Dow Jones Stalls After Fed Points To Terminal Rate 5% Or Above; Tesla’s new CEO?
The Dow Jones Industrial Average closed 0.02% lower on Thursday after paring most of the earlier losses in today’s trading. Fresh remarks from the Fed that pointed to a terminal rate of 5% or more in 2023 drove the index lower. The reports say You’re here (TSLA) CEO Elon Musk may have identified a successor to run this company. The news came as Musk testified in court to defend himself in a lawsuit filed by shareholders.
The S&P 500 also fell in tandem and also pared most of its 1% loss. It ended down 0.3%.
The Nasdaq fell the most in the morning by more than 1%, but fell back to trade 0.35% at 4 p.m. ET. The tech-dominated index is about to end its first year since 2014 without setting a record. It traded at its highest level of 16,057.44 almost a year ago on November 19, 2021, and has fallen 31.1% since then.
The small-cap Russell 2000 lagged with a loss of more than 1%.
Crude oil fell more than 3% to trade at $81.46 a barrel. The yield on the benchmark 10-year Treasury jumped 8 basis points to 3.77%.
Volume on the NYSE and on the Nasdaq was lighter compared to the same time on Wednesday.
Dow Jones stocks under watch
Dow Jones stocks under watch are Apple (AAPL) and Microsoft (MSFT), which found support above their 50-day lines. UnitedHealth (UNH) passed its 200-day line and is testing its 200-day line after last week’s health care carnage. Merck (MRK) is extended at a buy point of 95.82 in a flat basis.
In IBD 50, Tenaris (TS) is close to a buy point of 34.19 in a cup base with handle. New Fortress Energy (ENF) and United States (MUSA) fell below the 50-day line. NFE shares are in a handle cup basis with a buy point of 60.43.
MUSA fell back below the buy point of 303.19 from a flat base. Harmony Biosciences (HRMY) may trigger the round-trip short rule after breaking out at 52.62 from a handle cup. However, the stock reversed higher and is currently above the 50-day line.
Earnings on deck
Macy’s (M) sales of $5.2 billion and earnings of 52 cents per share topped views. Kohls (KSS) missed estimates with $4 billion in sales, but beat earnings expectations with 82 cents per share. Macy’s shares jumped 15% today and clears resistance at the 200-day moving average. Kohl’s rose 5%, rebounding from the 50-day line.
China’s Covid lockdowns hurt Ali Baba (BABA). E-commerce reported revenue of $29.12 billion with earnings of $1.82 per share. It was the Chinese e-commerce giant’s weakest quarter in terms of revenue growth, which rose 3% after falling 4% in September. BABA jumped over 7% today, breaking above its 50-day line.
Sales reached $4.6 billion for Big BJ Club (BJ) from $4.1 billion a year ago, while earnings per share of 99 cents also rose 91 cents. BJ shares plunged more than 5% after a failed breakout of a cup base. The shares also fell below their 50-day line.
Applied materials (AMAT), Ross Stores (ROST) and Palo Alto Networks (PANW) releases results today after the close. AMAT shares are testing their 200-day line, while PANW has fallen more than 1%. ROST increased by more than 1%.
Wednesday, Dow Jones stock Cisco Systems (CSCO) posted strong quarterly results. Sales of $13.6 billion were the highest ever for the networking giant and earnings per share of 86 cents was the second highest on record. It also raised its revenue forecast for the year to 4.5%-6.5% from 4%-6%.
Nvidia (NVDA) reported revenue of $5.93 billion and earnings per share of 58 cents Wednesday night. Sales were down 17% while earnings per share fell 50% from a year earlier. Also on Wednesday, the IBD 50 share Sociedad Quimica y Minera (SQM) recorded a meteoric 900% growth in earnings of $3.85 per share, while sales reached $2.96 billion.
Target (TGT) warned in its earnings report on Wednesday of weak holiday sales. Sales rose 3% to $26.5 billion, while earnings per share of $1.54 posted a 49% decline.
CSCO is up 5% today while NVDA is down more than 1%. SQM is also down 9% while TGT pares Wednesday’s big loss and is up more than 4%.
Early Thursday, St. Louis Fed President James Bullard observed that interest rate hikes had had a limited effect on inflation. A higher terminal rate above 5% could be envisaged in 2023, to effectively curb inflation. Last week’s initial jobless claims of 222,000 were down from 226,000 the previous week. Housing starts fell 4.2% in October to 1.425 million.
Reports Citing Sources Inside You’re here (TSLA) are many that CEO Musk has identified his successor at the helm of the world’s largest electric car company as he grapples with Twitter. Earlier, Musk indicated his reluctance to be chief and his preference for “design and engineering”. Tesla shareholders have already probed Musk’s salary after fears that the Twitter acquisition would take a toll on Musk’s time, making him “a part-time CEO.” Musk owns more than 20% stake in Tesla, including unexercised options. The shares fell 2%.
Follow Vramakrishnan @IBD_VRamakrishnan for more stock market news today.
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