Title: Volatility in Dow Jones as Fed Chair Powell’s Comments Weigh on Market
Subtitle: Netflix receives price target hike, while market reacts to Powell’s inflation concerns
Date: [Insert Date]
The Dow Jones Industrial Average experienced significant volatility on Friday morning as investors grappled with Federal Reserve Chair Jerome Powell’s remarks at the Jackson Hole Economic Symposium. The stock market initially saw gains, with Netflix (NFLX) leading the way after receiving a positive price target increase from Loop Capital.
However, the market subsequently lost momentum as Powell expressed concerns about persistently high inflation rates and hinted at the possibility of further interest rate hikes by the Federal Reserve. As a result, the gains in the stock market faded.
Despite the market downturn, Netflix’s stock rose by 1.6% following the upgrade from Loop Capital, which raised the price target to $500 and upgraded the shares to a buy recommendation. Earlier in the week, NFLX had briefly surpassed its 50-day moving average, but like other growth stocks, it faced a decline due to broader market conditions.
The 10-year Treasury yields also showed an upward tick, reaching 4.26%. Although traders currently believe there is an 80% chance that the Fed will maintain the fed funds rate range of 5.25% to 5.50% at the September meeting, the odds of a 25-basis-point hike at the November meeting have risen to about 50/50.
Several stocks recorded gains in the Dow Jones, including Salesforce (CRM), Nike (OF), and Microsoft (MSFT). Salesforce is set to release its earnings on Wednesday after the market close. Meanwhile, outside of the Dow Jones, the Nasdaq composite experienced a slight dip in value, with winners narrowly outnumbering losers.
Nvidia (NVDA), which had a tumultuous session on Thursday, showcased its price stalling action. Although the stock initially surged by over 6%, it ended the day with a minimal gain of 0.1%. Notably, Nvidia’s price action mirrored a form of distribution, suggesting a potential pause in its upward momentum.
Adobe stock, on the other hand, demonstrated strength by holding support at its 10-week moving average, leading to a 1.7% jump in its value.
While the Dow Jones and Nasdaq briefly surpassed their 50-day moving averages on Thursday, the S&P 500 fell just shy of reaching this milestone. With the index peaking at 4,458, approximately 1 point below its 50-day line, the gains for both the S&P 500 and the Dow Jones reduced to less than 0.1%, with advancing stocks just barely outnumbering losers.
Workday (WDAY), an enterprise software giant, experienced a volatile session on Thursday but saw a rebound in its value during morning trade after reporting a 72% increase in quarterly profit and a 16% rise in revenue to $1.79 billion.
Ulta Beauty (ULTA), which has faced a downtrend since May, encountered further losses after releasing its earnings report, which highlighted slower growth in earnings and revenue compared to the previous quarter. As ULTA approaches the critical support level of $400, investors will closely monitor its performance.
In the MarketSmith Growth 250, Marvell Technology (MRVL) faced a decline following its bearish outside day on Thursday, with earnings declining for the third quarter in a row and revenue dropping by 12%. However, the results were mostly in line with expectations, and revenue guidance for the next quarter met analysts’ forecasts.
On a positive note, Intuit (INTU) saw a reversal in its stock price after exceeding earnings expectations. The company also raised its dividend by 15%, although revenue guidance for the future fell below estimates. Nevertheless, Intuit’s stock remains in a bullish technical setup, supported by a consolidation phase after finding stability at the 10-week moving average.
For more stock market analysis and insight, follow Ken Shreve on Twitter at @IBD_KShreve.
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