Stock Market Gains Diminish; What We Can Learn From FANG Stocks

The stock market’s rebound attempt floundered in midday trading, after indexes ceded gains. Leading stocks reversed lower.


The Nasdaq composite climbed as much as 0.9% but erased the entire gain at one point. It was up 0.1% near midday. The S&P 500 also backtracked, trimming its gain to 0.4%. The Dow Jones Industrial Average was still up 0.5%.

Volume was lower on the NYSE and Nasdaq compared with the same time Tuesday. Yet, winners led losers on the NYSE by 9-to-5. On the Nasdaq, losers had the edge.

Invesco QQQ Trust (QQQ), which tracks the 100 largest nonfinancial Nasdaq stocks, was nearly flat.

FANG Stocks Mainly Lower

Major Nasdaq components such as Microsoft (MSFT), Facebook (FB), Nvidia (NVDA) and Alphabet (GOOGL) made sluggish gains or reversed lower at midday. Just those four stocks (including Alphabet Class A and C) account for about 25% of the QQQ index, and have an outsize influence on the whole stock market.

U.S. Stock Market Today Overview

Index Symbol Price Gain/Loss % Change
Dow Jones (0DJIA) 34471.11 +171.12 +0.50
S&P 500 (0S&P5) 4371.33 +18.70 +0.43
Nasdaq (0NDQC ) 14569.68 +23.00 +0.16
Russell 2000 (IWM) 221.18 -0.11 -0.05
IBD 50 (FFTY) 47.80 +0.12 +0.25
Last Update: 11:52 AM ET 9/29/2021

Microsoft and Alphabet made sharp breaks below their 50-day moving averages Tuesday and remain below that level. Such signs of deterioration bode badly for the market.

But Netflix (NFLX) — one of the so-called FANG stocks — rallied 3.5%, on track for a new closing high and the largest increase since Aug. 19. Benchmark raised its price target on Netflix to 493 from 448, although it maintained a sell rating.

Netflix stock has been trading tightly since rising to new highs on Sept. 2.

Treasury Yield Eases, Helps Stock Market

The yield on the 10-year Treasury note fell 2 basis points to 1.51% after a week of sharp gains. The sudden rise in yields hurt growth stocks and is one of the main reasons for this week’s stock market dive.

Technology Select Sector SPDR (XLK) pared its gain to 0.1% and Communications Services SPDR (XLC), which has a strong internet representation, rose 0.4%. Utility Select Sector SPDR (XLU), another rate-sensitive sector, was up 1.7% and on track to end a 14-day losing streak.

Innovator IBD 50 ETF (FFTY) erased morning gains also and was down 0.2%. That follows a three-day, 8.9% plunge. The ETF is now trying to bounce off its 50-day line.

IBD’s U.S. oil & gas exploration and production industry fell nearly 1%. The group, one of the hottest the past few weeks, reversed lower Tuesday. U.S. crude prices were nearly unchanged at $75.30 a barrel,  after the Energy Information Agency reported a surprising rise in oil inventories of 4.6 million barrels to 418.5 million barrels.

Building Shares Up In Stock Market

The homebuilding industry group climbed nearly 2%, while the mobile and manufactured home group rose 1.8% after positive data for the housing market.

Pending home sales surged 8.1% in August, well above the consensus forecast for a 0.9% increase, according to Econoday. The report, put out by the National Association of Realtors, followed two straight months of declines.

Most homebuilding stocks, however, are around the lows of recent price corrections.

Juan Carlos Arancibia is the Markets Editor of IBD and oversees our market coverage. Follow him at @IBD_jarancibia


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