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Dow Jones Falls As Yellen Touts Higher Taxes, Unions, Walmart Surges On Earnings

The Dow Jones Industrial Average slipped lower as Treasury Secretary Janet Yellen touted the benefits of higher taxes and unions to the Chamber of Commerce. Meanwhile, Walmart (WMT) surged higher on strong earnings, while Boeing (BA) was another standout blue chip name.

Housing stocks slipped amid a slowdown in housing starts. Meanwhile, a number of stocks managed to break out, even amidst the challenging action. First Financial Bankshares (FFIN), Maravai Lifesciences (MRVI) and Vista Outdoor (VSTO) all passed buy points.




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Yellen Touts Taxes, Unions

Treasury Secretary Janet Yellen was touting the benefits of higher taxes and unions to business leaders at the U.S. Chamber of Commerce Tuesday. She thinks higher taxes should be used to support stimulus spending.

“With corporate taxes at a historical low of one percent of GDP, we believe the corporate sector can contribute to this effort by bearing its fair share,” the former Fed Chair told the Chamber’s Global Forum on Economic Recovery. “We propose simply to return the corporate tax toward historical norms.”

Yellen also said workers, lower-wage earners in particular, have not seen enough wage growth over the past several decades, even as productivity rose. She said unions are part of the answer to this problem.

“There are several contributors to this troubling trend, but one important factor is an erosion in labor’s bargaining power,” she said.

Nasdaq Reverses, S&P 500 Gives Ground

The Nasdaq reversed lower, dipping 0.2%. Chinese e-commerce stock Pinduoduo (PDD) was the top performer, posting a gain of almost 4%.

The S&P 500 was the worst-performing major index, dipping 0.5%. Comcast (CMCSA) and Discovery (DISCA) were the biggest laggards, with both dropping more than 5% amid the fallout from Discovery’s proposed merger with WarnerMedia.

U.S. Stock Market Today Overview

Index Symbol Price Gain/Loss % Change
Dow Jones (0DJIA) 34171.03 -156.76 -0.46
S&P 500 (0S&P5) 4142.44 -20.85 -0.50
Nasdaq (0NDQC ) 13351.38 -27.67 -0.21
Russell 2000 (IWM) 220.63 -0.69 -0.31
IBD 50 (FFTY) 44.08 -0.62 -1.39
Last Update: 2:48 PM ET 5/18/2021

There were more losers than winners among the S&P sectors. Real estate and health were leading, while energy was the biggest laggard.

Volume was running higher vs. the prior session, which is not ideal on a down day. It rose almost 10% on the NYSE vs. the same time on Monday. Trading was up 7% on the Nasdaq.

Small caps inched lower, with the Russell 2000 dropping 0.3%. Growth stocks also more severely spanked, with the Innovator IBD 50 ETF (FFTY) down 1.4%.

Dow Jones Slips As Walmart Stock Surges

The Dow Jones Industrial Average fell back toward its 50-day line. It gave up almost 0.5%, losing around 150 points in the process.

Walmart was the top performer, rising more than 2% on strong earnings. This allowed it to retake its 200-day moving average, MarketSmith analysis shows.

Boeing was another top performer, though its gain of just 0.4% underlined the weakness of the index. Chevron (CVX) was the biggest laggard on a tough day for energy stocks, slipping almost 3%.

Housing Stocks Slip As Starts Slow

Homebuilder stocks slipped after the Commerce Department reported housing starts slowed to an annualized rate of 1.569 million in April. That was down from March’s pace of 1.739 million starts, and below expectations for a slowdown to 1.705 million new projects.

Building permits, which flag upcoming activity, slowed to a rate of 1.76 million starts, down from 1.766 million in March. That disappointed forecasts for an uptick to 1.78 million.

The SPDR S&P Homebuilders ETF (XHB) was down around 1%. Leaderboard stock Century Communities (CCS) dropped by a similar margin, while Sector Leader stock LGI Homes (LGIH) was down just over 0.5%.

These Stocks Pass Buy

A number of stock made bullish moves Tuesday, but were struggling to hold above their buy points.

Bank stocks have been strong of late, with First Financial Bankshares the latest to make a bullish move. It moved above a cup with handle’s buy point of 51.33 early, though it ended up slipping back below it.

The stock has a top notch Composite Rating of 95, with both earnings and stock market performance impressive.

Maravai Lifesciences also slipped back below its buy zone after staging a break out from a consolidation pattern. The ideal buy point here is 40.34. IBD Live panelists discussed the action in MRVI on Tuesday.

One point in its favor is the fact its relative strength line has just hit a new high.  The Nov. 2020 issue has a Composite Rating of 87, but stock market performance is not ideal.

Vista Outdoor also saw its RS line reach new heights after it passed a consolidation pattern buy point of 38.46. However it too is now back below the buy zone.

Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.

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