Dow Jones Dives Amid Powell Pledge; Tesla Sinks After Elon Musk Warning

The Dow Jones Industrial Average fell after Federal Reserve Chair Jerome Powell spoke on inflation and interest rates. Netflix (NFLX) stock rocketed on earnings. Tesla (TSLA) dived after CEO Elon Musk made a Cybertruck warning.

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Microsoft (MSFT) gained. Meanwhile, a trio of noteworthy stocks were moving toward buy points. HealthEquity (HQY), Vistra (VST) and Cencora (COR) are all worth watching as they build bullish bases.

Powell Makes Pledge On Interest Rates, Inflation

Stocks were wobbling after Powell spoke at the at the Economic Club of New York today. The central banker said he remains committed to “proceeding carefully,” signaling the Fed chief is in no rush to hike again.

Rising treasury yields have being doing some of the heavy lifting for the Fed, with Powell also saying this a key area to watch.

“We remain attentive to these developments because persistent changes in financial conditions can have implications for the path of monetary policy,” Powell said.

Nevertheless, he also stressed more tightening could be warranted if the recent run of strong economic data continues. Some investors also remain worried about the possible impact of the unwinding of the central bank’s gargantuan balance sheet.

Today’s economic data was not ideal for Powell. Weekly first-time claims for unemployment assistance surprisingly fell to 198,000 last week, Labor Department data showed. Claims were expected to come in flat vs. the previous week ‘s 211,000. The jobs market continues to be robust despite higher interest rates.

In addition, the Philadelphia Fed’s Manufacturing Index improved to -9.0 in October after wild swings in August and September.

Nasdaq Slips As Small Caps Stumble

The tech-heavy Nasdaq was faring worst out of the major indexes. It briefly rallied out of negative territory but was down almost 1% heading into the close. Lam Research (LRCX) was a laggard here as it tumbled nearly 6% after its earnings report.

But the S&P 500 had a wibbly-wobbly day before also falling nearly 1%. AT&T (T) was a noteworthy mover here, rising more than 7% as it popped on an earnings beat.

The S&P 500 sectors were mostly negative. Consumer discretionary and real estate lagged the most in the stock market today. Only the S&P Communication Services sector was making a gain.

Small caps got bitten by the bears after trying to rally back, with the Russell 2000 falling over 1%. The index has seen its 50-day line undercut the 200-day moving average, a negative sign. Growth stocks were given the harshest spanking, with the Innovator IBD 50 ETF (FFTY) falling more than 2%.

Dow Jones Today: Verizon, Microsoft Stock Shine

The Dow Jones Industrial Average whipsawed but was dragged lower as the bears retook control heading into the close. The blue chip index skidded around 200 points, or 0.6%.

Verizon Communication (VZ) popped following AT&T’s report, gaining more than 2%. It remains stubbornly below the 200-day and 50-day moving averages, MarketSmith analysis shows.

Microsoft (MSFT) was another of the best performing components. MSFT lifted almost 1% and pulled further away from its 50-day moving average. Old rival Apple (AAPL) was virtually flat.

There was plenty of action on the downside as well. Insurance stock Travelers (TRV) lagged most on the Dow Jones today as it slid over 2% a day after its earnings report.

Caterpillar (CAT) and Merck (MRK) also struggled. CAT dipped around 2% while MRK fell almost 2% heading into the close.

Netflix Earnings Send Stock Soaring

One stock that was clearly bucking the bearish trend was streaming giant Netflix.

The stock soared rocketed around 16%, smashing through its 200-day line and retaking the 50-day moving after the company crushed Wall Street views for new subscribers in the third quarter.

It beat earnings expectations with EPS of $3.73, well clear of views for $3.49. Sales of $8.54 billion were only in line with expectations.

The firm said its cheaper ad-supported service and an ongoing crackdown on account sharing had helped bring in more subscribers. Wall Street was delighted with the subscription growth, with Morgan Stanley rewarding Netflix stock with an upgrade to overweight from equal weight.

While the clearance of the 200-day and 50-day moving averages could be seen as an early buying opportunity among aggressive investors, waiting if it proves itself above the 50-day line could be a more prudent strategy. Keep in mind that market risk is high.

Tesla Earnings, Elon Musk Warnings Hit Stock

In contrast, Tesla stock was getting mauled in a painful bear attack. It fell more than 10% after the EV company missed earnings and sales views.

Investors were also far from impressed after CEO Elon Musk also warned that “there will be enormous challenges in reaching volume production with the Cybertruck, and then in making the Cybertruck cash flow positive.”

As if that wasn’t enough, Musk also struck a gloomy tone on the broader economy, mulling that rising interest rates make it harder for consumers to buy new vehicles.

“We have to make our products more affordable so people can buy it,” Musk said.

A cup-with-handle base is dead in the water after TSLA plunged nearly 13% below its 50-day line. It looks set to test support at its 200-day moving average.

Outside Dow Jones: 3 Stocks Eye Entries

With the stock market under pressure, it is currently a good time to build up one’s watchlist.

HealthEquity made slight progress toward a cup-with-handle entry of 76.30, MarketSmith analysis shows. Overall performance here is very strong, with HQY holding an IBD Composite Rating of 97 out of 99.

Vistra is building a flat base with an ideal entry point of 34.28. While it is a utilities play, Vistra is among the top 4% of stocks in terms of price performance over the past 12 months, defying its industry’s long slump.

Wholesale drug supplier Cencora is close to a cup base buy point of 194.79.

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

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