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Stocks Slide On Powell Speech; Snap Crashes On Earnings

The Dow Jones Industrial Average held a small gain in today’s stock market after briefly dipping into the negative. Meanwhile, the Nasdaq composite and S&P 500 sold off with sizable drops in early afternoon trading. Stocks were hindered by new commentary on asset-purchase tapering and inflation from Federal Reserve Chair Jerome Powell.




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Dow Jones In The Stock Market Today

At around 1:30 pm ET, the tech-heavy Nasdaq was down 0.9%, wiping out all of yesterday’s gains. The Dow Jones pared losses to a 0.2% gain. The S&P 500 traded down about 0.2%. Meanwhile, the Russell 2000 fell 0.3%. Data showed volume was running higher on the Nasdaq and on the NYSE vs. the same time on Thursday.

Stocks turned lower as Federal Reserve chair Jerome Powell spoke at a virtual Bank for International Settlements-South African Reserve Bank conference on Friday. Powell mentioned that supply constraints are “likely to last longer than previously expected, likely well into next year.”

“Overall inflation is running well above target,” Mr. Powell said at the conference. The measure of inflation that the Fed targets has shown prices increasing at 4% or more in recent months, compared with last year.

Fed policymakers will meet on Nov. 2 to set monetary policy. The focus of the meeting will be whether to begin tapering the $120 billion in monthly asset purchases. Powell said Friday it was “time to taper.”

In Friday’s market, both growth stocks and the 10-year U.S. Treasury note’s yield fell after rising sharply in recent weeks. The 10-year bond’s yield slid to 1.64% after reaching 1.67% on Thursday.

Meanwhile, growth-focused Innovator IBD 50 ETF (FFTY) lost 1.4%, underperforming the market indexes. Stocks leading the index on the downside included Snap (SNAP) and Dynavax Technologies (DVAX).

Social Media Stocks Tumble On Snap Earnings

Snap stock gapped down and crashed a whopping 25% early Friday in huge turnover. The stock fell below its 200-day line for the first time in 18 months. Snap, operator of mobile app Snapchat, beat Q3 earnings estimates late Thursday. But it fell short on sales and its Q4 revenue outlook missed. Snap estimated Q4 revenue in a range from $1.16 billion to $1.2 billion, below analyst estimates for $1.36 billion.

Shares of Snap traded at their lowest point since July 2019. The recent breakout past a 80.95 buy point had previously failed. Meanwhile, the sell-off spilled over to other social media stocks. Facebook (FB) also gapped down and lost 5.4% in heavy volume. The social media leader is about to test support at its 200-day moving average.

Twitter (TWTR) fell more than 4%, and is testing its 50-day moving average. Both Facebook and Twitter report earnings next week.

Stocks To Watch: Tesla, Nvidia Breakout

On the upside, several growth stocks scored powerful breakouts.

Tesla (TSLA), a member of the IBD Leaderboard list of leading growth stocks, scored a breakout past 900.50 cup-based pattern. Shares rose 1.2% after gaining roughly 7.3% for the week on a strong earnings beat reported late Wednesday.

Meanwhile, Nvidia (NVDA) rose above a 230.53 buy point of a new shallow base early Friday, before falling back below this entry. The graphics-chip designer is also an IBD Leaderboard stock.

Outside Dow Jones

Pool (POOL), a pool equipment and supply center operator, gained 2.4% in heavy volume, climbing above a 500.95 buy point of a cup base, according to MarketSmith chart analysis. Shares remain in buy range, which tops out at 526. Most importantly, the stock’s relative strength line, which compares a stock’s performance to the S&P 500, is at a new high.

On Thursday, the stock jumped nearly 8% after a strong Q3 earnings report beat expectations. The company also guided higher on 2021 earnings.

Computer software security firm CrowdStrike (CRWD) broke out from a 289.34 cup entry before shares reversed lower. The stock ended up traded down 0.5% and remains 2% below the entry.

Finally, trucking transportation stock TFI International (TFII) broke out from a 116.60 cup base. The trucking stock is among the latest in a series of breakout from trucking stocks.

J.B. Hunt International (JBHT), Saia (SAIA) and Old Dominion Freight Line (ODFL) are scored breakouts in the past week.

TFI International, a Canadian transportation provider, rose 1.7% on Friday. The stock’s RS line also reached a new high upon the breakout, a bullish sign.

Follow Rachel Fox on Twitter at @rachelgfox more Dow Jones and stock market commentary.

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