The Dow Jones Industrial Average moved off its session lows but still closed lower on Wednesday. The trading action closely resembled Tuesday's as indexes fought back from deeper losses. Tech stocks led the upside, as the Nasdaq briefly turned positive in afternoon trading.
In key economic news, the Fed's Beige Book report on Wednesday highlighted signs of emerging economic loosening. "The Beige Book supports the thesis that inflation is at an inflection point and is now in a cool-down period. Inflation expectations are moderating as some firms estimated next year retail price increases as ranging from 4 to 5 percent," commented Jeffrey Roach, Chief Economist for LPL Financial.
Other highlights from the Fed's Beige Book include commentary on how worker shortages are still keeping labor markets tight and businesses understaffed. But, in some districts, firms are freezing hirings, which is consistent with the decline in April job openings reported by the Bureau of Labor Statistics. Meanwhile, wage growth is leveling off and not keeping up with inflation.
Dow Jones Today
At the close, the Dow Jones Industrial Average traded down 0.5%, but remained off intraday lows. The S&P 500 fell 0.7% as well, after also moving off morning lows. The small-cap Russell 2000 traded at break-even, while the Nasdaq was down 0.7%. Volume, according to early data, was running lower on the Nasdaq and on the NYSE vs. the close on Tuesday.
Earlier in the session, the S&P 500 and Nasdaq were down more than 1%. The market closed out May with fractional gains on the major indexes but could be headed for better conditions this month, thanks to the new confirmed uptrend that began last Thursday.
On Wednesday, the Nasdaq held up from a technical perspective as the index moved off intraday lows and held above support at its 21-day line. Both the S&P 500 and Dow Jones also held above this level of support after regaining it last week.
Stocks initially fell Wednesday due to concerning comments from JPMorgan boss Jamie Dimon on the current state of the economy. Dimon told Bernstein's Strategic Decisions Conference the U.S. economy is facing a "hurricane" as the Federal Reserve continues its process of normalizing interest rates.
The Innovator IBD 50 ETF bucked the downtrend and rose 1.3% as energy stocks helped buffer losses. The Energy Select Sector SPDR led the upside among the S&P sectors, up 1.6%. The second best index performer on Wednesday was technology. Financials and health care sectors fell over 1% each.
Stocks Breaking Out Now
A handful of stocks in the MarketSmith Growth 250 index scored breakouts, including ProFrac. Meanwhile, insurance stock W.R. Berkley came within pennies of a breakout and remains just below its buy point.
After several oil stocks broke out Tuesday, ProFrac continued the trend as shares of the oil field services stock broke out from an IPO base. The stock traded just below the 19.05 entry in afternoon trading. The buy zone goes to 20. The company went public May 13 at 18 a share, according to MarketSmith.
Elsewhere, Berkley remains just below a 71.63 flat-base entry. The stock has traded higher in recent sessions in heavy volume, a bullish sign. Shares also reclaimed their 50-day line. Berkley is part of the property casualty insurance industry group, which ranks No. 22 out of IBD's 197 groups.
Salesforce Earnings Boost Stock
Dow Jones component Salesforce rallied over 10% as shares regained their 21-day line in heavy volume. The stock has been trading well below key moving averages for the past several months.
But a mixed earnings report helped boost the stock Wednesday. Earnings fell 19% but still beat expectations, while revenue also beat views. However, the company lowered its fiscal 2023 sales outlook.
Follow Rachel Fox on Twitter at @IBD_RFox for more Dow Jones and stock market commentary.
