Major stock market indexes closed near session lows Wednesday after the Federal Reserve released minutes from its December meeting. Small caps took heavy fire while Apple extended its slump.
The S&P 500 fell 0.8%. The Nasdaq composite lost 1.2% and fell for a fourth consecutive session. It is the index's longest and deepest decline since October.
The Dow Jones Industrial Average was down 0.8%. Johnson & Johnson made its highest close since Sept. 21. And Travelers is at its highest level since last January.
Small caps continued to lag, with the Russell 2000 down a hefty 2.6%. Its four-day slide has wiped out more than 5%.
Volume on the stock market today was lower on the Nasdaq and higher on the New York Stock Exchange, according to unconfirmed data.
Tension Among Fed Officials
In their December meeting, Fed officials developed a consensus that no further rate hikes were needed, according to minutes from the gathering. But the Fed was vague about when or how to trigger any rate cuts. Another rate increase wasn't ruled out, but some cautioned that keeping a restrictive stance on rates threatens to hurt the economy.
"The minutes reveal the tension within the Federal Open Market Committee," said Jeffrey Roach, chief economist for LPL Financial. "Participants realize the incredible amount of uncertainty surrounding the macro landscape and they want to keep their options open. Although mildly hawkish in sections, the minutes imply the committee will likely hold rates steady in March but start preparing the markets for a cut later in the year should growth falter."
The 10-year Treasury yield initially rose after the Fed minutes were released. But soon, the benchmark yield resumed a downward direction. In afternoon trading, it was down 4 basis points to 3.91%.
Santa Claus Indicator Bodes Poorly
While much of Wall Street referred to December market gains as the Santa Claus Rally, the indicator discovered by the Stock Trader's Almanac is really a seven-day period. Stock market indexes tend to rise in the final five sessions of the year and the first two of the new year. But when indexes fall in that period, bear markets or significant declines can be expected, the Almanac says.
With that seven-day period ending with Wednesday's trading, the S&P 500 is down 0.9% over that time span. That makes it its first Santa Claus Rally decline since 2015-16, according to Dow Jones Market Data. The Nasdaq also is down over the seven-day period and the Dow is barely higher.
Apple fell nearly 0.8% for a third straight decline, falling about 5% over this period. That is its worst three-day stretch since early September, when it fell 6.1%. Shares are trading below the 50-day moving average, 4.5% below the 192.93 buy point of a Dec. 5 breakout.
For now, there's no sell signal in Apple. The stock, which was the first to top a $3 trillion valuation last year, has lost more than $150 billion in market cap during its losing streak, according to Dow Jones Market Data.
Arm Holdings has erased almost an entire 20% gain from its 64.92 buy point. But the chip stock found support around that entry and closed near the session's highs. Industrial services provider APi Group gapped down more than 6% in heavy trading, and has lost nearly 11% so far this week.
Futures Rise After Further Market Losses; This Stock Clears Buy Point
IBD 50 Underperforms Stock Market
The Innovator IBD 50 exchange traded fund underperformed Wednesday with a 2.8% tumble. The ETF is now below its 200-day moving average. But it remains above the 50-day line and is forming a cup-with-handle base.
Among IBD 50 stocks of note, Cloudflare has erased a 14% gain from its 76.07 buy point, which is a round-trip sell signal. Irish airline Ryanair Holdings is rapidly descending, along with other travel stocks. It's down about 9% this week.
Dozens of IBD 50 and other high-rated stocks have fallen below their 21-day exponential moving averages. While that's not necessarily a sell signal, it does illustrate the broad weakness in growth stocks for the new year.
Tech leaders such as CrowdStrike, SentinelOne, ServiceNow, Salesforce and Zscaler are breaking below their 21-day lines.
