Dow Jones Dips, Nasdaq Reverses Slightly Higher; Bond Yields Rise Again

The Dow Jones Industrial Average fell in today’s stock market while the Nasdaq composite reversed higher after falling 1% intraday. Financials and energy sectors, however, are showing strength.

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Stock Market Today

Just after 11 a.m. ET, the Dow Jones industrials were trading down 0.5%. The Nasdaq composite edged higher by 0.2%, extending this week’s big declines. The S&P 500 was mostly flat, while the Russell 2000 small-cap index gained 0.5%. Data showed volume was running higher on the Nasdaq and on the NYSE vs. the same time on Wednesday.

The stock market rally turned sharply lower Wednesday after the minutes from the mid-December Federal Reserve meeting revealed slightly more hawkishness, now that the Fed is considering speeding the sale of more than $8 trillion in bonds currently on its balance sheet.

The major indexes closed near their lows on Wednesday while IBD downgraded it’s market outlook to uptrend under pressure from the prior uptrend status. Tech stocks made a concerning move lower as the Nasdaq fell below its 21-day and 50-day lines, with its biggest intraday price drop since Feb. 2021. This decisive break on the Nasdaq may likely take some time to recover.

The market may continue to rotate into 2022 as investors flock to segments like financials and energy stocks. Meanwhile, high growth stocks and tech leaders are taking a backseat. The Innovator IBD 50 ETF (FFTY) continued to underperform the major indexes and traded down over 2.5%. Growth stocks have suffered in recent sessions as bond yields continue to increase. Rising yields tend to make riskier, high-growth opportunities less appealing for investors.

The 10-year Treasury bond yield continued to rise to 1.73% on Thursday, after a gain of over 20 basis points since the start of the week. Meanwhile, financial stocks outperformed as the Financial Select Sector SPDR (XLF) gained close to 1%. Energy stocks led the upside with a 2% gain in the Energy Select Sector SPDR ETF (XLE). Shares broke out on Tuesday above a 59.51 flat-base entry. The stock remains in the buy range which tops out at 62.48.

Investors who aren’t interested in individual stocks but who are still seeking exposure to energy could consider starting a position in the ETF.

Stocks Making Notable Moves

As for leading stocks in the MarketSmith Growth 250 index, Resources Connection (RGP) scored a break out above a proper entry. Shares gained closed to 7% and moved above a 19.54 buy point. The RS line is hitting a new high on the weekly chart, a good sign.

Resource Connection is part of the consulting commercial services industry group, which ranks No. 37 out of the 197 groups IBD measures, according to MarketSmith.

Highly valued stocks in industry groups such as software continued to struggle. Also, steelmakers were also among top decliners in today’s market. Nucore (NUE) lost over 4% as shares slid back below a 122.26 entry. The stock is currently an IBD Leaderboard pick.

Meanwhile, regional bank stocks continued to perform well as the Spdr S&P Regional Bank ETF (KRE) rose over 1%. A handful of financial stocks have scored breakouts this week and held up in their buy zones including Ameriprise Financial (AMP), Signature Bank (SBNY) and Raymond James Financial (RJF), to name just a few.

Follow Rachel Fox on Twitter at @IBD_RFox for more Dow Jones and stock market commentary.

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