The Dow Jones Industrial Average closed in negative territory as the stock market moved off session lows following the release of the latest Fed Minutes. Nvidia fought its way into positive territory before posting an earnings beat. Dow Inc. and Walt Disney were among the top performing blue chips. Roblox was given a pasting on Q4 results.
A number of stocks managed to stage breakouts despite the bearish action. Hilton Worldwide and Wyndham Hotels & Resorts both managed to rise past entries, as did Cincinnati Financial.
Earlier in the day it emerged U.S. retail sales jumped 3.8% in January from the previous month. This was soundly higher than the 2% increase economists had forecast. Excluding cars and trucks, sales rose 3.3%, above estimates for a 1% improvement.
Fed Minutes: Federal Reserve Eyes This Move
The stock market fought its way back off session lows following the release of the latest Fed Minutes.
It showed bankers, led by Fed Chairman Jerome Powell, discussed an accelerated timetable for raising their benchmark interest rate at their meeting last month. It will begin with a heavily telegraphed increase in March.
"Most participants suggested that a faster pace of increases in the target range for the federal funds rate than in the post-2015 period would likely be warranted," the minutes said.
The document also said the Fed anticipated "a significant reduction in the size of the balance sheet" in light of current challenges.
The response to the latest Fed Minutes suggests the stock market had successfully priced in the rate moves, as bankers and investors try to wrestle with current inflation levels.
The yield on the benchmark 10-year Treasury note inched up one basis point to 2.05%.
Nasdaq Falls As Growth Stocks Excel
The Nasdaq ended the day down 0.1% as tech stocks struggled. Zoom Video Communications was a notable laggard as it closed the session down 5.7%.
The S&P 500 fared best out of the major indexes, rising 0.2%. Generac was the top performer, surging 14.4% on earnings.
U.S. Stock Market Today Overview |
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|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 34935.59 | -53.25 | -0.15 |
| S&P 500 | (0S&P5) | 4475.10 | +4.03 | +0.09 |
| Nasdaq | (0NDQC ) | 14124.10 | -15.66 | -0.11 |
| Russell 2000 | 206.45 | +0.39 | +0.19 | |
| IBD 50 | 38.31 | +0.15 | +0.39 | |
Last Update: 4:06 PM ET 2/16/2022 |
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The S&P sectors were mostly positive. Energy and materials were the best upside movers. Technology and communications services were the only sectors to close negative.
Small caps made up ground, with the Russell 2000 finishing with a 0.2% gain.
Growth stocks stood out the most though. The Innovator IBD 50 ETF, a bellwether for growth stocks, turned in a gain of 0.4%.
Dow Jones Today: Disney Stock Shines
The Dow Jones Industrial Average failed in its attempt to end the day positive. It lost just over 50 points as it closed down 0.2%.
Disney stock was the biggest winner on the index. It finished the session up 1.1%. The diversified media play is trying to pull away from the key 50-day moving average, MarketSmith analysis shows.
Nike was another noteworthy performer, rising 0.6%. Salesforce.com weighed on the index as it dipped 1.2%.
Nvidia Earnings Beat Expectations
Chip giant Nvidia managed to fight its way back into positive territory ahead of its latest earnings report. It closed the session with a tiny gain of less than 0.1%.
Nvidia beat analyst views for Q4, with earnings per share of $1.32 a share on sales of $7.64 billion. EPS had been seen popping 58% to $1.22 a share, according to FactSet data. Revenue was seen vaulting 48% to $7.4 billion.
Nvidia stock gave up some ground after hours. It has been rebounding from its 200-day moving average but a new base has yet to emerge.
Shares have regained support at their 21-day line but remain below the key 50-day moving average.
Nvidia is a member of the prestigious IBD Leaderboard list of leading growth stocks.
Bears Knock Roblox Block Off
Roblox stock was mauled by angry bears after it missed Wall Street views for the fourth quarter.
It closed the session down 27%, losing even more ground on the 50-day and 200-day moving averages.
It comes after the California-based video game firm revealed it lost 25 cents a share on bookings of $770.1 million in the December quarter.
Analysts had been expecting the company to lose 12 cents a share on bookings of $772 million. In the same period last year, it lost 30 cents a share on bookings of $642 million.
Bulls would have pointed to the fact Roblox had a record number of daily active users in the fourth quarter. But in the current market environment this did not cut any mustard.
The firm averaged 49.5 million daily active users in the period, up 33% year over year. In the month of January, the number increased to 54.7 million.
Average bookings per daily active user were $15.57 in the fourth quarter, vs. $13.49 in the third quarter.
These Stocks Test Buy Points
A couple of travel stocks staged bullish moves before falling foul amid the broader market action.
Hilton Worldwide is below its buy zone after briefly passing a 159.31 cup-base entry. The stock's relative strength line has hit fresh heights, which is a positive. It ended the day down 1.1%
It comes after the firm served up a mixed Q4 report. HLT posted adjusted EPS of 72 cents while Wall Street expected EPS of 73 cents per share. It had lost 10 cents per share a year ago. Sales rose 106% to $1.84 billion, beating estimates for $1.807 billion.
Big money has been snapping up the stock of late, which is encouraging.
Wyndham Hotels & Resorts is also back below its entry after rising past a 91.51 flat-base buy point. The RS line here is also hitting new highs. It closed virtually flat.
It was boosted after the firm reported an 886% EPS surge to 69 cents per share. This was well clear of analyst views for 54 cents. Meanwhile, revenue per available room for the quarter exceeded 2019 levels by 9%, growing 58% vs. 2020.
Institutional investors have also been buying WH stock of late, according to MarketSmith data.
Cincinnati Financial is in a buy zone after moving past a cup with handle entry of 125.04. It ended the day up 6.2%
The insurance play offers a solid balance of earnings and market performance. Earnings popped 22% in the most recent quarter.
With the current uptrend coming under pressure investors should be cautious about making any new buys however.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
