The Dow Jones Industrial Average fell amid rising fears over U.S.-China relations. PayPal was punched lower after a bearish call. Nordstrom reversed hard after popping on the news that meme stock investor Ryan Cohen took a big stake in the company. Intel was a blue chip loser.
A trio of stocks near entries were showing relative strength despite Monday's negative action. Toll Brothers, Meritage Homes and CSW Industrials were all looking strong.
An issue in an over-the-counter stock reporting system affected some trading momentarily. Regulatory agency Finra reported an issue with its Over-the-Counter Reporting Facility system earlier on Monday but it has been resolved, Bloomberg reported. It follows other recent issues, including a New York Stock Exchange malfunction on Jan. 24.
Oanda senior market analyst Edward Moya said rising geopolitical worries and poor earnings weighed on the market.
"Much of Wall Street is getting nervous over U.S.-China tensions," he said in a note to clients. "A few months ago, China was not investable. China was becoming a favorite bet with the great reopening, but now with rising tensions and possible blacklisting, investors are heading to the sidelines.
Nasdaq Falls; Small Caps, IBD 50 Lag
The Nasdaq struggled most out of the major indexes, ending the day 1% lower. Tesla stood out with a gain of 2.5% while Lucid popped 2.9%.
The S&P 500 lost 0.6%. Catalent soared 19.5% on reports Danaher is mulling a takeover.
The S&P 500 sectors were mostly negative. Utilities and consumer staples were the only areas to gain. Technology and communication services were the worst laggards.
Small caps lagged the major indexes, with the Russell 2000 dipping 1.4%. Growth stocks also tumbled, with the Innovator IBD 50 ETF falling 1.6%.
Dow Jones Today: Intel Stock Slides As TRV Leads
The Dow Jones Industrial Average was well off lows but an attempt to move into positive territory failed. It fell 0.1%.
Travelers led the upside with a 1.8% gain. McDonald's and Caterpillar were the next best performers on the Dow.
Intel struggled once again, falling 4.2%. The chip stock is now seeking support at the 50-day moving average.
Nordstrom Stock Reverses After Ryan Cohen Pop
Nordstrom stock suffered a painful hangover after an explosive move higher Friday on reports that Cohen took a stake in the company. Cohen is said to be looking to shake up the board.
JWN finished slightly off its lows for the day as it lost 8.3%.
Despite the precipitous decline, Nordstrom stock still held a fair portion of Friday's gain, when it shot 25% higher.
The move Friday came after the retailer previously reported disappointing holiday sales and cut its full-year guidance.
Cohen won recognition for his role in meme stock mania. He is currently chairman of GameStop, considered the original meme stock.
PayPal Stock Drops Amid Bearish Call
PayPal stock fell 3.8%. Shares of the payments company were beaten lower after Raymond James analyst John Davis downgraded PayPal from outperform to market perform.
Davis is worried that the firm will have flat to negative growth for checkouts at branded store chains. The company reports earnings Thursday.
"Despite the fact the stock is still relatively inexpensive … we are moving to the sidelines as we believe meaningful multiple expansion will prove difficult if branded checkout is in fact losing material share," he said in a research note.
Cyber Week data suggests PayPal is losing market share to the likes of Apple, whose Apple Pay system has been winning customers.
The news comes after PayPal last week announced it is shedding 7% of its workforce to lower costs.
Outside Dow Jones: 3 Stocks Show Strength
A trio of noteworthy stocks flexed their muscles amid the negative action. They all have relative strength lines at fresh highs.
Homebuilder Toll Brothers formed a cup-with-handle base, MarketSmith analysis shows. The ideal buy point is 63.29. This is a first-stage pattern.
TOL has a best-possible IBD Composite Rating of 99, which reflects excellent all-around performance. Funds have been big buyers of the stock lately.
Meritage Homes has a cup base with an ideal entry of 125.11. A new handle could be in the works.
While Meritage's base is deeper than normal, the stock is strong all around. Excellent earnings performance has netted it an EPS Rating of 97 out of 99.
The Building-Residential/Commercial group is currently a lofty No. 11 out of the 197 industry groups tracked by IBD.
Specialty chemicals stock CSW Industrials is just above a cup-with-handle entry of 144.12. CSWI is in the top 12% of stocks in terms of price performance over the past 12 months.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
