The Dow Jones Industrial Average closed lower despite a pop in Salesforce as the jobs report loomed. Marijuana stocks Canopy Growth, Tilray Brands and Cronos continue rising on a government move. Tesla whipsawed amid news of a probe into the firm's reported plan to build a glass house for CEO Elon Musk.
With the market back in a confirmed uptrend, now is the time to keep an eye out for breakouts. USA Compression Partners tested an entry. Adobe also cleared a short consolidation.
Treasury yields fell. The 10-year yield slipped 2 basis points to 4.10%, while the two-year yield lost 3 basis points to 4.86%. The yield curve remains inverted.
Jobs Report Looms; Investors Want To See This
Stocks initially popped after the core personal consumption expenditures price index, which strips out food and energy prices, increased 4.2% year over year. This was in line with economists' views. Core PCE is the Fed's preferred inflation gauge.
Investors seemed to be taking a breath ahead of Friday's release of U.S. nonfarm payroll numbers. Initial jobless claims fell to 228,000 vs. a revised 232,000 in the previous week, Labor Department data showed Thursday. This was lower than economist views for 235,000.
B. Riley Wealth's chief market strategist, Art Hogan, said if Friday's jobs report follows in the footsteps of ADP private payrolls data from earlier in the week, then it could help drive indexes higher.
"If Friday's employment data shows a similar trend of slowing but still growing nonfarm payrolls, it could be just what the doctor ordered for investors," he said in a note to clients. "A looser job market would mean less upward pressure on inflation from rising wages. But continued expansion of the workforce means growth in the economy and corporate profits."
Nasdaq Higher As Small Caps Reverse
The tech-heavy Nasdaq outperformed, rising 0.1%, but still suffered its worse month of the year so far. CrowdStrike was a top performer here as it soared 9.3%. It topped earnings views and issued upbeat guidance.
The benchmark S&P 500 reversed lower, ending with a loss of 0.2%. Dollar General retreated 12.2% on weak earnings and disappointing guidance.
The S&P 500 sectors closed mixed, with a bias to the negative. Technology, energy and consumer discretionary fared best in the stock market today. Health and the defensive utilities lagged.
Small caps struggled, with the Russell 2000 closing down 0.2%. Growth stocks outperformed, with the Innovator IBD 50 ETF finishing the session up 0.5%.
Dow Jones Today: Salesforce Stock Pops, Boeing Lags
The Dow Jones Industrial Average reversed lower, ending the day down 168 points, or 0.5%. It managed to hold just above the 50-day moving average.
The index struggled despite Salesforce jumping 3% on earnings. It gapped above its 50-day moving average, though this would be an aggressive entry point. More patient investors could wait to see if CRM stock can move clear of a consolidation entry of 238.22, MarketSmith analysis shows.
Other top performers on the Dow Jones today included Intel and 3M. INTC gained 1.8% while MMM rose 2.1%.
UnitedHealth lagged the most on the blue-chip index as it fell 3%. Boeing shed 2.1%.
Tesla Stock Gains Despite Elon Musk Probe
Tesla managed to modestly outperform despite news of a new probe into CEO Elon Musk.
The Wall Street Journal reported that both the U.S. Attorney's Office for the Southern District of New York and the Securities and Exchange Commission have opened probes into the so-called "Project 42."
It is said to have been described internally as an effort to build a sprawling glass house for Musk, which sources say was to be built in Austin, Texas.
The Wall Street Journal previously reported that the Tesla board had investigated whether company resources were misused on the project. Both probes are at an early stage.
The SEC and the Justice Department already opened separate investigations into whether Tesla misled customers and investors about the performance of its Autopilot driver-assistance system.
Tesla stock rallied out of the red and finished the day up 0.5%. TSLA managed to retake its 50-day moving average, a positive.
Marijuana Stocks Higher After This Move
Pot stocks have been badly beaten down in 2023, but they are getting some respite this week.
On Wednesday, reports said the U.S. Department of Health and Human Services had recommended easing restrictions on cannabis and reclassifying it at a lower risk level. At the moment, cannabis is rated as a Schedule 1 drug under the Controlled Substances Act.
According to the DEA, Schedule 1 substances are "drugs with no currently accepted medical use and a high potential for abuse."
While marijuana has been legalized for recreational use in many states, the industry has been facing challenges, such as cannabis businesses being denied access to banking services.
Canopy Growth stock soared 25.8% but remains down more than 75% for the year. Tilray popped 11.3% and is now up nearly 8% in 2023. Cronos jumped 9.6%.
Futures Await Jobs Report; Big Tesla Launch Friday?
Outside Dow Jones: Stock Tests Buy Point
USA Compression Partners tested an entry of 21.95 but reversed back below it in a high-volume session. Energy stocks have been faring well of late.
The natural gas services play is in the top 17% of stocks in terms of price performance over the last 12 months, but its bottom-line performance is not ideal.
Adobe cleared a short consolidation entry of 552.94. It ended the session in the buy zone after rising 2.6%.
Both earnings and stock market performance are excellent for ADBE. It has now won a spot on the prestigious IBD Leaderboard list.
Please follow Michael Larkin on X, formerly known as Twitter, at @IBD_MLarkin for more analysis of growth stocks.
