The Dow Jones Industrial Average fell late as recession fears rose following the Federal Reserve meeting. Tesla CEO Elon Musk verbally blasted a mass recall. Coinbase and Riot Blockchain fell, even as Bitcoin rallied. Eli Lilly popped on an upgrade.
Meanwhile, a trio of stocks near buy points were showing impressive relative strength. J.M. Smucker, Eastern Bankshares and HealthEquity all impressed.
Volume was mixed, rising on the Nasdaq but slipping on the New York Stock Exchange, according to early data.
The yield on the benchmark 10-year Treasury note surged 19 basis points to 3.7%. West Texas Intermediate crude oil rose 0.7%, closing at $83.53 per barrel.
Stocks Hit Amid Recession Fears
Dow Jones and other stocks are suffering a hangover following the latest Federal Reserve meeting Wednesday. The Federal Open Market Committee, led by Fed Chairman Jerome Powell, raised rates by 75 basis points.
The "dot plot" also forecast the Fed funds rate would reach 4.6% next year before the tightening comes to an end.
Nomura senior U.S. economist Rob Dent said the latest Fed move "really underscores the likelihood" of recession within the next 12 months.
"Global equities are struggling as the world anticipates surging rates will trigger a much sooner and possibly severe global recession," Oanda senior market analyst Edward Moya said in a note to clients. "The Fed has succeeded in convincing markets that they will remain aggressive with fighting inflation and that has many expecting another 75 basis point rate increase in November."
Dow Jones Gains, Nasdaq Falls, Small Caps Dive
The Dow Jones fell late closing down 0.4%. The Nasdaq was struggled most out of the indexes, dropping 1.4%. The S&P 500 also lagging, giving up 0.8%.
The S&P 500 sectors were mostly negative. Health and communication services were the only gainers while financials and consumer discretionary struggled the most.
Small caps were also mauled by the bears, with the Russell 2000 ending the day 2% lower.
The Innovator IBD 50 ETF, a bellwether for growth stocks, dropped 2.6%.
Inside Dow Jones: Merck Shines, American Express Lags
Merck fared best on the Dow Jones today as it turned in a gain of 3.5%. However, it remains rooted below the key 50-day moving average.
American Express stock was the worst laggard on the venerable average, falling 3.8%. It now sits under all its major moving averages.
The other worst performers were Boeing, which fell 3.2%, and Goldman Sachs, which ceded 2.4%.
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Elon Musk Miffed Over Recall; Tesla Stock Slides
Tesla stock tumbled after the NHTSA issued a Safety Recall Report for 1,096,762 Tesla vehicles. The issue involves Tesla's window automatic reversal system.
CEO Elon Musk took to Twitter to criticize the recall.
"The terminology is outdated & inaccurate," he tweeted Thursday. "This is a tiny over-the-air software update. To the best of our knowledge, there have been no injuries."
Tesla stock dipped 4.1%, losing ground on a short consolidation pattern with a 314.74 entry.
Even so, longer-term performance remains strong for Tesla stock.
Earnings have grown an average 173% over the past three quarters, well above CAN SLIM requirements. Annual results are also impressive, with its three-year EPS growth rate coming in at 197%.
Bitcoin Rallies; Coinbase Stock Plunges
Coinbase fell hard despite Bitcoin fighting back Thursday. Coinbase ended the session down 7%, although volume was light.
The stock got hit following a Wall Street Journal report about an alleged new speculative crypto trading venture.
The company, which slashed its full-year forecast last month, lost ground on all its major moving averages. COIN shares are down about 75% since the beginning of the year.
Bitcoin battled back from lows and is above the $19,000 mark after gaining 4.8% on Thursday.
However, other cryptocurrency plays struggled. The Grayscale Bitcoin Trust squeezed out a 0.4% gain while Bitcoin mining play Riot Blockchain skidded 0.5%.
Eli Lilly Stock Pops
Pharma play Eli Lilly was shining after UBS hiked it to "Buy" from "Neutral." It closed the session up 4.9%.
Analyst Colin Bristow said in a research note that the company's new weight loss treatment could be "the biggest drug ever." He estimated that peak annual sales could reach $25 billion.
Bristow also insisted that LLY stock is now "the most attractive name" in UBS's large cap coverage.
The relative strength line is picking up while the stock has formed a flat base, with an ideal entry point of 335.43 according to MarketSmith.
Outside Dow Jones: These 3 Stocks Flex Muscles
J.M. Smucker saw its relative strength line reach new heights. This comes as it eyes a cup-with-handle entry at 150, according to MarketSmith analysis.
The packaged foods play is in the top 9% of stocks in terms of price performance over the last 12 months. It is a double threat, as it offers investors a potent 2.9% dividend yield.
Eastern Bankshares also saw its RS line reach new heights. It is near a cup-with-handle buy point of 21.55.
EBC is in the top 7% of stocks tracked in terms of earnings performance. It is flat so far in 2022, which is better than most stocks in this troubled year.
Finally, HealthEquity rose more than 2%. It is in the buy zone of a consolidation pattern with a 72.80 buy point. It is in the top 5% of stocks in terms of price performance over the past 12 months.
Its RS line is trading at recent highs, an encouraging sign. Big money has also been getting behind the health savings account play of late, with its impressive B+ Accumulation-Distribution Rating.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
