The Dow Jones Industrial Average closed 0.02% lower on Thursday after it pared most of earlier losses in today's trading. Fresh Fed remarks that pointed to a 5% or higher terminal rate in 2023 drove the index down. Reports say Tesla CEO Elon Musk may have identified a successor to run that company. The news came as Musk testified in court in defense in a shareholders' lawsuit.
The S&P 500 also fell in tandem and pared most of its 1% loss as well. It ended 0.3% lower.
The Nasdaq fell the most in the morning by over 1% but scaled back to trade 0.35% lower at 4 p.m. ET. The tech-dominated index is on pace for completing its first year since 2014 without making a record. It traded at its highest level of 16,057.44 almost a year ago, on Nov. 19, 2021, and is down 31.1% since then.
The small-cap Russell 2000 lagged with a loss of over 1%.
Crude oil fell over 3% to trade at $81.46 a barrel. The yield on the benchmark 10-year Treasury note spiked 8 basis points to 3.77%.
Volume on the NYSE and on the Nasdaq was lighter compared to the same time on Wednesday.
Dow Jones Stocks On Watch
Dow Jones stocks on watch are Apple and Microsoft, which have found support above their 50-day lines. UnitedHealth fell through its 200-day line and is testing its 200-day line after last week's health care carnage. Merck is extended over a buy point of 95.82 in a flat base.
In the IBD 50, Tenaris is near a buy point of 34.19 in a cup-with-handle base. New Fortress Energy and Murphy USA have fallen below the 50-day line. Shares of NFE are in a cup-with-handle base with a buy point of 60.43.
MUSA has fallen back below the 303.19 buy point of a flat base. Harmony Biosciences may trigger the round-trip sell rule after breaking out at 52.62 from a cup with handle. However, the stock reversed higher and is above the 50-day line right now.
Earnings On Deck
Macy's sales of $5.2 billion and earnings of 52 cents a share topped views. Kohl's missed estimates with $4 billion in sales, but beat earnings expectations with 82 cents per share. Shares of Macy's surged 15% today and are clearing resistance at the 200-day moving average. Kohl's rose 5%, rebounding from the 50-day line.
Covid lockdowns in China hurt Alibaba. The e-commerce saw revenue of $29.12 billion with earnings of $1.82 a share. It was the Chinese e-commerce giant's weakest quarter for revenue growth, which rose 3% after falling 4% in the month of September. BABA surged over 7% today, climbing above its 50-day line.
Sales grew to $4.6 billion for BJ's Wholesale Club compared to $4.1 billion last year while per-share earnings of 99 cents also rose from 91 cents. BJ's shares plunged over 5% after a failed breakout from a cup base. Shares have also fallen below their 50-day line.
Applied Materials, Ross Stores and Palo Alto Networks report earnings today after the close. Shares of AMAT are testing their 200-day line, while PANW fell over 1%. ROST was up over 1%.
On Wednesday, Dow Jones stock Cisco Systems gave strong quarterly results. Sales of $13.6 billion were the highest ever for the networking giant and per-share earnings of 86 cents were its second highest on record. It also upped its revenue forecast for the year to 4.5%-6.5% from 4%-6%.
Nvidia reported $5.93 billion in sales with 58 cents in earnings per share late Wednesday. Sales declined 17% while earnings per share fell 50% from the prior year. Also on Wednesday, IBD 50 stock Sociedad Quimica y Minera had blowout 900% earnings growth of $3.85 a share while sales grew to $2.96 billion.
Target on Wednesday warned in its earnings report of weak holiday sales. Sales grew 3% to $26.5 billion while earnings per share of $1.54 showed a 49% decline.
CSCO is up 5% today while NVDA fell over 1%. SQM is down as well by a steep 9% while TGT is paring Wednesday's big loss and is up over 4%.
Early on Thursday, St. Louis Fed President James Bullard observed that interest rate hikes have had limited effect on inflation. A higher terminal rate of above 5% may be in the cards in 2023, to place effective curbs on inflation. Last week's initial jobless claims of 222,000 were lower than the previous week's 226,000. Housing starts fell 4.2% in October to 1.425 million.
Reports citing sources inside Tesla are rife that CEO Musk has identified his successor to head the world's largest electric-car company as he wrestles with Twitter. Earlier, Musk indicated his reluctance to be a chief and his preference for "design and engineering." Tesla shareholders have already probing Musk's pay after concerns that the Twitter acquisition will weigh heavily on the Musk's time, making him "a part-time CEO." Musk has a more than 20% stake in Tesla, including unexercised options. Shares fell 2%.
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