The Dow Jones Industrial Average was down more than 500 points in midday trading Thursday. This was because the index suffered from the decline in constituent stocks that had fueled the gains. caterpillar (Cat). On the other hand, the operators of Facebook and Instagram meta platform (META) led the decline in tech stocks, falling as much as 16% in a gap in the stock market today.
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Some products saw more modest declines. Gold price futures erased small early losses to rise almost 0.2% to $2,342 an ounce, while silver pared losses by two pennies to $27.32. Crude oil traded at $82.51 per barrel, down less than 0.4%.
Bank stocks included in the IBD 50 also resisted the market decline. Inside the IBD 50, deutsche bank (DB) and First Citizens Bankshares (FCNCA) led the way with increases of 8% and 7%, respectively. Deutsche Bank’s chief executive was recently profiled in the Wall Street Journal for leading a turnaround in profits.
The Dow Jones Industrial Average plunged more than 2.3% in the early going, but the loss had narrowed to about 1.4% after two hours of trading. The average growth rate for blue-chip companies in 2024 has shrunk to less than 0.3%.
Only 2 of 30 index stocks rose by more than 1 point: Defensive Strategy united health (UNH) and Merck (MRK) Healthcare field. Nine other stocks fell more than 4 points on the price-weighted Dow Jones Industrial Average.
Other mega-cap tech stocks also had a negative impact on the Nasdaq Composite, which fell as much as 2%, below 15,400, before rebounding slightly to fall 1.4% at lunchtime in New York. The S&P 500 index is down 1% and struggling to pare losses, but still hovers just above 5,000.
In contrast, the Dow Jones Transportation Average rebounded 0.6%. However, the sector index fell sharply on Wednesday, dropping 2.3% due to poor earnings in the trucking sector.
The big picture for IBD: Why transportation stocks sold.
Small-cap stocks sold off, costs rising
The stock market was weak today, with small-cap stocks selling off as investors also exited long-term U.S. government bonds. The Russell 2000 fell 1.4%, and the benchmark 10-year Treasury yield rose 5 basis points to 4.71%. This level is not far from the 52-week high of 4.99% hit in October, amid growing speculation that the Fed may wait until after the U.S. election in November to cut short-term interest rates.
A CME FedWatch survey of bond traders found that the Fed’s Sept. 18 interest rate meeting will push the federal funds rate at least a quarter of its current target range of 5.25% to 5.5%. This indicates that there is a slight possibility that points will be reduced. 60%.
Indeed, the cost of money is skyrocketing in 2024, worrying stock market investors. When interest rates rise, the cost of borrowing to fund dividends, share buybacks, or investments in growth increases. The yield on 10-year U.S. Treasuries at the beginning of the year was 3.86%.
The stock market is now focusing on Friday’s report on inflation, the Personal Consumption Expenditures or PCE index, before moving on. Get a look at both his top-line and core PCE indexes, as well as detailed forecasts on personal income and spending data, in the Econoday Economic Calendar.
Industry theme: After hitting 70%, will this retail sector continue to rise in 2024?
Stock Market Today: Tech Stocks Drop
Meta’s sharp drop below its 10-week moving average suggested that its wild rally since the market bottom in the fourth quarter may be over for now. The last time the meta closed below this important technical level was in the week ending October 27th. Magnificent Seven stock first broke out of the flat base of the first stage in mid-March 2023, clearing the entry at 197.16.
The meta fell as much as 16% intraday, but recent action has limited that loss to just under 12%. Over the past 50 sessions, trading volume has surged 8 times his average pace. More than 51 million shares changed hands on Wall Street before the lunch break, easily the most ever for a single down day in 2024.
This Investor’s Business Daily Technology on Meta’s weaker-than-expected revenue outlook for 2024 and plans to increase capital spending to bring artificial intelligence to its digital advertising and e-commerce efforts to drive future growth Please read the article.
Stock market today: Other AI stocks also rise
This plan is actually helping bring together AI-related names such as: Arista Networks (ANET) increased 3.6% due to higher sales.Data center maintenance professionals also benefit Vertive (VRT) rose nearly 8% after reporting its own financial results on Wednesday.
Mining and construction equipment giant Caterpillar reported adjusted earnings of $5.60 a share, beating Wall Street expectations by 46 cents. Operating margin increased 110 basis points year-on-year to 22.2%. However, sales came in at $15.8 billion, $200 million less than analysts expected. Caterpillar also noted that major Asia-Pacific economies, excluding China, are softening.
Caterpillar’s stock price fell nearly 7%, falling below its 50-day moving average, a key defensive selling rule in today’s stock market. Caterpillar broke through the key buy point of 293.88 and showed solid gains.
The stock’s relative strength rating of 93 means that Caterpillar outperformed 93% of all companies in the IBD database over the past 12 months.
IBD Live: Hear from a growth stock leader leading the conversation
This chip play moves forward
On the positive side, Impini (PI) led the day’s stock market winners by a strong margin. Shares of the company, which specializes in high-frequency-based semiconductor technology, soared nearly 26%. Volume reached 11 times the normal level. The stock cleared a flat base at a buy point of 132 on strong volume.
Impinj reported first-quarter earnings fell 25% to 21 cents per share. Sales decreased 11% to $76.8 million. This small-cap growth stock has a market value of less than $4 billion.
Impinj’s relative strength line marked a new high, triggering a blue dot on MarketSurge. This outperforms the S&P 500 in the stock market.
Chipotle Mexican Grill (CMG) also resisted today’s stock market decline. The stock rose nearly 6% and looked to erase the $3,000 resistance after another strong quarter. First-quarter profits rose 27% to $13.37 per share, and sales rose 14% to $2.7 billion.
Analysts are gradually raising their full-year profit forecasts. They currently expect earnings to increase 23% this year to $55.27 per share, and another 18% in 2024.
Follow Chung on X/Twitter: @Saito-chun and @IBD_DChung
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