Major indexes closed sharply lower Thursday following hawkish comments from the Fed on Wednesday that signaled a peak interest rate above expectations. Economic data that came out this morning also pressured the Dow Jones Industrial Average, which closed 2.3% lower.
The S&P 500 ended 2.5% lower. It has failed to break resistance at its 200-day moving average this week in a bearish sign.
The Nasdaq was down the most, losing 3.2% while the small-cap Russell 2000 saw a 2.5% fall at closing bell. Both indexes closed below their 50-day moving averages, another bad sign.
Volume on the NYSE and on the Nasdaq was lighter compared with the same time on Wednesday, according to unconfirmed data.
Crude oil fell 1.5% to trade at $76.07 a barrel.
The yield on the benchmark 10-year Treasury note fell 5 basis points to 3.45%. On Wednesday the yield rose briefly to 3.54% after Fed Chair Jerome Powell's remarks indicated a steeper terminal rate of 5.1%.
Earlier today, the Bank of England and the European Central Bank also raised rates to 3.5% and 2.5%, respectively.
According to John Lynch, chief investment officer at Comerica: "The yield curve continues to show little ambiguity about macroeconomic conditions while equities hope for better days ahead. They're likely coming, but not until after the October lows are revisited."
Stocks Moving Today
Enphase Energy fell 5.6% after Susquehanna's Biju Perincheril downgraded the stock from positive to neutral with a 365 price target. The IBD Leaderboard stock has fallen below its 316.97 buy point in a cup-with-handle base. Invesco Solar ETF, however, is in a cup-with-handle base with a buy point of 84.28.
Paccar got an upgrade to overweight from Morgan Stanley's Dillon Cumming with a new price target of 136, revised upward from 91. Demand forecasts for its semi trucks led to the bullish revision. Yet the stock sold off 4.7%. Shares fell through their 50-day line and triggered a round-trip sell signal.
Shares of Nvidia fell 4% after Frank Lee at HSBC initiated coverage with a reduce rating and a 136 price target. Nvidia is back below the 200-day line. Novavax gapped down 34% in strong volume after news of a stock and debt offering totaling $250 million.
Western Digital got a downgrade to sell from Goldman Sachs with a price target of 31. Analysts see weakening NAND memory demand and historically low gross margins as reasons for caution on the stock. Shares fell over 10% today in strong volume.
Netflix was down over 8% — its largest percentage decline since April 2022. It was the worst-performing stock in the S&P 500 today. Shares are down some 52% this year, the worst since 2011 when they declined over 60%. Analysis from Digiday indicates that the streaming video company has missed viewership targets that its new ad-supported platform depends on.
Tesla and other EV stocks are getting slammed on reports of slowing sales growth. Among EV suppliers, lithium producers Albemarle, SQM and Livent, plus Onsemi and Aehr Systems, fell. The drops came after Morgan Stanley analyst Adam Jonas lowered market size estimates for electric vehicles to 11% of the U.S. auto market by 2025 and 26% by 2030. Earlier estimates were 13% and 32%, respectively.
Tesla CEO Elon Musk sold shares of the EV leader worth over $3.5 billion. Aehr is doing a second test of support at its 50-day line.
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Dow Jones Stocks Weaker
In the Dow Jones, Amgen and UnitedHealth have fallen below their 50-day lines, while Microsoft and Merck are still holding above their 50-day lines. Boeing is slightly extended from a cup base with a buy point of 173.95.
Retail sales fell 0.6% to the lowest level for the year in November, indicating a slowing economy. Initial unemployment claims of 211,000 were the lowest in 11 weeks and show continued tightness in the labor market. The consensus outlook was 230,000 in initial claims. Industrial production in November fell 0.2%, compared with estimates of an increase of 0.1%.
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