The Dow Jones plunged as the stock market got crushed. Tesla took a dive amid reports Elon Musk could become temporary CEO of Twitter if he completes his takeover. Apple and Microsoft offered no refuge as tech stocks got mauled.
With the market in a correction, it is a good idea to find stocks flexing amid the downward pressure. Automatic Data Processing, Dillard's and General Dynamics all saw their relative strength lines hit highs Thursday as they build bullish bases.
Volume was up on both the Nasdaq and the New York Stock Exchange compared to the same time Wednesday. This is a bad sign on a down day.
Meanwhile, the yield on the benchmark 10-year Treasury note spiked 18 basis points to 3.1%. The move followed Wednesday's decision by the Federal Reserve to raise interest rates a half point and start reducing its balance sheet.
Oil dipped slightly, with West Texas Intermediate crude falling less than 1% to trade for about $107 per barrel.
Nasdaq Smashed As Small Caps Crumble
The stock market gave up Wednesday's gains that came after Fed Chairman Jerome Powell's news conference.
The Nasdaq was hit hardest Thursday, falling almost 5%. Cognizant Technology Solutions was among the worst performers, falling about 13% after it cut guidance.
The S&P 500 was also smacked lower, falling more than 3%. Etsy was among the worst offenders here. It shed almost 17% after serving up weak outlook during its latest quarterly report.
U.S. Stock Market Today Overview |
||||
|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 33062.90 | -998.16 | -2.93 |
| S&P 500 | (0S&P5) | 4155.62 | -144.55 | -3.36 |
| Nasdaq | (0NDQC ) | 12359.23 | -605.63 | -4.67 |
| Russell 2000 | 185.75 | -7.77 | -4.02 | |
| IBD 50 | 32.18 | -1.04 | -3.13 | |
Last Update: 1:24 PM ET 5/5/2022 |
||||
Bear in mind that the S&P 500 or Nasdaq would have to fall 7% for a circuit breaker to kick in and halt market trading.
The S&P sectors were all negative. Consumer discretionary and technology were faring worst as utilities held up the best.
Small caps were crushed, with the Russell 2000 falling 4%.
Growth stocks also fell hard. The Innovator IBD 50 ETF fell more than 3%.
Dow Jones Sheds Over 1,000 Points In Rout
The Dow Jones Industrial Average was mauled by the bears, dipping as much as 1,200 points, though it recovered a bit to around 1,000 points down in afternoon trading, a decline of almost 3%.
The broad nature of the losses is concerning. Salesforce was the worst Dow performer as it fell nearly 8%. It looks set to bring a short-lived rally to a close and lose further ground on its major moving averages.
Nike was another laggard as it slid nearly 6%. Home Depot also crumbled, off more than 5%.
There was no upside, with Amgen and Coca-Cola top performers by virtue of the fact they were down less than 1% apiece.
Apple Stock, Microsoft Slide As Big Tech Tumbles
Big tech had long served as a refuge for investors but that was certainly not the case Thursday.
Apple was among the worst performer on the Dow Jones as it tumbled 5%. It has now skidded back below its 200-day moving average. It also lost further ground on a buy point of 183.04, MarketSmith analysis shows.
Leaderboard stock Microsoft was another blue chip faltering. It was down nearly 5%. It is continuing to consolidate below its major moving averages, despite a recent strong earnings report.
Google parent Alphabet was near session lows as it gave up nearly 5%. Its losses paled in comparison to e-commerce behemoth Amazon.com, which fell around 7%.
Tesla Stock Spanked Amid Elon Musk Twitter News
Tesla stock was hammered again amid more revelations on the move by CEO Musk to take over Twitter.
The stock sank more than 7% after a CNBC report that the eccentric executive will serve as temporary CEO if he completes the $44 billion buyout.
The current CEO of Twitter, Parag Agrawal, has only led the firm for a few months after founder Jack Dorsey stepped down. Meanwhile, Elon Musk disclosed he has received $7 billion in new financing to fuel his deal to buy the social media company.
Twitter stock was one of the stocks making progress thanks to the news. It rose more than 3%.
Dow Dives As Yields Soar In Delayed Fed Reaction
Outside Dow Jones: These 3 Stocks Flex Muscles
When the stock market is in turmoil investors are best served by building up their watchlist.
Look for stocks, such as the ones below, showing relative strength. All saw their RS lines hit new highs today
Automatic Data Processing is worth watching as it crafts a cup-with-handle base. The ideal buy point is 240.73. The stock was down nearly 5% Thursday, however.
The firm boasts strong earnings. In addition, it is in the top 11% of stocks in terms of stock market performance over the past 12 months.
Department store play Dillard's is forming a cup base with an ideal entry point of 416.81, according to MarketSmith analysis.
General Dynamics is building a flat base with an entry point of 255.09. The stock has managed to clear its 10-week line this week, an encouraging sign.
General Dynamics and other defense stocks jumped at the start of Russia's Ukraine invasion. This is spurring Europe and other countries to significantly increase defense spending, which should benefit these companies in the long term.
Last week, General Dynamics beat Wall Street views on the top and bottom lines for the most recent quarter.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
