Dow Jones Dives As Powell Gives This Inflation Warning; Tesla Stock Gets Hammered

The Dow Jones Industrial Average plunged after Federal Reserve Chair Jerome Powell gave an inflation warning. Walt Disney (DIS) popped on earnings. Tesla (TLSA) got hammered on a Wall Street call as other Magnificent Seven stocks like Nvidia (NVDA) and Apple (AAPL) were mixed.

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A number of stocks attempted breakouts despite the negative action. Jackson Financial (JXN), TransDigm (TDG) and Woodward (WWD) all tested entries.

Powell Issues Inflation Warning

Stocks were falling in late trading after Powell cast doubt on the future path of interest rates at the IMF Annual Research Conference in Washington, D.C.

“The Federal Open Market Committee is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2% over time; we are not confident that we have achieved such a stance,” he said.

Wall Street had become hopeful future rate hikes were off the table following last week’s FOMC meeting. Meanwhile, Powell was forced to temporarily leave the stage after climate protesters interrupted his speech.

Also, demand at the Treasury’s $24 billion 30-year bond auction was light Thursday. That caused a jump in Treasury yields.

The likelihood of a Fed rate hike in December jumped to 14.5% from 9.6%, according to the CME FedWatch Tool.

Yields were spiking heading into the close. The 10-year Treasury note yield jumped 13 basis points to 4.63% while the 30-year vaulted 13 basis points to 4.78%. The 5-year yield popped 12 basis points to 4.64% while the 2-year rose 9 basis points to 5.02%.

Nasdaq Reverses As Small Caps Get Mauled

The tech-heavy Nasdaq was on course to close in negative territory as it fell around 1%. Marvell Technology (MRVL) was outperforming as it rose nearly 3% and reclaimed ites 50-day line.

The S&P 500 is on course to fall for the first time in nine sessions after falling nearly 1%. Becton Dickinson (BDX) was among the worst S&P laggards, down around 9%. The medical technology firm fell on weak fiscal 2024 sales and earnings guidance.

The S&P 500 sectors were mostly negative. Technology and energy performed best on the stock market today. Health and consumer discretionary lagged the most.

Small caps being bitten the hardest by the hungry bears, with the Russell 2000 plunging 1.5%. Growth stocks fared better though, with the Innovator IBD 50 ETF (FFTY) down 0.5%.

Dow Jones Today: Disney Earnings Boost Stock

Dow Jones industrials were down almost 200 points heading into the close. The index fell about 0.5%.

Walt Disney stock was the clear top performer after it popped nearly 7% following its latest quarterly report.

Disney earnings beat views, and the Disney+ streaming service ended the quarter with a total of 150.2 million subscribers, coming in above forecasts of 148.7 million.

The House of Mouse also raised its ambitious cost-restructuring targets. It is now looking to achieve $7.5 billion in cost reductions compared to its previous target of $5.5 billion.

DIS stock is now up slightly for the year and now looks to retake its 200-day moving average.

At the other end of the spectrum, Amgen (AMGN) and Home Depot (HD) were the worst performers on the Dow Jones today. AMGN fell more than 3% while HD dipped nearly 3%.

Magnificent Seven: Tesla Hit After Wall Street Call

Tesla stock was faring worst out of the Magnificent Seven today. HSBC issued a negative research note on the EV maker. Analyst Michael Tyndall initiated coverage of TSLA with a “reduce” rating, the equivalent of a sell.

While he sees “considerable potential” in the firm, he believes the timeline to making good returns is “likely to be longer than the market and valuation is reflecting.”

TSLA stock plunged nearly 7% and lost ground on its 200-day moving average. It remains up more than 90% so far this year.

Nvidia fared best out of the so-called Magnificent Seven, rising nearly 1%. It is rose above a double-bottom entry of 476.09 but faded, MarketSmith analysis shows.

Meta Platforms (META) was virtually flat; Microsoft (MSFT) and Apple both fell fractionally. AAPL trades above its 50-day moving average but is well shy of a 198.23 entry while MSFT trades in a buy zone above a 346.20 entry.

Google parent Alphabet (GOOGL) and Amazon.com (AMZN) both dipped around 1%.

Outside Dow Jones: 3 Stocks Test Entries

It was not all negative on the stock market today, though. A number of stocks tested buy points from proper bases.

Jackson Financial is in a buy zone after it cleared a cup-with-handle entry of 41.60. It was up after beating earnings views. But while it is in the top 9% of stocks in terms of price performance over the last 12 months, its EPS Rating of 19 is poor.

TransDigm is in a buy zone after clearing a flat base entry of 940. The aircraft components maker soared after fourth-quarter earnings and revenue beat analyst views. The relative strength line hit fresh heights for TDG, which is a bullish sign.

Woodward also saw its RS line jump as it cleared a flat base buy point of 133.15 for a while. Earnings are due in seven days.

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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