The Dow Jones Industrial Average dropped after Federal Reserve Chairman Jerome Powell's remarks on inflation and interest rate. Netflix's (NFLX), stock soared after its earnings. Tesla (TSLA), after Elon Musk's Cybertruck warning, plunged.
Microsoft (MSFT), a software giant, gained. Three notable stocks are moving towards buy points. HealthEquity, Vistra and Cencora are all stocks to watch as they develop bullish bases.
Powell makes a pledge on interest rates and inflation
After Powell's speech at the Economic Club of New York, stocks began to tremble. The central banker reiterated his commitment to "proceeding with caution," indicating that the Fed chief has no plans to raise rates again.
Powell said that rising treasury rates are a major factor in the Fed's decision-making.
Powell stated that "we remain vigilant to these developments, because persistent changes in the financial conditions can impact on the direction of monetary policies."
He also said that if recent economic data continue to be strong, then more tightening may be necessary. Investors are also concerned about the impact that the massive balance sheet of the central banks could have.
Powell was not pleased with the economic data released today. Labor Department data revealed that weekly first-time unemployment claims dropped to 198,000 in the last week. Claims were predicted to be flat, compared with the previous week's 211,000. The job market remains robust despite rising interest rates.
The Philadelphia Fed Manufacturing Index also improved in October to -9.0 after wild swings between August and September.
Nasdaq slips as small caps tumble
Nasdaq, the tech-heavy index, was doing worst of all major indices. It briefly recovered from negative territory, but was still down by almost 1% at the close. Lam Research (LRCX), a laggard in this market, fell nearly 6% following its earnings report.
The S&P 500 also had a wiggle-wobble day, before falling by nearly 1%. AT&T's (T) performance was notable, as it rose more than 7% on the back of a positive earnings report.
S&P 500 sector performance was largely negative. Today, the S&P 500 sectors that were most negatively impacted by the market were consumer discretionary and real-estate. S&P Communication Services was the only sector to show a positive return.
Russell 2000 fell over 1% after the small caps tried to recover. This is a bad sign. The 50-day line of the index has been pushed below the 200-day moving median. The Innovator ETF 50 (FFTY), which tracks growth stocks, fell more than 2%.
Dow Jones Today: Verizon and Microsoft Stock Shine
The Dow Jones Industrial Average was whipsawed, but was dragged down as the bears took control going into the closing. The blue chip index fell around 200 points or 0.6%.
Verizon Communication (VZ MarketSmith Analysis shows)
Microsoft (MSFT) Apple (AAPL), on the other hand, was almost flat.
The downside was also very active. The Dow Jones Insurance Stock Travelers (TRV), which fell over 2% the day after its earnings announcement, was most lagging today.
Netflix Earnings Send Stocks Soaring
Netflix was one stock that defied the bearish trend.
Stocks soared by around 16 percent, breaking through their 200-day line. They also reclaimed the 50-day move after the company surpassed Wall Street's expectations for new subscribers during the third quarter.
It exceeded earnings expectations by a wide margin with EPS at $3.73. Sales of $8.54 Billion were in line with expectations.
According to the company, its cheaper service supported by ads and ongoing crackdowns on account sharing helped attract more subscribers. Morgan Stanley upgraded Netflix's stock to overweight, from equal weight. Wall Street was thrilled with the growth in subscriptions.
Although the clearing of the 200-day or 50-day moving averages may be seen by aggressive investors as an early opportunity to buy, it could be prudent to wait until the line crosses the 50-day mark. Market risk is high.
Tesla Earnings and Elon Musk's Warnings Impact Stock
Tesla's stock, on the other hand, was being mauled by a bear attack. The stock fell by more than 10% when the EV company missed its earnings and sales forecasts.
Investors also were not impressed by Elon Musk's warning that "volume production of the Cybertruck will face enormous challenges, as well as making the Cybertruck cashflow positive."
Musk has also sounded a pessimistic tone about the economy in general, suggesting that higher interest rates are making it more difficult for consumers to purchase new cars.
Musk stated that "we have to make products more affordable for people to buy them."
TSLA has plunged almost 13% below the 50-day line. It is likely to test the support of its 200-day moving mean.
Outside Dow Jones, 3 stocks eye entries
It is a good idea to create a watch list now that the stock market is under pressure.
MarketSmith's analysis shows that HealthEquity has made a slight move towards 76.30 cup-with handle entry. HQY has a very good performance, as it holds an IBD Composite rating of 97.
Vistra has a flattening base, with an entry point ideal of 34.28. Vistra, despite being a utilities stock, is in the top 4% for price performance over the last 12 months. It has defied the long-term slump of its industry.
Cencora, a wholesale drug supplier, is nearing a cup-base buy point of 194.79.