The Dow Jones Industrial Average tumbled on strong jobs data Thursday even as AI stock Microsoft popped. Meta Platforms was nearly flat amid the launch of Twitter rival Threads, while Tesla CEO Elon Musk launched a verbal and legal broadside against the platform.
Meanwhile, some noteworthy stocks are building bullish bases as others flashed sell signals. InMode and Xylem eyed entries, while Monday.com and Zscaler were coming under pressure.
Stocks were coming under pressure while Treasury yields spiked on hot jobs data. The ADP private payroll number of 497,000 blew away economist estimates for 235,000, according to Econoday. It was also far higher than the revised 267,000 May payrolls number. Wall Street will await Friday's June jobs report with bated breath.
Oanda senior market analyst Edward Moya said the labor market "is not loosening at all" based on the ADP data. "The Fed's rate hiking campaign is not yet crippling small and medium size businesses, but that should change going into the fall," he said in a note to clients.
Treasury yields roared higher. The 10-year yield jumped 10 basis point to 4.04% while the two-year yield spiked 4 basis points to 5%. The yield curve remains inverted.
Nasdaq Dips As Small Caps, IBD 50 Get Mauled
The Nasdaq dived 0.8%, though it closed off lows. Latin American e-commerce stock MercadoLibre was a laggard, falling 7.5%.
The benchmark S&P 500 also tumbled 0.8%. Leaderboard stock Generac was among the poor performers here, falling 3.8%.
The S&P 500 sectors all closed in the red. Energy and consumer discretionary suffered the worst declines while technology and consumer staples fared best.
Small caps got badly mauled by the bears, with the Russell 2000 ending the session down 1.6%. Growth stocks got spanked even harder, with the Innovator IBD 50 ETF losing 2%.
Dow Jones Today: Microsoft Stock, Apple Shine
The Dow Jones suffered a shellacking; it fell 366 points, or 1.1%.
Home Depot fared the worst as it slid 2.8%. It is now testing support at the 21-day exponential moving average, according to MarketSmith.
3M, American Express and Goldman Sachs followed closely behind with losses of more than 2% each.
Microsoft stock fared best on the Dow Jones today, rising 0.9% as it continues to benefit from lingering AI buzz. Apple was the only other component that turned in a gain, though its 0.3% lift was meager.
Meta Dips Amid Musk Threads Taunt, Twitter Legal Move
Meta stock faded into the closed Thursday, though it fared better than many amid the launch of its Threads social media app.
It was initially boosted by positive comments from KeyBanc, which maintained an overweight rating and raised its price target for Meta stock to 335 from 280.
Threads is built by Instagram, and Twitter owner Musk took to his platform to poke fun at his new rival. He mocked the idea of a safer alternative to his self-styled bastion of free speech.
"It is infinitely preferable to be attacked by strangers on Twitter, than indulge in the false happiness of hide-the-pain Instagram," Musk tweeted.
It has also emerged that Twitter sent Meta a missive accusing it of stealing trade secrets after hiring dozens of former Twitter employees.
"Twitter has serious concerns that Meta Platforms has engaged in systematic, willful and unlawful misappropriation of Twitter's trade secrets and other intellectual property," Alex Spiro, the longtime attorney of Elon Musk, said in the letter.
He also warned in the dispatch, addressed to Meta CEO Mark Zuckerberg, that Twitter "intends to strictly enforce its intellectual property rights." Semafor initially reported the letter.
Musk later addressed the legal letter directly, tweeting that "competition is fine, cheating is not."
Twitter's new rival has already managed to pass 30 million sign-ups.
Meta stock was forced lower into the close, falling 0.8%. The Leaderboard stock remains well-extended from its most recent entry.
Meanwhile, Tesla stock sank 2.1% amid the broader market pullback. The EV giant remains far clear of its most recent buy point.
Outside Dow Jones: These Stocks Form Bullish Bases
Even on down days it is a good idea to bulk up one's watchlist of potentially actionable stocks.
InMode has formed a consolidation with an ideal buy point of 41.84, according to MarketSmith analysis. Aggressive investors could also see 38.38 as a potential entry. This counts as a first-stage pattern, which means it is more likely to net big gains.
All-around excellent performance has netted InMode stock an IBD Composite Rating of 97 out of 99. Earnings have accelerated for the past three quarters. The company makes and sells devices using radio frequency technology for minimally invasive procedures. Earlier this month Barclays upped its price target on InMode to 47 from 45 while maintaining an overweight rating.
Water industry equipment maker Xylem has formed a first-stage cup with handle and is shooting for a 114.87 entry. It is currently falling below the 21-day exponential moving average. The relative strength line has been dipping while it forms the handle.
XYL is in the top 20% of stocks in terms of price performance over the past 12 months. In addition, it has a strong EPS Rating of 88. It has stout institutional sponsorship, with 58% of its stock currently held by funds. The firm operates in three segments: water infrastructure, applied water, and measurement and control solutions.
Futures: Jobs Data Looms; Meta Leads 7 Resilient Stocks
Software Stock Fights Back Amid Sell Signal
Work management software stock Monday.com triggered a sell signal after it fell 7% below a 171.89 buy point. This was disappointing following its attempted breakout from a cup base. It rallied back somewhat into the close amid the low-volume move, closing 4.8% below the entry.
Nevertheless, the relative strength line has also been weakening, a bad sign. Monday.com has managed to find support so far at the 10-week moving average and has yet to touch the 50-day line on its daily chart.
Zscaler triggered a round-trip sell signal after ceding double-digit gains from its 143.63 entry. The cybersecurity firm also looks to be losing support at the 21-day exponential moving average.
Investors may want to wait to see if a new base can be formed amid a broader stock market pullback.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
