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The stock market fell Thursday morning with the Dow Jones trying to hold on, but the Nasdaq selling. The stock rally is turning, with the Nasdaq and growth stocks under great pressure in recent weeks amid rising bond yields. Federal Reserve Chairman Jerome Powell will speak today as investors seek possible comments on Treasury yields.
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The Dow Jones Industrial Average was down 0.2% in morning trading. But the S&P 500 fell 0.55%, undercut its 50-day line. The Nasdaq composite sank 1.35%.
Dow component Boeing (BA) is near a buy point after flirting with a breakout on Wednesday. Brazilian miner Valley (VALE), global steel giant ArcelorMittal (MT) and manufacturer of specialty chemicals Element solutions (ESI) are also close to the entrances.
Boeing shares rose 1% early Thursday. But it is a delicate market for any purchase.
The UK has launched an antitrust vs. Apple (AAPL) on alleged anti-competitive practices on its App Store. Apple is already the subject of investigations on the App Store by antitrust officials in the United States and the European Union.
Apple’s stock fell 1%. Shares lost 2.45% on Wednesday. AAPL stock is below its 50-day line after a late January breakout that collapsed.
Walt disney (DIS) will close at least 20% of its Disney stores by the end of the year, including at least 60 in the United States. It will focus more on e-commerce. This is just the latest example of Disney moving its business online. Disney stock has fallen 2% and is near the top of its buying range from a flat base.
DraftKings (DKNG) reversed the drop after initially rallying to a deal with the UFC to become an exclusive bookmaker and daily fantasy partner in the US and Canada.
Square (SQ) is buying the majority of Jay-Z Tidal’s music platform for $ 297 million. Jay-Z will join Square’s board of directors. The square stock fell 7%.
Burlington Stores (BURL), soared and spread apart from a flat base. The discount retailer reported a 3% revenue gain after three consecutive quarters of declining sales.
Chip maker and software maker Broadcom (AVGO) reports late tonight. AVGO stock fell to its 10 week line on Wednesday, but held above that level after the opening. Broadcom is an iPhone supplier to Apple, but that’s only part of the business.
Disney stock is on SwingTrader.
The 10-year Treasury yield fell 0.1% to 1.46% after rising on Wednesday, ending a three-day decline. The 10-year Treasury yield briefly exceeded 1.6% last week.
Initial jobless claims rose to 745,000 last week from 730,000. Economists expected new filings to rise to 760,000.
Join the IBD experts as they analyze the exploitable stocks during the stock market rally on IBD Live.
Fed Chief Powell Plot ‘Twist’?
Fed chief Jerome Powell will speak at a conference just after noon eastern time. These will be his last public comments ahead of the Fed’s March 16-17 meeting. The 10-year Treasury yield has surged in recent weeks amid expectations that a massive stimulus bill from Biden, as well as the coronavirus pandemic disappearing in the coming months, will spur a huge economic recovery that may drive up inflation. The prices of crude oil, copper and many commodities have exploded recently. While this is good news for mining, financials and many other so-called “real economy” companies and stocks, it has been a catalyst for the sell-off of growth stocks.
Powell and other policymakers have indicated that they want faster inflation and probably aren’t too concerned about 10-year Treasury yields below 2%. But the pace of rising yields caught the attention of Fed Governor Lael Brainard, she admitted on Tuesday.
Powell stressed that he was focusing on full employment, not financial markets, even though it was against the backdrop of the stock market rally reaching new heights. But investors might want to hear him say he’s at least paying attention to Treasury yields.
Could Powell hint at a policy change? There is speculation that the Federal Reserve may try to drive down long-term yields, by buying long-term T-bills and buying shorter-term T-bills. The Fed has used this “Operation Twist” before, in 1961 and again in 2011.
But even if Powell is ready for such a move, he may not want to tip his hand until the Fed meeting in mid-March.
Stock market rally on the brink of the abyss
The stock market rally may be on its last legs. The confirmed uptrend has been an “uptrend under pressure” for several days.
The Dow Jones Industrial Average slipped 0.4% in Wednesday’s stock trading. The S&P 500 Index fell 1.3%, closing just above its 50-day line. The Nasdaq composite dipped 2.7%, falling below its 50-day line and closing below its February 23 low. All major indexes closed near the session lows.
If the S&P 500 crosses its 50-day line and the Nasdaq loses further ground, the post-election stock rally may be over.
Investors should focus on sectors that are working and reduce their exposure to speculative growth stocks.
Read The Big Picture tonight to stay in tune with market direction and major stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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