Dow Jones Dives Amid These Fed Worries; This Warren Buffett Stock Flashes Sell Signal

Dow Jones Dives Amid These Fed Worries; This Warren Buffett Stock Flashes Sell Signal

The Dow Jones Industrial Average tumbled Wednesday after hot inflation data and the latest Fed minutes revealed inflation worries. Artificial intelligence leader Nvidia (NVDA) moved higher despite a correction but fellow Magnificent Seven names Tesla (TSLA), Apple (AAPL) and Microsoft (MSFT) struggled on the stock market today. And a Warren Buffett stock flashed a sell signal.


Meanwhile, a couple of stocks were digging in near entries amid the negative action. Icici Bank (IBN) and Axon Enterprise (AXON) were trying to hold up. But there were also a number of breakdowns.

Stock Market Today: Bears Maul Small Caps

The tech-heavy Nasdaq dropped more than 1% on the stock market today. Walgreens Boots Alliance (WBA) lagged in the composite as it tumbled nearly 7%.

The benchmark S&P 500 also fell more than 1%. Extra Space Storage (EXR) was among the worst performers as it plunged nearly 7%. Delta Air Lines (DAL) had initially been a bright spot on an earnings beat, but reversed and lost almost 3%. The Invesco S&P 500 Equal Weight (RSP) exchange traded fund skidded nearly 2% amid broader weakness.

S&P 500 sectors were virtually all in negative territory. Real estate and utilities, the latter a defensive area, struggled most on the stock market today. Only energy was managing to squeeze out a slight gain.

Small caps were being spanked by the bears, as the Russell 2000 fell 3%. The index gapped below its 50-day moving average. Growth stocks were digging in, though, with the Innovator IBD 50 ETF (FFTY) dipping only 0.6%.

Fed Minutes Reveal Worries

Taking a chunk out of stocks Wednesday was the latest consumer price index, which came in hotter than expected. The news stoked inflation fears and put a damper on prospects for interest rate cuts this summer.

Headline CPI popped 3.5% year over year. This was higher than views for 3.4%. Core CPI, which strips out food and energy prices, spiked 3.8% from a year ago. This was also above analyst expectations.

Also on the economic front, minutes from the Federal Reserve came out Wednesday, but stocks had a muted response.

The latest Fed minutes revealed Fed Chair Jerome Powell and his fellow Federal Open Market Committee members are worried about cutting rates too soon.

“Participants generally noted their uncertainty about the persistence of high inflation and expressed the view that recent data had not increased their confidence that inflation was moving sustainably down to 2%,” the minutes said.

Meanwhile, the 10-year Treasury note soared 19 basis points to 4.56% while the 30-year gained 13 basis points to 4.63%. The five-year yield jumped 24 basis points to 4.61% while the two-year vaulted 22 basis points to 4.97%. Yields were pushed even higher in afternoon trading following a disappointing 10-year auction.

Dow Jones Today: Home Depot And Intel Lag

The Dow Jones plunged more than 500 points. This equates to a fall of more than 1.3%.

Home Depot (HD) lagged the most as it tumbled more than 3%. Intel (INTC) sank over 3%. The struggling semiconductor stock is trading below the 200-day line.

Banking giant Goldman Sachs (GS) also lagged with a near 3% dip while Boeing (BA) skidded more than 2%.

There were only a few components in positive territory on the Dow Jones today. Walmart (WMT) was faring best, rising just over 1%.

Magnificent Seven: Nvidia Rises Amid Correction

The so-called Magnificent Seven were enduring mixed fortunes on the stock market today.

Nvidia stock, which has been fueled by AI enthusiasm, was fighting back after days of weak action. It rose nearly 2% as it gets support at the 10-week moving average. It got a boost after Morgan Stanley raised its price target to 1,000 from 795.

Nvidia stock yesterday closed more than 10% below the March 25 closing high of 950.02. Nevertheless, the Leaderboard stock remains up more than 70% so far in 2024.

Tesla stock suffered most among the much-watched group of stocks. The electric vehicle maker’s shares dived more than 3%, losing ground on the 50-day line in the process. It came after Jefferies lowered its price target to 165 from 185 but retained its hold rating. TSLA stock is now down more than 30% so far in 2024.

Microsoft stock fell around 1%, and is now testing the 21-day exponential moving average. Old rival Apple (AAPL) also fell nearly 1% as its downtrend continues. Google parent Alphabet (GOOGL) fell fractionally. (AMZN) inched lower while Meta Platforms (META) reversed out of negative territory to edge higher.

Stock Market Today: Deckers Decked Amid Breakdowns

Ugg and Hoka brands parent Deckers Outdoor (DECK) saw yesterday’s test of the 50-day moving average turn into a serious breach as it skidded more than 7% in high volume, MarketSurge analysis shows. This is a sell signal.

Deckers stock was hit after Truist downgraded the stock to hold because of weak demand concerns.

Aerospace play Hexcel (HXL) flashed a sell signal as it tumbled below the 200-day moving average. Shares plummeted nearly 12% in massive volume. Chief Executive Nick Stanage is retiring. He will be replaced by Thomas C. Gentile, effective May 1.

Homebuilder stocks were also under pressure. The iShares U.S. Home Construction (ITB) exchange traded fund fell below its 50-day line after dipping nearly 5%. Volume was above average here.

Warren Buffett Stock Flashes Sell Signal

Even the greatest investors can suffer a painful loss. And legendary stock picker Warren Buffett may be spitting out his Coca-Cola today after one of the stock’s held by his Berkshire Hathaway (BRKB) firm flashed a key sell signal.

Floor & Decor (FND) gapped below its 50-day moving average in above-average volume. The relative strength line is also falling. Its share price was down nearly 7%.

Overall performance at the flooring retailing company is not ideal, with its IBD Composite Rating coming in at 75 out of 99. And while it is in the top 17% of stocks in terms of price performance over the past 12 months, fundamentals are not ideal. This is reflected in its EPS Rating of 66.

Nevertheless, Buffett may opt to pursue his legendary buy-and-hold strategy as he still holds a solid profit on his average buy price in the stock.

Outside Dow Jones: These Stocks Dig In Near Entries

Even amid the difficult action there were a few stocks showing strength near buy points on the stock market today.

India-based Icici Bank slipped back just below the 26.66 buy point of an early-stage flat base, MarketSurge analysis shows. The stock reclaimed its 50-day moving average in mid-February. Icici stock rallied in March as Asian bank stocks acted strongly. Earnings performance is a particular highlight here, with its EPS Rating at a best-possible 99.

Axon Enterprise is another one for investors’ watchlists as it climbed more than 2% on the stock market today. Axon continues to form a flat base with an ideal entry of 325.63. It is breaking out past a trend line entry around 319. But market risk is higher now.

Axon’s overall performance is strong, with its IBD Composite Rating coming in at 99. The police equipment maker is up more than 22% thus far this year.

Please follow Michael Larkin on X, formerly known as Twitter, at @IBD_MLarkin for more analysis of growth stocks.


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