Dow Slips, Nasdaq Dives, Despite Powell Pledge; Apple Falls As Disney Surges; Tesla Fights Back

The Dow Jones Industrial Average dipped again, down nearly 0.3% in midafternoon trading as a rally attempt following comments by Federal Reserve Chairman Jerome Powell faded. Apple (AAPL) stock was falling again, even as Walt Disney (DIS) surged out of a buy zone. Meanwhile IBD 50 stock MaxLinear (MXL) rebounded from a key support level.

Among EV stocks, Tesla (TSLA) was down heavily, but fought back to pare much of its losses. Chinese rival Nio (NIO) was also down sharply, while General Motors (GM) also slipped. Wells Fargo (WFC) also reversed.


Fed Chairman Powell Makes Pledge

The indexes were falling again after attempting a rally on supportive comments from Fed Chairman Jerome Powell.

Powell reiterated that the Fed is “committed to using our full range of tools to support the economy and to help ensure that the recovery from this difficult period will be as robust as possible,” in a speech in front of the Senate Banking Committee.

He commented that inflation and employment remain well below the Fed’s objectives, which suggests easy monetary policy is likely to remain in place.

Powell did not address the surge in longer-duration government bond yields. They have risen to levels not seen since before the Covid-19 pandemic.

Oanda senior market analyst Craig Elram believes Powell may have to put investors’ minds at ease a number of times over the coming months as the recovery phase following the coronavirus pandemic begins, and economies move away from lockdowns and restrictions.

“Once the recovery is well underway and the economy is firing once again, the Fed may feel it’s appropriate to start discussing reducing bond purchases but now is surely not the time,” he said in a note to clients.

On the CBOE the yield on the benchmark U.S. Treasury 10-year bond reached 1.38% before slipping a few basis points.

U.S. Stock Market Today Overview

Index Symbol Price Gain/Loss % Change
Dow Jones (0DJIA) 31423.43 -98.26 -0.31
S&P 500 (0S&P5) 3853.36 -23.14 -0.60
Nasdaq (0NDQC ) 13288.31 -244.74 -1.81
Russell 2000 (IWM) 219.61 -4.12 -1.84
IBD 50 (FFTY) 45.65 -1.83 -3.85
Last Update: 1:26 PM ET 2/23/2021

Nasdaq Dives, S&P 500 Falls

The Nasdaq was the worst performing major index, dipping almost 1.6% at around 1:35 p.m. ET. Coronavirus vaccine play Moderna (MRNA) fared worst, dipping more than 8%.

The S&P 500 was also struggling, slipping around 0.5%. Engineering firm Leidos (LDOS) was the biggest laggard, falling around 11%.

Volume was higher compared to the same time Monday. It rose about 32% on the Nasdaq and was up more than 25% on the NYSE.

The S&P sectors were mixed, with a balance of winners and losers. Energy and utilities were faring best.

Small caps were being mauled by the rampaging bears, with the Russell 2000 was sliding more than 2%.

Growth stocks were faring worst of all, with the Innovator IBD 50 ETF (FFTY) dipping more than 4%. Trex (TREX) was the worst IBD 50 performer, falling almost 11%.

Apple Stock Falls As Dow Jones Slips

The Dow Jones Industrial Average was the best performing major index, but was still down around 0.4%.

Apple stock was among the worst performers, giving up around 3% before cutting that loss by nearly in half. It previously flashed a sell signal after falling below its 50-day moving average, and it lost further ground on this key benchmark. It also dipped closer to its 200-day moving average.

Apple stock has now erased most of its gains from a 125.49 early entry. Its relative strength line is also sliding, which is a concern.

The IBD Stock Checkup tool shows earnings growth was hit amid the pandemic in recent quarters. Apple has averaged 16% growth over the past three quarters, which is shy of the 25% earnings growth sought by CAN SLIM investors. However EPS grew by a strong 34% in the most recent quarter.

The worst performing component was Home Depot (HD). It was down almost 4% as it gapped down beneath its 50-day moving average. The big-box home improvement retailer reported better-than-expected Q4 earnings and sales before the open.

The top performing component was once again Disney stock, rising almost 3%. Disney stock surged past buy zone from a five-week flat base, according to MarketSmith analysis.

Its ideal buy point is 183.50, while its buy zone tops out at 192.68. Weak earnings amid the coronavirus pandemic have dragged its IBD Composite Rating down to a poor 30.

Disney was the IBD Stock Of The Day for Monday, and was also added to Swing Trader after bouncing off its 21-day exponential moving average.

Tesla Stock Fights Back After Collapse

IBD Leaderboard stock Tesla was down around 5%. However it had rallied back after being down as much as 13% earlier in the session.

It comes after the stock previously flashed a sell signal of its own after slipping below its 50-day moving average. It has also slipped below its 10-week moving average.

Nevertheless, it remains well extended from a 466 buy point of a cup with handle.

Tesla’s Chinese rival Nio was also struggling. It lost more ground on its 50-day line as it gave up almost 9%. A previous breakout from a cup base with a 57.30 buy point failed, and it is now well below this entry point.

GM stock was faring better, but still dipped around 3%. It previously broke out from a cup base Jan. 12 on positive EV news. But it is now slipping closer to its buy point of 46.81.

IBD 50 Stock Makes Bullish Move

MaxLinear stock made another bullish move following Monday’s break out from a consolidation pattern. The ideal buy point is 38.81.

The stock staged a bullish rebound from its 50-day moving average. This can also be used as a buying opportunity given that shares had already busted out of a prior base on Oct. 22 and eventually hit new highs. However, with the market getting hit hard, new buys carry much more of failure.

The relative strength line for MXL stock has been rising of late, which is encouraging. The stock boasts a near-perfect Composite Rating of 98. At the moment earnings are lagging stock market performance. However, EPS has been accelerating for the past three quarters.

The recent IBD 50 Stocks To Watch pick is a provider of RF, analog, digital and mixed-signal integrated circuits. It is a supplier for the cable and satellite broadband communications and the connected home, and wired and wireless infrastructure markets. It is benefiting from the push for 5G adoption.

Wells Fargo Stock Reverses

The stock reversed despite the news it is selling its asset management business to private-equity firms GTCR and Reverence Capital Partners for $2.1 billion. The business manages more than $603 billion in assets.

The stock was recently an IBD Stock Of The Day after reportedly showing progress toward eventually ending limits on its size. WFC also holds a quarter-position status in IBD Leaderboard.

It was reported that Federal Reserve officials “privately signaled” that they accept Wells Fargo’s proposal to repair its risk management and governance practices.

Wells Fargo stock has struggled for years amid a scandal involving the creation of fake consumer accounts.

Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.


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