The Dow Jones Industrial Average fell further at midday as the market digested the sterner stance from Fed Chairman Jerome Powell.
After opening 0.4% lower, the Dow is now trading 1.7% lower. The Nasdaq fell 2.5% while the S&P 500 was down 2%. The small cap Russell 2000 was also down 2.2%.
The growth-focused Innovator IBD 50 ETF showed a smaller decline of 1.9%.
The yield on the benchmark 10-year Treasury rose 2 basis points to 3.03% following the release of Powell's speech.
Volume was higher with the Nasdaq showing a 1.7% increase and the NYSE up by 5.6% compared to the same time yesterday.
In his Jackson Hole speech, Powell emphasized the importance of curbing inflation sooner rather than later and aligning aggregate demand to supply.
"Restoring price stability will likely require maintaining a restrictive policy stance for some time," Powell said. He said the lessons from the high inflation era of the 1970s showed that inflation feeds on itself. Central banks' primary function was to ensure low and stable inflation. Any delay in achieving that aim could carry a high risk for the economy. "The historical record cautions strongly against prematurely loosening policy," he added.
Though personal consumption rose just 0.1% in July while core prices rose less than 0.1%, Powell believes it to be insufficient data to start easing. He says the biggest challenge lies in controlling inflation before it spirals and gets entrenched in wage and price decisions.
Powell is weighing the lower-than-expected, revised GDP contraction of 0.6% in July, and yesterday's initial jobless claims of 243,000 that indicates a still-strong labor market. On the other hand, durable goods were unchanged in July after June's 2.2% increase.
Market Rally Feels Powell's 'Pain'; What To Do Now
Dow Jones Leaders Near Buy Point
Blue chip names remain an opportunity. Apple shares are near a buy point of 176.25 as the stock forms a handle. UnitedHealth is in the buy zone from a buy point of 518.80. Coca Cola is trading 4% below a buy point of 67.37. Chevron is building the right side of a cup base with a buy point of 182.50.
In the semiconductor group, IBD Leaderboard and IBD 50 stock Axcelis Technologies broke out yesterday from a cup-with-handle base. Shares fell below the 79.93 buy point in Friday trading.
Outside Dow Jones: Earnings News
Dell late Thursday beat estimates but lowered its full-year outlook. Revenue of $26.4 billion was in line with the company's guidance and 9% higher than the same quarter last year. Earnings of $1.68 were 2 cents above estimates. The Round Rock, Texas-based company warned of customers taking a more cautious view in the current quarter. Shares are selling off in higher volume, falling below the 50-day line.
Workday gapped up nearly 7% after earnings beat. Ulta shares broke out after strong earnings. Shares are in a buy zone from a buy point of 417.08.
Stocks Moving Today
IBD 50 stock Daqo Energy is surging nearly 10% today. The polysilicon manufacturer ranks first in the number one IBD industry group, solar energy. Solar and renewable energy stocks are rising after the Inflation Reduction Act authorized government spending of $369 billion for U.S. renewables.
Electronic Arts gapped up 5% after rumors that Amazon.com may bid to acquire it. Dow Jones component Microsoft's acquisition of another video game company, Activision Blizzard, awaits approval from the Federal Trading Commission.
Bitcoin Depot, the largest Bitcoin ATM company in the U.S., has partnered with a special-purpose acquisition company to go public. The SPAC, GSR II Meteora, went public recently under the ticker GSRM. Bitcoin Depot has around 7,000 ATMs in the U.S. that allow users to convert cash to crypto. Shares will trade on the Nasdaq under the ticker BTM.
Follow Vidya Ramakrishnan @IBD_Vidya for more news on growth stocks and the stock market today.
