The Dow Jones Industrial Average and other indexes fell sharply as attention turned to the Jackson Hole speech by Fed Chair Jerome Powell. Nvidia lost almost all its gains after blowout earnings. Tesla CEO Elon Musk issued a Cybertruck warning to employees.
Meanwhile, a trio of stocks near buy points were holding up even amid the broader pullback. Box, NOV and Automatic Data Processing all showed strength.
Treasury yields rose. The 10-year yield gained 4 basis point to 4.24%, while the two-year yield surged 7 basis points to 5.03%. The yield curve got further inverted.
Powell Speech Looms Large Over Market
Stocks reversed lower with Powell set to give a much-anticipated speech at the Economic Symposium in Jackson Hole, Wyo., on Friday.
Earlier Thursday, first-time unemployment claims unexpectedly fell to 230,000 vs. 240,000 in the previous week, Labor Department data showed. Economists had expected them to rise to 241,000.
Durable goods orders fell 5.2% in July, more than estimates for a 4% decline. Excluding transportation, durable goods orders rose 0.5%, above forecasts.
"It seems, we are getting steady reminders about how well this economy is doing and that keeps the risks of a somewhat hawkish Fed Chair Powell speech on the table," Oanda Senior Market Analyst Edward Moya told IBD. "Today, we saw jobless claims remain low and the Atlanta Fed still sees the economy sizzling hot in Q3."
Former hedge fund manager and IBD Live contributor David Ryan also made a bearish call on social media.
"The QQQ has seen its high for the year on 7/19/23. NVDA's earnings mark the final move in tech. Raise cash and get defensive," he said on X, formerly Twitter.
Futures: Powell Speech Stakes High After Ugly Market Reversal
Nasdaq Gains Evaporate As Bears Bite Small Caps
The tech-heavy Nasdaq saw early gains evaporate as it was kicked 1.9% lower. Autodesk was a star here, closing up 2.1% following its earnings report.
The benchmark S&P 500 skidded 1.4%. Dollar Tree and Advanced Micro Devices lagged with declines of 12.9% and 7%, respectively. Dollar Tree beat quarterly earnings views but comments from CEO Rick Dreiling about the "challenging macro environment" spooked investors.
The S&P 500 sectors all finished in negative territory. Technology, communication services and consumer discretionary fared worst in the stock market today. Financials and real estate suffered the smallest declines.
The bears took a big bite out of small caps, with the Russell 2000 losing 1.2%. Growth stocks were also spanked, with the Innovator IBD 50 ETF falling 1.5%.
Dow Jones Today: Boeing, Apple Stock Lag
The Dow Jones also got hammered into the close. It fell 374 points or 1.1%.
Apple was one of the worst laggards on the index as it slid 2.6%. It lost ground on its 50-day moving average, MarketSmith analysis shows. Microsoft also struggled with a 2.2% dip.
But Boeing fared worst of all in the Dow, with the aerospace giant falling 4.9%. Intel and Walt Disney also lagged with declines of 4.1% and 3.9%, respectively.
Verizon Communications and insurance stock Travelers performed best on the Dow Jones today despite meager lifts of 0.6% each.
Tesla Stock Dips; Elon Musk Issues Cybertruck Warning
Tesla stock fell even as the release of the much-hyped Cybertruck looks to be moving closer toward reality.
On Wednesday, Musk shared a photo of himself in one of the vehicles on X, formerly Twitter. "Just drove the production candidate Cybertruck at Tesla Giga Texas," he said.
And it emerged Thursday that he had shared an email explaining how vital it is to be precise when building the SUV.
"Due to the nature of Cybertruck, which is made of bright metal with mostly straight edges, any dimensional variation shows up like a sore thumb," he said in a Wednesday memo leaked to Electrek.
Musk also said that "precision predicates perfectionism" and said parts "need to be designed and built to sub 10 micron accuracy." Final prices and specifications have yet to be released.
In addition, Reuters reported investors negatively affected by Musk's tweet in August 2018 about taking the company private soon will receive a payout. It will come from a fund established as part of a settlement with the SEC.
Tesla stock fell 2.9% and is trading below the 50-day moving average. Nevertheless, TSLA remains up nearly 113% for the year.
Nvidia Stock Gains Fade Despite Explosive Earnings
Nvidia had an explosive opening before ceding nearly all of its gains, closing with a tiny lift of 0.1%.
The company reported earnings and revenue well ahead of expectations. Adjusted profit soared more than 400% to $2.70 a share. Revenue jumped 101% to $13.51 billion. Data center revenue more than doubled to $10.32 billion.
NVDA forecast sales of $16 billion in the current quarter, well clear of expectations. This would be a 170% surge from the same period last year.
Nvidia stock briefly touched an all-time high and is now up around 229% since the start of the year. The AI stock is a member of the prestigious IBD Leaderboard list of top stocks.
Outside Dow Jones: 3 Stocks Hold Strong Near Entries
With the stock market in a correction now is a time to be building your watchlist. Here are some potential candidates showing strength.
Box stock gave up just 0.3% as it held close to a cup-with-handle entry of 31.94, MarketSmith analysis shows.
The database software play has a very good IBD Composite Rating coming in at 89 out of 99. Earnings are a key strength here.
Oil & gas industry equipment stock NOV fell 1% but remains close to a cup-with-handle buy point of 20.98. All-around performance is solid here. The relative strength line has been looking strong of late.
Automatic Data Processing slipped 0.5% as it holds near a cup with handle with an entry point of 256.84. The RS line continues to show grit.
The outsourcing and payroll services stock has a very good EPS Rating of 93. It is also in the top 23% of stocks in terms of price performance over the last 12 months.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
