The Dow Jones Industrial Average and Nasdaq composite closed lower on Monday after a massive sell-off hit the stock market last week following the Federal Reserve's rate-hiking announcement. The Nasdaq led the downside while the S&P 500 fell more than 2% intraday, setting a fresh low of just under 4000 for 2022.
Nasdaq Leads Downside As Oil Plummets
A half-point fed funds rate increase on Wednesday, followed by comments from Fed Chairman Jerome Powell, led stocks initially higher last week. But the gains were short-lived as the Dow plummeted over 1,000 points on Thursday and continued lower on Friday.
At the close on Monday, the Dow Jones industrials were down another 2% and closed near intraday lows. The Nasdaq sank 4.3% after being down over 1.5% last week. Meanwhile, the S&P 500 declined 3.2%. The small-cap Russell 2000 lost 4.2%. According to IBD data, volume was higher on the Nasdaq and on the NYSE vs. the same time on Friday. This is very much a bearish indicator as it shows institutional distribution.
On Monday, the 10-year Treasury yield traded at around 3.08%. Meanwhile, crude oil plummeted, causing a sell-off in energy stocks. Energy stocks, which had been holding up amid the market correction, led the downside among S&P 500 sectors. The Energy Select Sector SPDR lost around 8.2%.
The slide came as the price of U.S. crude oil fell more than 6% to $102.70 per barrel. Oil prices fell on new data from China showing a slowdown in exports. Chinese exports rose 3.9% from a year earlier in April, a big drop-off from 14.7% growth a month earlier.
Stocks To Watch: These Stocks Manage To Break Out
The Innovator IBD 50 ETF, a benchmark for growth stocks, fell 6.3%. It's certainly been an unforgiving market for growth stocks. The index gapped lower and was led by heavy losses in several shipping stocks including Zim Integrated Shipping and Eagle Bulk Shipping, as well as oil and gas stocks like Flex LNG and Earthstone Energy.
But two growth stocks in the MarketSmith Growth 250 index managed to score breakouts.
Consumer Portfolio Services, a consumer loans services company trading on the Nasdaq, broke out above a 14.87 entry in strong volume. The stock has shown several up days in heavy volume recently, a bullish sign. Shares remained right at the buy point in afternoon trading. The buy zone tops out at 15.61.
Food products manufacturing giant Mondelez also scored a breakout from a 66.45 entry. Shares have been forming a cup-with-handle base since the start of 2022.
The stock's RS line is skyrocketing to new highs amid Monday's market sell-off. Shares of Mondelez rose 0.8% on Monday. The stock remained just below the buy point in afternoon trading.
Oil, Fertilizer Stocks Struggle
Oil stocks and fertilizers, two areas of the market that had been holding up, struggled in Monday's market.
Bunge, a maker of fertilizer and agricultural products, fell 6.4% and traded well below its 50-day moving average for the first time since it broke out on Jan. 7.
Another leading fertilizer play outside the Nasdaq is Nutrien, which lost over 10% and got removed from IBD's Leaderboard.
Oil explorer Canadian Natural Resources undercut the 50-day line while Comstock Resources made its first break below the 50-day moving average since a March breakout past 10.62 in a six-month cup with handle, according to IBD MarketSmith.
Outside the IBD 50, other stock market leaders in the energy sector struggling to hold their 50-day lines included Matador Resources, Viper Energy Partners and Darling Ingredients.
Follow Rachel Fox on Twitter at @IBD_RFox for more Dow Jones and stock market commentary.
