The Dow Jones Industrial Average erased a 350-point drop to close higher Tuesday despite Treasury Secretary Janet Yellen’s interest-rate warning, but the Nasdaq sank.
The Dow Jones industrials ended with a 0.1% gain, the S&P 500 fell 0.7% and the Nasdaq sank 1.9% in the stock market today. Small caps tracked by the Russell 2000 lost 1.2%. Early data showed higher volume on both major exchanges vs. Monday.
Stocks dived early, after Yellen warned of potentially higher rates. “It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat,” Yellen said at the Atlantic’s Future Economy Summit.
Federal Reserve Chairman Jerome Powell last Wednesday noted that the central bank plans to keep rates at current levels until the economy reaches its goals. It “is likely to take some time for substantial further progress to be achieved,” he said.
Tech stocks got slammed Tuesday. But last year, tech stocks boosted the Nasdaq to a 43.6% gain — its fifth best year ever. The S&P 500 rose 16.3% in 2020 and the Dow added 7.2%. After a strong start this year and a short correction, the market has rebounded near record highs.
U.S. Stock Market Today Overview
Last Update: 4:04 PM ET 5/4/2021
Read The Big Picture for more detailed daily market analysis.
The Covid-19 pandemic has roiled the U.S. economy, as nationwide lockdowns have passed the one-year mark. But many states are relaxing restrictions, and cases are plateauing or declining in some states as vaccinations roll out.
Cumulative Covid-19 cases worldwide have topped 154 million, with more than 3 million deaths, according to Worldometer. In the U.S., cases have surpassed 33 million with nearly 592,000 deaths, although the number of new cases in the U.S. has slowed dramatically in many states.
Dow Jones Losers And Winners
Apple (AAPL) dropped 3.5% in heavy trade to test its 50-day moving average for the first time in almost a month. The stock is now about 6% below a 135.63 buy point of a cup with handle, according to MarketSmith chart analysis. It tried to break out on Thursday, following Apple’s strong earnings results, but reversed lower.
On Friday, shares fell 1.5% after the European Union’s antitrust commission issued preliminary charges over concerns about Apple’s App store practices. The case was initiated by a 2019 complaint from Spotify Technology (SPOT).
Salesforce.com (CRM) fell nearly 3%, while Microsoft (MSFT) gave up 1.6%. Microsoft stock extended its losing streak to five. Shares are back in the 5% buy range from a 246.23 entry of a flat base. The buy zone tops out at 258.54.
Caterpillar (CAT), up 2.4%, was a blue-chip winner. Caterpillar stock is about 2% away from a 237.88 buy point of a flat base. Last week the heavy equipment maker crushed Wall Street’s Q1 targets as earnings soared 74% on a 12% increase in revenue.
Outside The Dow
Solar, software, chip, biotech and automaker stocks led the downside among IBD’s 197 industry groups. The few groups avoiding the sell-off included steel, paint and other building products stocks.
In the automaker group, Tesla (TSLA) trimmed a big early loss to 1.6% by the close. It still fell back below its 50-day line. Shares have formed a cup with handle with a 780.79 buy point. But the electric vehicle giant’s base is late stage, which increases the risk of a failed breakout.
China EV maker Nio (NIO) shed 5% as it nears a test of the 200-day line. Nio stock has been under pressure since mid-February, when it fell below its 50-day line. It’s now more than 40% off its January peak.
Among chip stocks, Nvidia (NVDA) lost 4% in its third straight decline. The stock triggered the 7%-8% loss-cutting sell rule as it fell more than 7% below a 615 cup-base entry. As a result, the graphics-chip designer was cut to a quarter position from a half position in IBD Leaderboard.
The Innovator IBD 50 ETF (FFTY) stumbled 1.6% as it looks for support at its 50-day line. PLBY Group (PLBY) and Cleveland-Cliffs (CLF) rallied more than 10% apiece. Louisiana-Pacific (LPX) and Century Communities (CCS) rose a respective 7% and 4%.
Follow Nancy Gondo on Twitter at @IBD_NGondo
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