The stock market improved but still posted losses Wednesday, with all the major indexes bouncing off the day's lows in afternoon trading. Market drops came as Treasury yields reached levels not seen since before the Great Recession.
The yield on the benchmark 10-year Treasury note was on the rise again, adding 4 basis points to 4.89%. The yield moved above the 4.9% level earlier in the session for the first time since July 2007.
Meanwhile, September housing starts showed promise from the prior month but fell short of forecasts. The Commerce Department said housing starts jumped 7% for the month to an annualized rate of 1.358 million, up from a revised 1.269 million in August. But that was below predictions for 1.394 million in September.
Building permits, which provide a rough gauge to future building activity, dropped 4.4% to a rate of 1.473 million in September. Higher mortgage rates are weighing on the housing market.
Indexes Drop On Higher Volume
The Nasdaq dipped 0.8% in the stock market today as the Dow Jones Industrial Average dropped 0.5%. And the S&P 500 trimmed 0.7% as the small-cap Russell 2000 pulled back 1.4%.
The Nasdaq and S&P 500 held below their 50-day moving averages, while the Dow hovered above its 200-day moving average.
Volume rose on the New York Stock Exchange and the Nasdaq, compared with Tuesday's trading at the same time of day.
The Invesco QQQ Trust exchange traded fund, which tracks the Nasdaq 100, shed 0.6%. The Innovator IBD 50 ETF retreated 1.1%.
Stock Market Action: Tesla Sinks Before Earnings
Leaderboard and IBD 50 component Tesla dipped more than 3% ahead of its third-quarter earnings report, which is due after Wednesday's stock market close. Analysts expect Tesla's per-share earnings to drop considerably on increasing revenue.
TSLA stock found support after testing the 50-day line. The electric-vehicle maker is in a cup-with-handle base with a 278.98 buy point, according to MarketSmith pattern recognition. Investors could use the Oct. 10 high of 268.94 as an early entry.
Nvidia pulled back 3.5% Wednesday on top of Tuesday's 4.7% drop, which pushed the maker of artificial-intelligence chips below the 50-day line. On Tuesday, the U.S. said it would restrict AI chip exports to China. That prompted Citigroup to lower its price target on Nvidia to 575 from 630, but it maintained its buy rating. Nvidia is an IBD Leaderboard and IBD 50 stock.
Tidewater stock led the IBD 50, jumping more than 4%. The offshore energy transporter stock has outperformed the market and gained around 95% this year.
Shares of Dutch chip equipment maker ASML sank nearly 4% after the company reported mixed third-quarter results and warned of flat 2024 sales. Shares fell further below the 50-day line.
Other Stock Market Movers: IBD 50 Names Tumble
Meanwhile, heavy-equipment stocks felt pressure. Terex gapped down nearly 7% in heavy volume after Barclays cut its price target to 60 from 66 and maintained its equal-weight rating on the stock. TEX stock undercut its 200-day line.
Dow Jones heavy-machinery stock Caterpillar also plunged. Shares remained under their 50-day level.
Among IBD 50 stocks, United Rentals fell more than 3% in heavy trading. Also, Modine Manufacturing plummeted more than 7% and fell below its 50-day line.
United Airlines tumbled more than 7% as the company filed a positive earnings report but lowered its fourth-quarter earnings outlook due to the Israel-Hamas war. Shares are well below the 50-day line and nearing their 52-week low. UAL stock was a big loser among S&P 500 stocks Wednesday.
Dow Jones stock Procter & Gamble climbed more than 2% after the company's fiscal first-quarter earnings and sales came in better than expected. The consumer goods stock retook its 200-day moving average. But it remained below its 50-day line in tight trading near the bottom of a flat base.
Futures: Yields Eye 5%; Tesla Falls On These Elon Musk Warnings
Dow Jones Component Gains, Others Drop
Dow Jones component Travelers eased from larger gains, now up 0.3% after the insurance company reported a significant miss on its third-quarter profit estimates and higher revenue. The property and casualty insurer cited larger catastrophic losses from wind and hail storms. The stock is trading below its 200-day line.
Interactive Brokers gapped down more than 4% even though the online broker reported higher-than-expected profits and sales for the third quarter. Shares undercut the 200-day line in recent stock market action.
Financial services stock Morgan Stanley tumbled more than 7% after the company reported lower-than-expected earnings and higher sales for its third quarter, but revenue lagged the year-ago period.
J.B. Hunt Transport Services gapped down more than 6% after the transportation company reported a miss on earnings and sales projections. The stock sank below its 50-day and 200-day lines. The big move below the 50-day line triggered a sell signal.
This is the time to have your watchlists ready. Look for stocks near buy points with strong relative strength. And keep upcoming earnings in mind.
Follow Kimberley Koenig for more stock market news on X/Twitter @IBD_KKoenig.
