The Dow Jones Industrial Average closed lower despite rallying off lows Monday after Federal Reserve Chair Jerome Powell spoke out on interest rates. Magnificent Seven stock Nvidia (NVDA) rallied on a price-target hike while Alphabet (GOOGL) and Apple (AAPL) also rose. Meanwhile, well-known fund manager Cathie Wood snapped up a stock that’s plunging.
Stocks on the move included social media play Snap (SNAP), which fell after it announced job cuts. Meanwhile, a trio of strong stocks tested buy points. MongoDB (MDB), Synopsys (SNPS) and JFrog (FROG) flirted with entries.
Many investors have been betting on imminent cuts to interest rates. But Fed Chief Powell poured some cold water on that notion in a rare interview that aired Sunday. The case for quick rate cuts was weakened by last week’s jobs report, which came in far hotter than expected. And on Monday the ISM nonmanufacturing reading came in at 53.4, above expectations. It grew for the 13th month in a row.
Meanwhile, Powell made the case for being careful and not moving too quickly when he appeared on “60 Minutes.” “We want to see more evidence that inflation is moving sustainably down to 2%,” Powell said.
And while he said that central bankers’ confidence is rising, they “want some more confidence before we take that very important step of beginning to cut interest rates.”
The Nasdaq composite briefly rallied into positive territory but ended the session down 0.2%. ON Semiconductor (ON) surged 9.5% on an earnings beat. The benchmark S&P 500 also closed off lows but still ceded 0.3%. Air Products and Chemicals (APD) plunged 15.6% after the firm missed earnings views. The S&P 500 sectors closed in mostly negative territory. Only health care and technology rose on the stock market today. Materials and utilities struggled the most. Small caps were mauled by the bears, the Russell 2000 falling 1.1% and closing under the 50-day moving average. Growth stocks impressed, the Innovator IBD 50 ETF (FFTY) rising 0.4%.
The Dow Jones lagged the other major indexes, ending the day down nearly 274 points, or about 0.7%. Caterpillar (CAT) fared best on the much-watched index after posting strong earnings. It climbed nearly 2% but ended well off session highs. The firm benefited from particularly strong sales in North America. Caterpillar stock is extended from a 293.88 entry. By contrast, fast-food giant McDonald’s (MCD) dropped 3.7%. It was slapped lower after turning in mixed quarterly results. Revenue came in slightly below Wall Street expectations.
Buying on the dip can be a risky strategy for most investors. But that was not enough to stop fund manager Cathie Wood taking advantage of a big pullback in one of her favorite stocks as she hunts for potential bargains despite the risks. Her firm Ark Invest, of which she is chief executive and chief investment officer, snapped up nearly 88,000 shares of Tesla (TSLA) Friday for the ARK Innovation (ARKK) exchange traded fund. Tesla stock fell nearly 3.7% Monday and currently trades below its 50-day and 200-day moving averages, MarketSmith analysis shows.
So-called Magnificent Seven stocks were having a mixed start to the week Monday. Among Magnificent Seven stocks outside the Dow Jones index, Nvidia fared best, gaining 4.8%. The Leaderboard stock is extended past its most recent entry. The chip stock, a leader in artificial intelligence, surged on a price-target hike from Goldman Sachs to 800 from 625.
Makeup giant Estee Lauder (EL) shone brightly Monday following its latest quarterly report. Shares jumped nearly 12.1% after the company crushed earnings views, though it failed to retake the 200-day moving average. Estee Lauder stock turned in a 43% drop in adjusted earnings to 88 cents per share, after four quarters of accelerating declines.
Investors sometimes cheer the prospect of efficiencies when companies announce job cuts. But Snap failed to benefit from that Monday. Shares rallied off lows for the day but closed down 1.8%. Snap said it plans to jettison 10% of its global workforce, or more than 500 employees. NVO Stock Pops On Acquisition News, Novo Nordisk (NVO) was another noteworthy name faring well on the stock market today.
With the market’s continued strength, IBD is recommending exposure in the 80%-to-100% range. Here are three strong stocks worthy of consideration. MongoDB tried to break out past the 442.84 buy point of a cup base but faded, MarketSmith analysis shows. MongoDB provides an open-source database platform for businesses around the globe.
Meanwhile, Synopsys has formed a cup-with-handle base and is trading just above an ideal buy point of 554.57. JFrog stock is in a buy zone after clearing a flat base with a buy point of 35.35. This is a first-stage pattern, which is a bonus. An overall performance here is once again top notch, with its IBD Composite Rating coming in at 99. Price performance is its strongest suit, but its EPS Rating of 81 out of 99 is still solid. Analysts see earnings soaring 1,009% in 2023 and up 17% in 2024.
