The Dow Jones Industrial Average sliced through the June low on Friday, dropping more than 600 points to a 22-month low. Crude oil fell into the $70s for the first time since January. Contagion hit Europe like a sledgehammer, lifting U.K. GILT yields to multiyear highs. Capping off a tough week, Fed Chairman Jerome Powell is on Friday's calendar, speaking at 2 p.m. ET.
The Dow Jones is down 2.1% at this hour while the S&P 500 index has slumped another 2.2%. The Nasdaq composite is trading lower by 2.1% as well.
The Russell 2000 small-cap index has shed 3.2%, bringing the weekly loss to a painful 7.2%.
Major indexes are now poised to book their sixth weekly loss in the last seven weeks.
Volume on the NYSE has surged more than 30% compared to the same time on Thursday while Nasdaq volume is 6.5% higher.
Treasury yields are volatile but flat, with the 10-year note crisscrossing 3.70%.
West Texas intermediate crude oil has plunged nearly 6% to a 9-month low, breaching the psychological $80 per-barrel level, as fears of demand destruction escalate in the energy pits.
World Markets Trading In The Red
Germany's DAX fell to the lowest level since November 2020. Most European bourses traded lower by more than 2% in their weekly closing bells. The London FTSE 100 was off 2.4%.
U.S. Stock Market Today Overview |
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|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 29653.40 | -423.28 | -1.41 |
| S&P 500 | (0S&P5) | 3692.85 | -65.14 | -1.73 |
| Nasdaq | (0NDQC ) | 10851.98 | -214.83 | -1.94 |
| Russell 2000 | 166.51 | -4.88 | -2.85 | |
| IBD 50 | 24.23 | -1.20 | -4.72 | |
Last Update: 10:28 AM ET 9/23/2022 |
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The British pound fell more than 3% after Prime Minister Liz Truss proposed radical tax cuts. The 5-year U.K. GILT yield surged more than 50 basis points, the biggest on record. The bond entered 2022 with a 0.82% yield, catapulting to 2.82% at the start of September, and 4% this week.
"A Eurozone recession is in the cards as companies report worsening business conditions and intensifying price pressures linked to soaring energy costs," said Chris Williamson, chief business economist at S&P Global Market Intelligence. Williamson was quoted in an S&P Global news release.
Asian stocks also fell across the board, despite a number of declarations reopening countries to tourism.
Dow Jones Testing June Low
The Dow Jones is probing and undercutting the June low on Friday, threatening to break down. The S&P 500, Nasdaq composite and Russell 2000 indexes all remain above their respective lows.
Unfortunately, there's likely more pain to come.
Price zones around major lows mark natural testing grounds, suggesting that volatility will rise sharply into next week and eventually yield a notable reversal, or a painful breakdown.
As we've witnessed in the last three years, this type of action can generate major violations of support and resistance before a sustained trend, higher or lower, kicks into gear. As a result, this is a great time to take additional defensive measures.
Top stocks to watch amid the market's major weakness include Continental Resources, DoubleVerify, Neurocrine Biosciences and Vertex Pharmaceuticals. Dow Jones stock Chevron also is basing, although it gapped below the 200-day line this morning. Keep in mind the market correction is a good reason for investors to be mostly, if not entirely, on the sidelines.
Costco Lower Despite Strong Quarter
Costco Wholesale was trading lower by 3.4% after beating fiscal Q4 earnings by 3 cents, reporting a profit of $4.20 per share. Revenue rose a healthy 17.3% year-over-year to $72.09 billion, also meeting estimates.
The bearish market environment took control after the upbeat release, with traders selling the positive news. The big-box retailer is expected to post 12% annual earnings growth in 2022 and 2023, lifting the Earnings-Per-Share Rating to an impressive 90.
However, the retail sector is a tough sell for investors these days, with rising expectations for a recession that diminishes floor traffic and comparative sales.
In early September, Costco shares triggered the 7%-8% loss-cutting rule from a 552.81 buy point out of a cup-with-handle base.
Outside The Dow Jones: IBD 50 Stocks In Play
KnowBe4, added to the IBD 50 this week, continues to consolidate after a high-volume breakout above the 200-day moving average.
The security software provider is expected to grow earnings 46% this year and 37% in 2023. This week's bullish gap could signal a period of major accumulation, despite tough macro-market conditions.
Ovintiv has carved a cup-with-handle base since June. The handle has now fallen below the 200-day moving average, however.
HF Sinclair is rounding-the-bend in a cup-with handle base starting in June. The oil and gas refiner is hanging tough despite crude oil's major descent.
