The Dow Jones Industrial Average finished lower Monday even as Treasury yields eased. Meanwhile, famed investor Bill Ackman unwound a bearish bet amid rising economic worries. And Tesla stock dug in near a key moving average while Okta continued to plunge.
Also, a trio of stocks moved higher toward buy points. Light & Wonder, AeroVironment and Tradeweb Markets all made strong moves Monday.
Bill Ackman Unwinds This Bet, Treasury Yields Ease
Famed investor Bill Ackman revealed his firm Pershing Square had covered its bond short.
The billionaire disclosed in August that he had placed a bearish bet against 30-year Treasury notes, but the yield has been rising since then. At the time he said it was a good hedge against the potential impact of long-term interest rates on equities.
"There is too much risk in the world to remain short (on) bonds at current long-term rates.," Ackman said Monday on X. "The economy is slowing faster than recent data suggests."
After his proclamation the 30-year Treasury yield fell, sliding 8 basis points to 5.01%. The 10-year yield skidded 7 basis points to 4.85%, retreating after briefly moving above the 5% level. The two-year yield dipped 2 basis points to 5.07%.
Nasdaq Gains Fade As Small Caps Slide
The tech-heavy Nasdaq fared best out of the major indexes but closed well off its highs as it rose 0.3%. Airbnb was a top performer, rallying 3.3%.
The S&P 500 reversed after bears pounced late, and the index dipped 0.2%. Leaderboard stock Nvidia ranked among the better performers as it rose 3.8%. It is consolidating below the 50-day moving average.
The S&P 500 sectors ended mainly lower. Communication services and technology fared best in the stock market today. Energy and materials had the toughest time.
Small caps were slapped lower as the Russell 2000 sank 0.8%. Growth stocks saw a rally attempt fall short as the Innovator IBD 50 ETF fell 0.2%.
Dow Jones Today: Chevron Falls On Deal, Microsoft Stock Shines
The Dow Jones index underperformed the other two major indexes. It fell 191 points, or 0.6%.
Walgreen Boots Alliance fared best, though its lift of 3.3% was well off session highs. It got a boost from JPMorgan, which upgraded the stock from neutral to overweight. But shares remain rooted below the 200-day and 50-day moving averages, MarketSmith analysis shows.
Microsoft also fared well as it gets ready to report earnings Tuesday. MSFT rose 0.8% and pulled further away from its 50-day moving average. Its old rival, Apple, edged up 0.1%.
There was also some noteworthy downside action. Oil major Chevron skidded 3.7% on news it agreed to purchase Hess in a $53 billion all-stock deal. While the deal values HES stock at 171 a share it actually fell 1.1% to trade for just over 161.
Tesla Stock Fights For Key Level
Tesla tried to dig in following last week's shellacking. TSLA stock was lacerated after the firm missed earnings and sales views, losing 15.6% last week.
The stock rose fractionally Monday, but closed well off session highs. It briefly retook its 200-day moving average, then finished the day below it. Decisively retaking this key level would be an important first step for Tesla shares.
TSLA stock took a hit after Chief Executive Elon Musk claimed that rising interest rates is making it harder for consumers to buy new vehicles.
"We have to make our products more affordable so people can buy (them)," he said. Musk also warned that the firm's much-hyped Cybertruck faces "enormous challenges in reaching volume production."
S&P 500: AI Chip Leader Among Monday's Winners
Okta Stock Dives
Okta stock continued to toil amid the blowback from a systems breach in which hackers accessed the cybersecurity firm's support system, enabling them to view client files.
Citi warned there is potential the firm faces "reputational risk affecting new pipeline development."
And Evercore ISI noted it was a second big breach in the past two years, with the company potentially facing a downward revision to fiscal 2024 estimates.
Okta stock gapped down and ended a tough session down 8.1%. It comes on the heels of Friday's 11.6% plunge. OKTA stock now trades below its 200-day moving average.
Outside Dow Jones: These Stocks Eye Entries
Investors should focus on building up robust watchlists amid the current stock market malaise. Here are some potential candidates.
Light & Wonder moved toward a flat-base entry of 79.06, MarketSmith analysis shows. Overall performance is strong and it resides in the top 6% of stocks in terms of price performance over the past 12 months.
Meanwhile, AeroVironment is gaining ground on a cup-base entry of 124.33. The defense stock has a best-possible Composite Rating of 99. Its relative strength line, which gauges a stock's performance against the market, sits at fresh highs.
Tradeweb Markets saw its relative strength line hit new heights as it closes in on a flat-base entry of 87.53. It has a Composite Rating of 94. One reason for caution is earnings are due Thursday for the company.
An approach highlighted by Investor's Business Daily is to use options as a strategy to reduce risk around earnings. It's a way to capitalize on the upside potential of a stock's move around earnings, while reducing the downside risk.
Please follow Michael Larkin on X, formerly known as Twitter, at @IBD_MLarkin for more analysis of growth stocks.
