Key stock market indexes were headed for a third straight loss Wednesday, with the Dow Jones Industrial Average testing a key support line.
The Dow Jones industrials shed 1%, the S&P 500 lost 0.9% and the Nasdaq fell 0.8% in the stock market today. Small caps tracked by the Russell 2000 led the sell-off with a 1.6% drop. Volume was higher on both major exchanges vs. the same time Tuesday.
Tech stocks remain under pressure as the Nasdaq slumps further below its 50-day moving average. On May 10, the Nasdaq tumbled 2.6% to close below the support line for the first time since March. On Wednesday, the Dow and the S&P 500 were testing their 50-day lines.
Last year, tech stocks boosted the Nasdaq to a 43.6% gain — its fifth-best year ever. The S&P 500 rose 16.3% in 2020 and the Dow added 7.2%. Read The Big Picture for more detailed daily market analysis.
The U.S. economy is recovering from the Covid-19 pandemic, which triggered nationwide lockdowns over a year ago. But many states are relaxing restrictions, and cases are plateauing or declining in some states as vaccinations roll out.
U.S. Stock Market Today Overview
Last Update: 12:10 PM ET 5/19/2021
Cumulative Covid-19 cases worldwide have topped 165 million, with more than 3 million deaths, according to Worldometer. In the U.S., cases are approaching 34 million with over 600,000 deaths, although the number of new cases and deaths in the U.S. has slowed dramatically in many states.
Dow Jones Movers
Chevron (CVX) skidded 3% in fast turnover to gap down below its 50-day line, extending Tuesday’s 4.2% drop. Shares briefly climbed past a 112.80 buy point of a cup base on May 10 but reversed to close below the entry. Chevron stock has since formed an alternate handle with a new 113.21 entry.
Warren Buffett’s Berkshire Hathaway cut its stake in the oil giant by 51% after buying it for the first time in Q4, according to the recently released SEC filing.
Among other big blue chip losers, Boeing (BA), Caterpillar (CAT) and Goldman Sachs (GS) fell more than 2% each. Caterpillar stock, down 2.4%, has slipped back below a 237.88 buy point of a flat base. It’s now testing support at its 50-day moving average.
Goldman Sachs, down 2.1%, was trading near a 356.95 buy point cleared on May 5. It gave up the entry on May 12 before retaking the buy point late last week. Early Wednesday, it undercut the 356.95 level again. If Goldman climbs back above the entry, the buy range would top out at 374.80.
But Salesforce.com (CRM) bucked the downtrend with a 2.3% gain. Morgan Stanley upgraded the software stock to overweight from equal weight with the price target unchanged at 270. The stock remains below its 50-day and 200-day line as it works on a seven-month consolidation.
Outside The Dow
Retail, oil and gas, automaker, and building stocks led the downside among IBD’s 197 industry groups. Solar, chip and major discount chains were among the few outperformers.
In the automaker group, Tesla (TSLA) skidded 4% to a two-month low. Shares are falling further below their long-term 200-day line and nearly 40% off their 52-week high. On Jan. 25, Tesla stock hit a record high at 900.40, after climbing as much as 93% from a 466 buy point in a cup with handle.
Discount giant Target (TGT), up 5% in heavy trade, was a rare bright spot. The stock is on pace for a new closing high. Target stock rebounded off its 10-week line to set up a chance to buy or add shares. Keep in mind the market uptrend is under pressure, which increases risk.
Target delivered a blowout Q1 earnings report early Wednesday. Earnings skyrocketed 525% to $3.69 a share as sales rose 23% to $24.20 billion. Analysts expected $2.20 EPS on revenue of $21.86 billion.
Bitcoin tumbled below $31,000 overnight to its lowest level since early February. The cryptocurrency traded around $37,857 midday Wednesday, according to Coindesk. Bitcoin peaked at $64,829.14 on April 16.
Building Stocks Break Down
Several building-related stocks including D.R. Horton (DHI), Builders FirstSource (BLDR) and Boise Cascade (BCC) triggered sell signals as they fell below — or further below — their 50-day lines in heavy volume.
Building products provider Atkore (ATKR), down 4% to test its 50-day line, tripped the round-trip sell signal. The stock erased a 19% gain from the 75.70 buy point of a flat base.
Follow Nancy Gondo on Twitter at @IBD_NGondo
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