The Dow Jones Industrial Average closed at lows for the day. Tesla CEO Elon Musk lashed out amid a big product recall. Virgin Galactic reversed amid a mother ship flight, while Microsoft lagged.
There was some bullish action despite the negative overall picture. Super Micro Computer and Carlyle Secured Lending both attempted breakouts while new Leader Iridium Communications bounced off its 50-day moving average.
Stocks fought back after economic data rattled investors, but the rebound faded with a sell-off in the final hour. Hawkish comments from two Fed officials appeared to fuel the selling. St. Louis Federal Reserve President James Bullard said he advocated for a half-point rate hike at the last Fed meeting and would press again for one. Cleveland Fed President Loretta Mester also said she had pushed for a half-point hike.
January's Producer Price Index from the Labor Department rose 0.7% on the month, hotter than the 0.4% estimate. That amounts to a year-over-year increase of 6%, down from 6.2% in December but higher than forecast. In addition, weekly first-time unemployment claims fell to 194,000 vs. 195,000 in the previous week. They were expected to rise to 200,000.
Oanda senior market analyst Edward Moya said the data strengthens the case made by Cleveland Fed President Loretta Mester for more robust interest rate hikes.
"Her reiteration that they need to bring rates above 5% and hold for some time is becoming the consensus view and should suggest the dot plots in March will be much higher," he said in a note to clients. "She is a nonvoter but her comments suggest the Fed could do a lot more given how strong the economy remains."
Meanwhile, the yield on the benchmark 10-year Treasury note inched up 1 basis point to 3.87%. Oil dipped, with West Texas Intermediate crude falling nearly 1% to trade at around $78 per barrel.
Nasdaq Falls, Small Caps Impress
The Nasdaq plunged late, closing down 1.8%. Datadog had a "ruff" day here as it fell 7% on guidance.
The S&P 500 ended around session lows as it shed 1.4%. Etsy was among the poor performers here as it gave up 8.4%.
The S&P 500 sectors were all lower. Technology and consumer discretionary fared worst while utilities and consumer staples fell the least.
Small caps performed better, but the Russell 2000 still gave up 0.7% Growth stocks fell, with the Innovator IBD 50 ETF down nearly 1%.
Dow Jones Today: Microsoft Stock, Disney Lag
The Dow Jones Industrial Average saw a rally attempt fail. It reversed sharply late to give up 431 points, or 1.3%.
Microsoft stock lagged, falling 2.7%. It remains clear of its major moving averages, MarketSmith analysis shows.
MSFT was giving back some of its gains after popping on recent excitement surrounding its integration of the technology behind the viral chatbot ChatGPT into its Bing search engine and Edge web browser.
Walt Disney fared even worse than Microsoft. It was the worst component on the Dow Jones today as it fell 3.1%.
Cisco Systems, meanwhile, led the upside as it popped 5.2% and broke out of a flat base. It climbed after beating views on both the top and bottom lines. Cisco also raised its dividend.
Elon Musk Lashes Out As Tesla Stock Falls On Recall
Tesla stock reversed lower after it emerged it had been hit by another recall snag.
The firm is voluntarily recalling 362,758 vehicles after warning its Full Self-Driving Beta driver-assistance software may cause crashes.
The recall notice, which was posted on the National Highway Traffic Safety Administration website Thursday, said an over-the-air software update will be delivered to cars to address the issues.
Musk took to his social media platform Twitter to complain about the terminology used.
"The word 'recall' for an over-the-air software update is anachronistic and just flat wrong!" the eccentric executive said.
Tesla stock plunged late to end the session down 5.7%. While it remains well off all-time highs, TSLA stock is up more than 60% so far in 2023.
Virgin Galactic Stock Up After Blast-Off
Virgin Galactic stock saw what had looked to be a good day end on a sour note as it fell 0.7%.
The stock was in positive territory for most of the session after it made a test flight Wednesday of its mother ship, Eve. The flight over Mojave, Calif., was the first for the travel company's flagship since it underwent mechanical upgrades.
SPCE stock is now back above its major moving averages. Virgin Galactic stock is also up more than 70% so far this year.
Nevertheless, it is one to be avoided for CAN SLIM investors as the stock is currently trading for less than $10.
Outside Dow Jones: New Leader Eyes Entry
Super Micro Computer is in a buy zone after breaking out from a double bottom. The ideal buy point here is 92.90 and it topped another entry today at 95.32.
The stock boasts a perfect EPS Rating of 99. It has fought back well after getting rocked by a short selling firm's bearish call on Jan. 10.
Carlyle Secured Lending passed a flat-base entry of 15.50 but closed just below it. Volume was low on the move. This is a first-stage pattern. Overall solid performance is reflected in the stock's IBD Composite Rating of 83 out of 99.
Iridium Communications won a spot on Leaderboard as it rebounds off the 10-week line for the first time since a strong move out of a flat base. A new flat base could also form by Friday; the buy point would then be 62.58.
It comes after Iridium posted Q4 results that beat sharply on the top line; total revenue of $194 million beat the consensus view of $174.3 million and grew 24% vs. a year earlier.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
