The Dow Jones Industrial Average led the downside Thursday afternoon as stocks cooled following Wednesday's powerful upside move. The S&P 500 drifted higher but still remained in the negative, while the Nasdaq closed barely positive.
Dow Jones Leads Downside
The Dow Jones industrials closed about 0.6% after rallying over 2% yesterday. The Nasdaq traded about 0.1% higher after bouncing over 4% higher the day before. The S&P 500 was down only 0.1% while the small-cap Russell 2000 lost 0.1% as well. Volume was lower on the Nasdaq and higher on the NYSE vs. the close on Wednesday.
Stocks are taking a slight pause after Wednesday's meteoric rise in the indexes following Fed Chair Jerome Powell's speech. Powell said the pace of rate hikes could start to slow at the December meeting, which was widely anticipated. Still, stocks rocketed in response.
Meanwhile, investors are continuing to digest more economic info over the course of today's trading. Early Thursday, the Commerce Department's PCE inflation index rose 0.3% in October. This was cooler than estimates. The Fed's preferred measure of inflation marked a 6% year-over-year increase compared to June's 40-year high of 7%.
Investors are also digesting the latest PMI data. The seasonally adjusted S&P Global U.S. Manufacturing Purchasing Managers' Index posted a 47.7 reading in November, down from 50.4 in October. This was the sharpest drop since May 2020, and was driven by declines in output and new orders. Numbers below 50 indicate contraction in manufacturing.
This renewed deterioration in operating conditions in November from U.S. manufacturing firms shows that "the business mood remains among the gloomiest seen over the past decade," according to Chris Williamson, chief business economist at S&P Global Market Intelligence. "Companies are consequently cutting production at a rate not seen since the global financial crisis."
A combination of rising cost of living, higher interest rates and growing recession fears has resulted in slumping demand for goods, both domestically and internationally.
Retailer Stocks To Watch
Shares of Costco traded over 6% lower Thursday following disappointing November sales data. Sales growth slowed to 5.7% from 7.7% in October. Additionally, e-commerce sales during the period fell 10.1%.
The stock had been building a cup base with 564.85 entry but the move Thursday certainly puts a dent in the pattern. COST stock also undercut its 200-day and 21-day moving averages in heavy volume, a concerning sign.
Other retailers appeared to fall in sympathy, such as Target and BJ's Wholesale Club, which fell 1% and 5.9%, respectively.
Meanwhile, discount retailers Big Lots and Dollar General fell on Thursday following earnings releases.
Big Lots stock lost around 8.5% and undercut its 50-day moving average but traded near intraday highs. The retailer missed estimates on its top and bottom lines. The company reported a loss of $2.99 a share while analysts expected a loss of $2.94 a share.
Dollar General gapped down significantly and lost about 7.5% following its earnings. Shares were hovering near the 259.75 cup buy point before Thursday's losses, which sent the stock below its 50-day line and triggered the 7% to 8% sell signal from the entry.
Follow Rachel Fox on Twitter at @IBD_RFox for more Dow Jones and stock market commentary.
