The stock market reversed lower near midday Wednesday, as the Nasdaq fell nearly 1%. Natural gas prices and energy stocks slid, and an IBD 50 stock saw a sell signal.
The Nasdaq composite, which was up 0.4% earlier, was down 0.8%. The index is testing its 2022 lows. The S&P 500 reversed lower 0.6% and is now down for the week. The Dow Jones Industrial Average fell 0.5%, but is still holding above its 50-day moving average. It faces resistance at the 21-day exponential moving average.
Volume was higher on the NYSE and Nasdaq compared with the same time on Tuesday.
Innovator IBD 50 ETF fell 1.5%, underperforming the main indexes. Few IBD 50 stocks made big moves, however. Tenaris fell back to its 35.15 buy point. Texas Pacific Land dropped below its 50-day line but in light volume. The oil and gas royalties firm is forming a flat base.
The 10-year Treasury yield rose 3 basis points to 3.89%, after a 10-basis point jump on Tuesday that contributed to that day's stock market's decline.
Tesla Stock Market Capitalization Sinks
Tesla pared gains to 0.5% after being up more than 4%. Baird cut its price target on the stock to 252 from 316, but said it still likes the EV company in the long term. Baird called it the "best positioned" company in the auto making industry.
The stock remains down more than 40% for the month. With Tuesday's 11.4% slide, Tesla is no longer among the 10 largest companies by market capitalization. It's the first time in more than two years that the company is not in the top 10, according to Dow Jones Market Data.
Its market cap has fallen to $344.5 billion, according to MarketSmith. The stock began to unravel soon after a 3-for-1 stock split that went into effect in August. Excessive splits can mark tops for major stocks, although it didn't seem excessive for Tesla at the time. Shares met resistance around the 10-week and 40-week moving averages in August and September, which emboldened the bears.
In a year when tech leaders have suffered more than most, Apple is also having a forgettable December. The stock lost support around the 134 level this month, dashing hopes that at least one of the big techs could withstand the selling. Apple fell 1.7% today.
Natural Gas Slides
Natural gas prices plunged, sending related ETFs down sharply as energy stocks in general weakened. United States Natural Gas Fund fell more than 11% and traded below 15 for the first time since February.
U.S. natural gas prices fell 6.2% to $4.955 per million Btu, which could be the lowest closing price since March 21, according to The Wall Street Journal. The price of natgas has about halved from the peak price of $9.68 on Aug. 22. Traders are reacting to a fast warm-up in U.S. temperatures after last weekend's winter storm.
Flex LNG, whose tanker ships carry liquefied natural gas, stumbled 5.6% in heavy volume. The stock gapped below its 50-day moving average. The IBD 50 stock is more than 7% below its prior 37.09 buy point, which is a sell signal.
The price of U.S. crude oil fell 2.6% to $77.46 per barrel around 11 a.m. ET. Of the 11 S&P sector ETFs, Energy Select Sector SPDR was the weakest this morning, off 2%.
Stock Market Watches Economic Reports
In economic news, pending home sales fell 4% in November, an improvement over the revised 4.7% decline in the previous month. Economists had forecast a decline of 0.5%, according to Econoday. The pending home sales index fell from 77.1 to 73.9.
"We expect more downside in housing, but so far, we do not see the same level of risk as the Great Financial Crisis," said Jeffrey Roach, chief economist for LPL Financial. "Housing activity will slow further from here but we do not expect a significant rise in foreclosures."
The Richmond Fed manufacturing index, which combines new orders, shipments, and employment indexes, rose to 1 in December from -9 the prior month. It also beat expectations.
