The Dow Jones Industrial Average fell under a key level as Walmart reversed lower despite an earnings beat. CVS Health cratered after a big insurer tapped rivals including Amazon.com for drugs. Famed fund manager Cathie Wood snapped up shares in a pharma stock despite a big plunge.
With the market weakening, now is a good time to bulk up one's watchlist. PDD, Cinemark and Automatic Data Processing are potential candidates near entries.
Stocks fell after investors digested more economic data. First-time jobless claims fell to 239,000 vs. 248,000 in the previous week, according to the Labor Department. Economists had expected them to fall to 240,000. Ongoing strength in the jobs market bolsters the case of interest rate hawks.
In addition, the Philadelphia Fed manufacturing index came in with a 12.0 reading, showing growth. This was much better than the expected -10.0 reading.
Treasury yields were mixed. The 10-year yield rose 5 basis point to 4.31% while the two-year yield slipped 5 basis point to 4.93%. Dow Jones Market Data says the 10-year yield is at the highest since Nov. 7, 2007, based on 3 p.m. ET yields.
Bears Maul Nasdaq, Small Caps
The tech-heavy Nasdaq closed at session lows, falling 1.2%. Moderna stood out from the crowd as it turned in a powerful gain of 7.4%.
The benchmark S&P 500 held up slightly better, but still fell 0.8%. Juniper Networks shined here thanks to a lift of 3.1%.
The S&P 500 sectors were almost all negative. Consumer staples and consumer discretionary lagged the most in the stock market today. Energy was the only area to finish in positive territory.
Small caps were spanked, with the Russell 2000 falling 1.1%. But bears gave growth stocks the worst thrashing, with the Innovator IBD 50 ETF diving 2.1%.
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Dow Jones Today: Walmart Earnings Beat, WMT Reverses
The Dow Jones closed down 291 points, or 0.8%. There was enough to cause it to end below the 50-day moving average, joining the Nasdaq and the S&P 500 below this key level.
Walmart was among the worst performers in the Dow despite posting strong earnings and sales results and raising its fiscal-year outlook. The retail giant ended the session down 2.2% after reversing lower. It retreated below the 50-day moving average, MarketSmith analysis shows.
In contrast, Cisco Systems popped 3.3% after topping views on the top and bottom lines.
Poor sessions from the likes of Intel, Boeing and UnitedHealth also dragged. But Walgreens Boots Alliance fared worst of all on the index as it skidded 3.7%.
Cathie Wood Snaps Up Stock After Dip, Sells Shopify
Big-name investors are often brave enough to buy on the dip. That is certainly the case with Wood, the famed fund manager.
The ARK Invest CEO was at it again when she snapped up a big chunk of Recursion Pharmaceuticals Wednesday.
Her firm bought almost 220,000 shares for the ARK Genomic Revolution ETF.
From its July 19 high of 16.75 to today's low of 8.42, its decline was about 50%. The company is unprofitable for now but its shares are in the top 13% of stocks in terms of price performance over the past 12 months.
RXRX stock does seem to be getting support at the 200-day moving average, at least for now.
Wood also trimmed her holdings of Shopify in her flagship ARK Innovation ETF by just over 182,000 shares Wednesday.
CVS Stock Craters On Amazon Move
CVS Health was given a painful beatdown on news Blue Shield of California is ending its pharmacy benefits partnership with the firm.
The insurer is ditching CVS Caremark in favor of Amazon Pharmacy and Mark Cuban Cost Plus Drug as it seeks to save on the cost of pharmaceuticals.
Blue Shield of California CEO Paul Markovich said he believes the firm will "be saving $500 million a year" once the plan comes to fruition.
But while this may benefit customers, it has proved to be a bitter pill for CVS shareholders. CVS stock ended off lows but still fell 8.1%, gapping below its 50-day moving average. This is a key sell signal for a stock that had barely begun to rebound.
Outside Dow Jones: These Stocks Eye Buy Points
With the stock market struggling, it is a good time to add names to your watchlist.
China e-commerce stock PDD is one to watch for adventurous investors. Shares have formed a cup-with-handle base with a 92.79 buy point.
PDD stock has been finding support at the 10-week moving average. Overall strong performance is reflected in its IBD Composite Rating of 93 out of 99.
Cinemark is eying a consolidation pattern entry of 18.85, but has formed a handle with an 18.46 buy point. It is in the top 11% of stocks in terms of price performance over the past 12 months.
The cinema chain has also been seeing rising institutional investment, with its Accumulation/Distribution Rating coming in at B.
Outsourcing and payroll services play ADP has formed a cup with handle with an entry point of 256.84. The relative strength line is looking bullish. Performance is strong overall, with its IBD Composite Rating coming in at 99.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
