Small caps paced a generally mild drop in stocks Thursday while gold miners fell sharply and China-based highfliers took a breather. But some growth players muscled higher and triggered new breakout points and follow-on entries on the stock market today. The market also showed strength in some quarters, particularly energy and a few spots in the vast health care sector.
The Nasdaq whittled its losses to a fraction after briefly trading above 18,000 earlier in the session. Stocks on the S&P 500 slipped 0.2%. And blue chips on the Dow Jones Industrial Average sank 0.4% after paring early-morning losses.
Still, U.S. equity indexes continue to show bullish action overall ahead of a key jobs report due Friday before the open. IBD's current outlook still calls for 80%-100% exposure for active investors.
Seven of the Dow's 30 components slumped by $2 a share or more, led by Goldman Sachs. The money center bank dropped nearly $6 a share, or 1.2%, and undercut its 50-day moving average. IBM bucked the drop as the only Dow Jones industrial stock to rally at least $2.
Finally, small caps on the Russell 2000 lost 0.8% on the stock market today.
3:23 p.m. ET
Economy More Robust Than Thought
Meanwhile, a stronger-than-expected reading from the ISM Services Index survey — a 54.9 reading in September, higher than the Econoday forecast of 51.5 — highlighted the fact that the U.S. economy is growing more robustly than thought.
The news also slightly reduced the probability that the Federal Reserve will repeat its half-point trim in short-term interest rates made in September at next month's meeting. An ISM services index reading above 50 denotes expanding activity.
The probability for a 50-basis-point cut in the fed funds rate — which is now at 4.75% to 5% — at the upcoming Nov. 7 Federal Open Market Committee meeting eased to 32.7% on Thursday. That's down sharply from 49.3% a week ago. Correspondingly, the chances for a quarter-point trim to a range of 4.5%-4.75% grew to 67.3% from 50.7% a week ago.
In market news, oil and gas companies and utilities widely outperformed. Royalty trust, U.S. exploration, drilling, refining, oil and gas transport, field services and international exploration and development were among the industry groups rising 1% or more earlier in the session.
On the downside, hospital firms got roasted for a 2.3% loss. Tenet Healthcare slid 3.7% and undercut its 50-day moving average. Further losses would trigger a defensive sell signal. Metal ores, car tires, paper, integrated telecom, automaker and apparel retail groups also weakened, down 1% or more.
1:52 p.m. ET
Stock Market Today: This Small Cap Rises 146%
Pennant Group, which priced a $109 million stock offering, rallied nearly 5% following a recent sharp decline. The operator of nursing care facilities is finding buyers near its rising 50-day moving average. Volume ballooned to 1.6 million shares, easily the highest amount so far this year.
Pennant Group is making its second touch of the 50-day moving average since it cleared a narrow, tight base with a 24.09 buy point on July 2. On the weekly chart, Pennant is also finding support at the 10-week moving average for the second time since the breakout, as shown by the weekly chart above. This positive action offers a follow-on entry near 33.10.
The Eagle, Idaho-based company shows a stout profit growth record.
Earnings jumped 24% in 2022 and 28% in 2023. Wall Street expects earnings to rise an additional 25% this year to 91 cents a share. Pennant, which operates 51 senior living communities, notched a return on equity of 17% last year. Its debt-to-equity ratio over the long term stood at a reasonable 46% at the end of 2023, according to MarketSurge.
According to Pennant's IBD Stock Checkup, the Medical-Long Term Care industry group ranked 18th out of 197 industry groups in six-month price performance headed into Thursday's trading.
More Bullish Charts Charging Higher
Cruise company Viking, which went public in May, outperformed the major averages, rising more than 1% and hitting a session high of 36.24. Viking, a new quarter-size position in Leaderboard, rallied past an aggressive trendline entry near 35.
Volume jumped nearly triple average levels. Viking also is forming a base with a conventional buy point at 37.25.
Meanwhile, Ryan Specialty rolled past the bears, rising for a fourth straight session. Up nearly 1% in heavy turnover, the insurance broker coasted past a 69.03 entry in an eight-week flat base. The 5% buy zone goes up to 72.48.
Ryan Specialty on Oct. 1 announced it's purchasing certain assets of EverSports & Entertainment Insurance from Everest Group. Carmel, Ind.-based EverSports is a managing general underwriter focused on sports, leisure and entertainment risk.
Financial Leader Benefits From Nervousness
Other top-rated growth stocks to watch on the stock market today include Cboe Global Markets, featured during Thursday's IBD Live episode.
Cboe benefits from higher trading in volatility-based options when investor nervousness rises. The stock, down just pennies, rallied sharply off its rising 50-day line and has set up a new flat base that offers a 216.14 buy point.
Former Commerce Secretary Ross: Why India Threatens China's Growth
In a flat base, the correction from high to low does not exceed 15%.
Cboe grew earnings 21% in the second quarter to $2.15 a share. Revenue rose 7% to $974 million, following four quarters in a row of a shrinking top line. Cboe has earned a superb 95 Composite Rating.
On Thursday, the Cboe Volatility Index, or simply the VIX, added 1% to 19.85. On Tuesday, the VIX jumped to a nearly three-week high.
12:15 p.m. ET
China Names Lead Downside
Meanwhile, China-focused exchange traded funds took a break. The iShares China Large Cap dropped 2% in heavy trading. The ETF remains extended past a buy point at 29.53. Krane CSI China Internet halted a big five-session win streak, down 2.7%.
The stock market today got off to a weak start following news of weekly jobless claims. Initial claims rose in the latest reported week to 225,000, matching views. Traders are waiting for Friday's nonfarm payrolls report. Econoday forecasts 132,500 net job additions to the U.S. economy in September, down from an increase of 142,000 in August, and the jobless rate to remain unchanged at 4.2%.
Volume inched 1% lower vs. the same time Wednesday on the Nasdaq and fell sharply on the New York Stock Exchange.
Meanwhile, Magnificent Seven stocks traded mixed. Microsoft, a true long-term leader, edged up slightly amid a critical test of the long-term 200-day line. Shares of Microsoft stock shows a plummeting relative strength line since July, a big concern.
Microsoft has made a huge investment in Open AI, the startup behind ChatGPT. OpenAI, earlier this week, received a new round of funding that reportedly now values OpenAI at more than $150 billion.
Stock Market Today: Gold Stocks Fall
Gold futures for December delivery edged up 70 cents to $2,670 per ounce. But gold mining plays fell sharply after coasting nicely higher in the third quarter.
Barrick Gold, a large cap with a market value of $34 billion, slid 1.9% in average trading. Amid choppy action since July, the stock remains above a July 16 buy point at 18.95.
Newmont fell 1.9% in light trading but is still up nearly 20% from a 44.59 proper buy point in a six-week flat base.
An Investor's Corner explains why selling most stocks at 20%-25% from a buy point can lead to excellent long-term returns.
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