Fri. Jun 21st, 2024

The Dow Jones Industrial Average edged down in afternoon trading Monday as Treasury yields eased. Meanwhile, famed investor Bill Ackman unwound a bearish bet amid rising economic worries. And Tesla (TSLA) stock was fighting to keep its head above a key moving average while Okta (OKTA) continued to plunge.


Also, a trio of stocks moved higher toward buy points. Light & Wonder (LNW), AeroVironment (AVAV) and Tradeweb Markets (TW) all made strong moves as Monday’s session wore on.

Bill Ackman Unwinds This Bet, Treasury Yields Ease

Famed investor Bill Ackman revealed his firm Pershing Square had covered its bond short.

The billionaire disclosed in August that he had placed a bearish bet against 30-year Treasuries, with the yield rising since then. At the time he said it was a good hedge against the potential impact of long-term interest rates on equities.

“There is too much risk in the world to remain short (on) bonds at current long-term rates.,” Ackman said on X. “The economy is slowing faster than recent data suggests.”

After his proclamation the 30-year Treasury yield fell. It was down 9 basis points to 4.99%.  The 10-year yield skidded 8 basis points to 4.84%, retreating after briefly moving above the 5% level. The two-year yield slid 2 basis points to 5.06%.

Nasdaq Pops As Small Caps Struggle

The tech-heavy Nasdaq was faring best out of the major indexes. It was up 0.8% as it tried to fight back from recent losses. Airbnb (ABNB) was a top performer as it rallied more than 4%.

The S&P 500 was also positive, though its gain was a mild 0.4%. Leaderboard stock Nvidia (NVDA) ranked among the better performers as it rose nearly 4%. It is consolidating below the 50-day moving average.

The S&P 500 sectors were mixed. Communication services and technology fared best in the stock market today. Energy and materials were having the toughest time.

Small caps were getting pinned down, with the Russell 2000 fractionally lower. Growth stocks reversed higher, though, with the Innovator IBD 50 ETF (FFTY) up 0.3%.

Dow Jones Today: Chevron Falls On Deal, Microsoft Stock Shines

The Dow Jones index saw a rally attempt go awry as the bears fought back. It was down around 0.5%.

Walgreen Boots Alliance (WBA) fared best, rising around 5%. It was boosted after JPMorgan upgraded the stock from neutral to overweight.

Nevertheless, the stock remains rooted below the 200-day and 50-day moving averages, MarketSmith analysis shows.

Microsoft also fared well as it gets ready to report earnings. MSFT rose more than 1% and pulled further away from its 50-day moving average. Its old rival, Apple (AAPL), edged up fractionally.

There was also some noteworthy downside action. Oil major Chevron (CVX) skidded nearly 4% on news it agreed to purchase Hess (HES) in a $53 billion all-stock deal. While the deal values HES stock at 171 a share it actually fell nearly 1% to trade for less than 162.

Tesla Stock Fights For Key Level

Tesla was trying to dig in following last week’s shellacking. TSLA stock was lacerated after the firm missed earnings and sales views, losing 15.6% last week.

The stock was up nearly 1% Monday, though, and is getting close to its 200-day moving average. Retaking this key level would be an important first step for Tesla shares.

TSLA stock took a hit after Chief Executive Elon Musk claimed that rising interest rates is making it harder for consumers to buy new vehicles.

“We have to make our products more affordable so people can buy it,” he said. Musk also warned that the firm’s much-hyped Cybertruck faces “enormous challenges in reaching volume production.”

Okta Stock Dives

Okta stock continued to toil amid the blowback from a systems breach which saw hackers access the cybersecurity firm’s support system, enabling them to view client files.

Citi warned there is potential the firm faces “reputational risk affecting new pipeline development.”

And Evercore ISI noted it was a second big breach in the past two years, with the company potentially facing a downward revision to fiscal 2024 estimates.

Okta stock gapped down and fell nearly 9% on the heels of Friday’s 11.6% plunge. It now trades below its 200-day moving average.

Outside Dow Jones: These Stocks Eye Entries

Investors may want to focus on building up robust watchlists amid the current stock market malaise. Here are some potential candidates.

Light & Wonder moved toward a flat-base entry of 79.06, MarketSmith analysis shows. Overall performance is strong and it is in the top 6% of stocks in terms of price performance over the past 12 months.

Meanwhile, AeroVironment is gaining ground on a cup-base entry of 124.33. The defense stock has a best-possible Composite Rating of 99.

Tradeweb Markets saw its relative strength line hit fresh heights as it closes in on a flat-base entry of 87.53. It has a Composite Rating of 94. One reason for caution is earnings are due Thursday for Tradeweb.

An approach highlighted by Investor’s Business Daily is to use options as a strategy to reduce risk around earnings. It’s a way to capitalize on the upside potential of a stock’s move around earnings, while reducing the downside risk.

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


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