The Dow Jones Industrial Average and Nasdaq traded sharply lower following Federal Reserve Chairman Jerome Powell's hawkish speech at Jackson Hole, Wyo. Friday. The Nasdaq led the downside in today's heavy-volume sell-off.
Dow Jones, Nasdaq Crumble On Fed Speech
Index losses deepened into the close. The Dow ended down 3% while the S&P 500 fell 3.4%. Small caps also struggled, with the Russell 2000 declining 3.3%. The Nasdaq fared the worst and lost over 3.9%. Volume was higher on the Nasdaq and NYSE vs. the close on Thursday, according to early data.
Crude oil futures pared early gains but traded slightly higher, up 0.4%. The commodity traded around $92.86 per barrel Friday afternoon. The 10-year Treasury yield showed little movement on Friday after this week's strong gains, trading at 3.03% Friday.
Investors were clearly unhappy with the U.S. central bank's commitment to fight inflation. "Restoring price stability will likely require maintaining a restrictive policy stance for some time," Powell said in his speech. "The historical record cautions strongly against prematurely loosening policy."
U.S. Stock Market Today Overview |
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|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 32282.80 | -1008.98 | -3.03 |
| S&P 500 | (0S&P5) | 4057.74 | -141.38 | -3.37 |
| Nasdaq | (0NDQC ) | 12141.71 | -497.56 | -3.94 |
| Russell 2000 | 188.86 | -6.54 | -3.35 | |
| IBD 50 | 29.56 | -0.76 | -2.51 | |
Last Update: 4:08 PM ET 8/26/2022 |
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Meanwhile, economic data released Friday morning suggests that inflation is moderating and consumers are waning. Sal Guatieri, senior economist with BMO Capital Markets, noted that personal consumption rose merely 0.1% in July while real spending advanced 0.2%, less than expected. Additionally, core prices rose less than expected, up 0.08% in July, following June's big 0.6% leap.
"Inflation is still well above the 2% target, but it's starting to move in the right direction, no doubt benefiting from recent retail discounting to clear out inventories," Guatieri said.
Inside The Dow Jones
All 30 Dow Jones stocks traded lower on Friday. Tech giant Salesforce led the downside, losing 5%, following Thursday's earnings-related sell-off. Shares are now down close to 10% for the week. CRM shares sank after the firm lowered its fiscal 2023 revenue outlook, citing currency exchange rates and slowing demand from retail and telecom customers. The Dow Jones component reported July-quarter earnings that fell from a year earlier but exceeded Wall Street targets.
Shares have been tumbling over the past week, undercutting support at their 50-day moving average in strong volume.
MMM also led the downside with losses of over 9%. The diversified operations stock slid below its 50-day moving average in heavy volume. Falling below this level would be a bearish sign for the stock, if not a sell signal. MMM also led the downside among S&P 500 stocks.
While no Dow Jones stocks traded higher on Friday, Chevron fared the best, losing 0.7%. The oil giant is holding a gain of over 3.5% for the week, contrary to many stocks in today's market. Shares have recently crossed above their 21-day and 50-day moving averages as oil stocks continue to strengthen.
Chevron is currently 10% below a 182.50 buy point of a cup base. Investors could also consider using a more aggressive buy point above the 164.66 short-term resistance level.
Breakout Stocks Pull Back
As the market pulled back on Friday, it took many recent breakout stocks down with it. Several stocks inside the IBD 50, including Axcelis Technologies lost recent gains. ACLS stock fell over 11%, triggering the 7% to 8% sell rule just one day after a heavy-volume breakout. Shares of Axcelis broke out above a 79.93 entry on Thursday.
On Friday, shares of Dave & Buster's Entertainment briefly broke out above a 43.92 cup-with-handle buy point. But the restaurant's shares immediately reversed lower and are now down over 3%. A reversal on the breakout day is never a good sign. The broad market sell-off is making it hard for most stocks in today's market. On the positive side, the stock remains above its 21-day exponential moving average.
