The Dow Jones Industrial Average fell late as fears of a recession mounted after the Federal Reserve meeting. Tesla (TSLA) CEO Elon Musk verbally announced a massive recall. Coinbase (Coins Riot Blockchain (RIOT) fell even as Bitcoin rose. Eli Lilly (LLY) came up with an upgrade.
Meanwhile, a trio of stocks near buying points showed impressive relative strength. J.M. Smucker (SJM), Eastern Bank Shares (EBC) and HealthEquity (HQY) all impressed.
According to early data, volume was mixed and rose on the Nasdaq but fell on the New York Stock Exchange.
The return on the 10-year Treasury benchmark rose by 19 basis points to 3.7%. West Texas Intermediate crude rose 0.7% to close at $83.53 a barrel.
Stocks hit by recession fears
Dow Jones and other stocks are suffering a hangover after the Federal Reserve’s latest meeting Wednesday. The Federal Open Market Committee, led by Fed Chair Jerome Powell, raised interest rates by 75 basis points.
The dot plot also predicted the Fed funds rate to reach 4.6% next year before the tightening ends.
Rob Dent, senior US economist at Nomura, said the Fed’s latest move really underscores “the likelihood” of a recession within the next 12 months.
“Global equities are struggling as the world expects rising interest rates to trigger a much faster and potentially severe global recession,” Oanda senior market analyst Edward Moya said in a note to clients. “The Fed has managed to convince the markets that they will remain aggressive in fighting inflation and that many expect another rate hike of 75 basis points in November.”
Dow Jones Gains, Nasdaq Falls, Small Caps Dive
The Dow Jones fell 0.4% lower late at the close. The Nasdaq suffered the worst of the indexes, falling 1.4%. The S&P 500 also lagged, losing 0.8%.
Sectors of the S&P 500 were mostly negative. Health and communications services were the only winners, while financials and consumer discretionary struggled the most.
Small caps were also torn apart by the bears, with the Russell 2000 finishing the day 2% lower.
The Innovator IBD 50 ETF (FFTY), a growth stock clockmaker, fell 2.6%.
Inside Dow Jones: Merck Shines, American Express Lags
Merck outperformed the Dow Jones today with a gain of 3.5%. However, it remains rooted below the main 50-day moving average.
American Express stocks trailed the venerable average the most, falling 3.8%. It is now below all of its major moving averages.
The other worst performers were Boeing (BA), which fell 3.2%, and Goldman Sachs (GS), who relinquished 2.4%.
The latest losers? This 5 Holdouts Buckle When Proceeds Increase
Elon Musk hesitated about recall; Tesla stock slides
Tesla shares plunged after the NHTSA issued a Safety Recall Report for 1,096,762 Tesla vehicles. The issue relates to Tesla’s automatic window reversing system.
CEO Elon Musk took to Twitter to criticize the recall.
“Terminology is outdated and imprecise”, he tweeted thursday. “This is a minor wireless software update. As far as we know, no one has been injured.”
Tesla stock fell 4.1% and lost ground on a short-term consolidation pattern with entries of 314.74.
Still, longer-term performance remains strong for Tesla stock.
Revenues have grown an average of 173% over the past three quarters, well above CAN SLIM requirements. The annual results are also impressive, with a three-year EPS growth rate of 197%.
Bitcoin rallies; Coinbase Stock Collapses
Coinbase fell hard despite Bitcoin fighting back on Thursday. Coinbase ended the session at 7%, although volume was low.
The stock was hit after a Wall Street Journal report on an alleged new speculative crypto trading firm.
The company, which cut its full-year forecast last month, lost ground on all of its key moving averages. COIN stocks are down about 75% since the beginning of the year.
Bitcoin fought back from lows and is above $19,000 after gaining 4.8% on Thursday.
However, other cryptocurrency games struggled. The Grayscale Bitcoin Trust (GBTC) Expressed a 0.4% Gain as Bitcoin Mining Played Riot Blockchain (RIOT) slipped 0.5%.
Eli Lilly Stock Pops
Pharma game Eli Lilly shined after UBS raised it to “Buy” from “Neutral”. It closed the session at 4.9%.
Analyst Colin Bristow said in a research note that the company’s new weight-loss treatment could be “the greatest drug ever.” He estimated that the maximum annual revenue could be $25 billion.
Bristow also emphasized that LLY stocks are now “the most attractive name” in UBS’s large-cap coverage.
The relative strength line is picking up as the stock has formed a flat base, with an ideal entry point of 335.43 according to MarketSmith.
Beyond Dow Jones: These 3 Stocks Flex Muscle
JM Smucker saw his relative strength line reach new heights. This is because it sees a cup-with-handle entry at 150, according to MarketSmith’s analysis.
The packaged food game is in the top 9% of the stock in terms of price performance over the past 12 months. It is a double threat as it offers investors a potent dividend yield of 2.9%.
Eastern Bankshares also saw its RS line reach new heights. It’s near a cup-and-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 difficult year.
Finally, HealthEquity rose more than 2%. It is in the buy zone of a consolidation pattern with a buy point of 72.80. It ranks in the top 5% of the stock in terms of price performance over the past 12 months.
The RS line is trading on recent highs, an encouraging sign. There has also been a lot of money behind the health savings game lately, with its impressive B+ Accumulation-Distribution Rating.
Follow Michael Larkin on Twitter at: @IBD_MLarkin for more analysis of growth stocks.
You may also like:
Stock market forecast for the next six months holds big risks for Dow Jones – but also hope
MarketSmith: research, charts, data and coaching all in one place
These are the 5 best stocks to buy and watch right now
This Is The Ultimate Warren Buffett Stock, But Should You Buy It?
This Is The Ultimate Donald Trump Stock: Is DWAC A Buy?