 4%. Aerospace giant Boeing also struggled badly as it fell 3.8%.
Fast food behemoth McDonald's led the upside as it popped 2.7%.
Tech Stocks Dive After Snap Warning
It was a tough day for tech stocks in general following a disastrous guidance update from Snap.
The Snapchat parent was getting bludgeoned after it issued a warning about its second-quarter results. The stock plummeted 43.1%.
It comes after the firm already warned its revenue was growing more slowly than expected when it missed Q1 estimates on April 21.
A host of big tech names were getting dragged lower amid the worsening sentiment. Google parent Alphabet fell 5%, e-commerce giant Amazon slid 3.2%, Facebook parent Meta Platforms dropped 7.6% and Pinterest plunged 23.6%.
Futures Rise After Latest Wild Session; Defense Giant Goes On Offense
Outside Dow Jones: These 3 Stocks Flex Muscles
It is always a good idea to look for stocks showing strength when the stock market is having a tough day.
Pfizer caught the eye of investors after its relative strength line surged to a new high.
The stock is trying to close in on a consolidation-pattern entry of 61.81, according to MarketSmith analysis.
Pharma stocks have been faring well of late, which is encouraging. Pfizer stock boasts a perfect IBD Composite Rating of 99 due to strong all-around performance.
BP Prudhoe Bay Royalty Trust also saw its RS line reach new heights.
The energy play is closing in on a cup-base buy point of 17.30. The stock is up a remarkable 230% since the start of 2022.
SM Energy also saw its relative strength line hit new high ground.
The stock has formed a fresh consolidation and is shooting for an ideal entry of 43.79. Analysts see earnings spiking 344% in 2022.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
