Indexes remained near session lows in afternoon trading Tuesday. The Dow Jones Industrial Average was lower by 1%, or 370 points. The index is testing June's lows as bond yields continue to spiral upward.
The S&P 500 fell 1.3% at 1:30 p.m. ET in the stock market today. The index undercut last week's low, a bearish sign.
Tech stocks lagged. The Nasdaq fell 1.8% after rebounding from August's lows in a four-day rebound.
Volume on the NYSE and on the Nasdaq was higher compared with the same time on Monday— a sign of a distribution day in the making for Tuesday. A follow-through day for the Nasdaq remains elusive.
On Tuesday, in a historic move, the House is scheduled to hold a referendum to decide whether Speaker Kevin McCarthy will continue to lead the House. McCarthy helped broker a deal to avoid a government shutdown over the weekend, but some Republicans criticized the agreement.
The small-cap Russell 2000 fell 1.4%, while the Innovator IBD 50 ETF underperformed, falling 2.2%.
IBD 50 Stocks Falter
IBD 50 stock Capital Southwest slid below the 50-day line with a 3.5% drop in heavy volume. It may trigger the 7% sell rule as it falls below a buy point of 22.92.
Novo Nordisk is round-tripping gains from its last breakout by falling back near its buy point of 86.48. The IBD 50 pharmaceutical stock had climbed as much as 17% from that entry.
Energy stocks in the IBD 50 continued to fall amid wider weak action. Tidewater and Liberty Energy remain above the 50-day line as they pull back. But Dorian LPG is breaking support at the key level after sliding more than 6%. A handle entry of 28.69 is in danger of failing.
The Job Openings and Labor Turnover Survey (JOLTS) for August came in at 9.61 million, well above consensus views of 8.75 million. It rose from July's 8.827 million, according to Econoday. The strong labor market could give the Fed more reason to raise Fed funds interest rates. September's nonfarm payroll data will be released Friday after Thursday's ADP employment report for September.
On Tuesday, Atlanta Fed President Raphael Bostic indicated that rates would stay high for some time. The IBD/TIPP U.S. Economic Optimism Index fell to a 12-year low in October.
The yield on the benchmark 10-year Treasury note rose a further 10 basis points to 4.78% and is now at the highest since July 2007. The U.S. dollar continued its ascent as odds of another rate hike this year rose to 29.7% for November and 41.1% for December.
Gold fell. Crude oil rose less than 0.5% to trade at $88.91 a barrel.
Dow Jones Stocks
In the Dow, Intel retook its 50-day moving average. Nike rose and is holding the bulk of its gains after an earnings gap-up last week. Among other tech leaders, Apple, Microsoft and Salesforce fell 1%-2.8% and remain below their 50-day lines.
Eli Lilly fell and is below the 50-day line after news that it will buy Point Biopharma Global for $1.4 billion. LLY has given up the bulk of its 28% gain from a buy point of 469.87 and is now below the 200-day moving average. PNT stock surged more than 80% but is thinly traded.
HP pared some early gains at the hour after Bank of America upgraded the stock to buy from underperform. Value investor Warren Buffett is reported to have sold 5.1 million shares of the computer hardware maker for around $130 million. HPQ stock remains well below its 50-day line.
Dow Dives As Yields Soar; These Stocks Skid From Key Level
McCormick, Airbnb Among Movers
Outside the Dow Jones index, spice maker McCormick was down more than 8%, gapping down after it announced fiscal third-quarter results. Earnings declined to 65 cents per share from 69 cents in the prior year's quarter. Sales rose 6% to $1.68 billion but missed expectations. For the full year, the company expects midpoint sales growth of 6% amid pricing moves and cost savings to counter inflationary pressures.
Also in the food sector, Cal-Maine reports after the market close. The egg producer's stock has fallen this week and is testing its 50-day line ahead of earnings.
Airbnb got a downgrade from KeyBanc to sector weight from overweight. Analysts, who did not give a price target, see demand for leisure travel fading. ABNB stock fell below its 50-day line and is at risk of ruining a cup with handle pattern.
Quanta Services is falling below its 200-day line in strong volume. It had climbed more than 25% from an April breakout, but nearly all of those gains are now gone.
Digital freelance platform Fiverr pared early gains and was up 1% on an upgrade from Roth MKM to buy from neutral with a price target of 33. Shares face resistance around 30. Analysts at UBS upgraded Warner Music Group to buy from neutral. Shares met resistance at the 50-day line but were finding support at the 200-day line in afternoon trading.
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