The Dow Jones Industrial Average and the broader stock market fell as Russian President Vladimir Putin increased pressure on Ukraine amid invasion fears. Home Depot (HD) tumbled on results while McDonald’s (MCD) gained amid a spat over how it treats pigs. Tempur Sealy (TPX) was hit hard on earnings. Krispy Kreme (DNUT) provided crumbs of comfort.
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Meanwhile a trio of stocks were flexing their muscles. Commercial Metals (CMC), Union Pacific (UNP) and Dollar Tree (DLTR) all saw their relative strength lines hit new highs.
Volatility jumped, with the Cboe Volatility Index, or VIX, up around 9%. Volume was also up on both the New York Stock Exchange and the Nasdaq compared to the last trading day. Lower volume is preferable when stocks pull back.
Meanwhile, the yield on the benchmark 10-year Treasury note was up almost two basis points to 1.94%. Oil was also up, with West Texas Intermediate crude rising more than 1%.
Putin Makes Ukraine Moves
Stocks were falling as Russian President Vladimir Putin stepped up efforts in Ukraine. He has recognized two rebel-held regions in eastern Ukraine as independent states and ordered troops to move in there.
Putin said they will engage in “peacekeeping,” which the U.S. has dismissed as “nonsense” and the “beginning of an invasion.”
He also asked Russia’s upper house of parliament for authority to deploy armed forces abroad and they voted in favor. This gives him formal permission to send troops into eastern Ukraine. Putin also demanded during a news conference Tuesday that Ukraine should not be allowed to join NATO.
President Joe Biden is hitting back economically. He said during a news conference that the U.S. will sanction Russian financial firms, sovereign debt and specific individuals.
Nasdaq Dives As Bears Maul Stock Market
The Nasdaq was well off its lows for the day heading into the close. It was down 0.3%. The S&P 500 fell by a similar amount.
U.S. Stock Market Today Overview |
||||
|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 33788.77 | -290.41 | -0.85 |
| S&P 500 | (0S&P5) | 4334.20 | -14.67 | -0.34 |
| Nasdaq | (0NDQC ) | 13508.35 | -39.72 | -0.29 |
| Russell 2000 | (IWM) | 199.41 | -0.06 | -0.03 |
| IBD 50 | (FFTY) | 36.90 | -0.27 | -0.73 |
| Last Update: 3:08 PM ET 2/22/2022 | ||||
The S&P sectors were mostly negative. Consumer discretionary and energy were faring worst while real estate and utilities were the best performers.
Small caps were faring best of all, with the Russell 2000 basically flat.
Growth stocks were slapped lower though. The Innovator IBD 50 ETF (FFTY), a bellwether for growth stocks, fell 0.7%.
Dow Jones Today: Home Depot Falls Hard As McDonald Stock Gains
The Dow Jones Industrial Average was faring worst out of the major indexes. It was still well off lows as it gave up nearly 300 points, dipping 0.9%.
Home Depot was the worst culprit. The stock knifed more than 8% lower in high volume, though it is off lows.
The home improvement chain was hit hard despite topping sales and earnings expectations. Same-store sales rose 8.1% for the January-ended quarter. Home Depot also raised its quarterly dividend 15% to $1.90 a share.
It was hit after it guided for EPS growth to be in the low single digits and “slightly positive” sales growth in the latest fiscal year.
McDonald’s was among the top gainers, though it is up less than 1%. It was up despite famed investor Carl Icahn launching a proxy fight over the firm’s treatment of pigs. He is calling for the firm’s U.S. suppliers to move to crate-free pork.
Tempur Sealy Stock Plunges
The mattress manufacturer was flagging badly in afternoon trade. It suffered a metaphorical broken spring as it dropped more than 20% in high volume.
It gapped down and saw its relative strength line dip vertically. TPX stock is now down around 38% so far in 2022.
It was hammered after reporting an adjusted 88 cents per share, which badly missed the 96 cents expected by analysts, according to FactSet. Sales of $1.36 billion were also light.
Management said results had been impacted by costs that outpaced sales.
It said operational inefficiencies due to Covid had caused gross margins to fall 1.8%.
Krispy Kreme Stock Up On Taste Of Success
Krispy Kreme made a sweet move on strong results. The doughnut firm was up more than 8% after posting its first quarterly profit after going public.
It was up even though earnings fell short of Wall Street’s expectations. EPS of 8 cents came in a penny light, but revenue of $371 million was better than the $364 million the Street expected.
Investors reacted positively to the fact that the firm had swiftly moved to combat inflation. It raised prices twice in Q4.
Chief Executive Mike Tattersfield said Krispy Kreme and the broader restaurant industry are affected by inflation. However, he believes the company also has pricing power to help reduce the impact.
These Stocks Flex Muscles
It is always a good idea to look out for stocks showing relative strength when the market is struggling. These are likely to fare well when an uptrend kicks into gear.
Commercial Metals saw its relative strength line hit a new high on its weekly chart. It is eyeing a 38.82 buy point after forming a consolidation pattern over the past several weeks.
The recent IBD Stock Of The Day has been moving higher on a strong demand outlook. It is looking to build on strong recent profits, with EPS growing by an average 105% over the past three quarters.
Dollar Tree also saw its RS line spike higher. DLTR stock cleared a 142.48 handle buy point on Friday and now sits just below it.
This is a second-stage base, which means it is more likely to succeed than a third or fourth stage base. The stock had been consolidating for 12 weeks following a breakout from a cup base.
DLTR managed to shake off news that its Family Dollar Stores closed in six states due to a rodent infestation.
Rail stock Union Pacific is also seeing rising relative strength. The stock, which offers good all-around performance, is sitting below a flat base buy point of 256.21.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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