The tech-heavy Nasdaq composite led the downside for the second day in a row as the major indexes all turned negative in early-afternoon trading. After opening in the green, the Dow Jones, S&P 500 and Nasdaq all traded lower.
Federal Reserve Chairman Jerome Powell is speaking on a panel presented by the International Monetary Fund at 1 pm ET. Investors are on the lookout for signs of the Fed’s next move on interest rates, which is widely expected to be a half-point rate hike.
Dow Jones, Nasdaq Today
The yield on the benchmark 10-year Treasury note continued its ascent, rising to 2.94% on Thursday after weeks of trading higher. Meanwhile, West Texas Intermediate crude rose 1.3% after a drop earlier this week. The commodity is trading around $103.58 a barrel.
In afternoon trading, the Dow Jones industrials traded down 0.2%, near session lows. The index has been faring the best given its successful reclaiming of support at the 200-day, 50-day and 21-day lines. But the Nasdaq has struggled in recent weeks and remains below the three key moving averages at this time. The tech-heavy index led on the downside with losses of over 1%.
Elsewhere, the S&P 500 also erased earlier gains and fell 0.6%, while the small-cap Russell 2000 was down 1.3%. Volume was higher on the Nasdaq and on the NYSE vs. the same time on Wednesday, a potentially bearish sign as the indexes move lower.
As for the S&P 500 sectors the majority traded lower while only a few managed to eke out small gains. Consumer discretionary and consumer staples led the upside with small gains of less than 1% each. The Consumer Staples Select Sector SPDR (XLP) traded up 0.5% and led the upside. The ETF has been trending higher in recent weeks and recently broke out above a 78.28 flat-base entry. Investors looking to gain exposure to this area of the market could consider starting a position here in the defensive ETF as shares remain within the 5% buy zone.
Commercial services led the downside with losses of around 2%.
Earnings Movers: Tesla, Travel Stocks
Stocks moving on earnings included Tesla (TSLA), which initially gapped up 11% in heavy volume. However, shares in the Nasdaq-listed EV giant filled the gap and pared the initial gains to just above 6%. Shares remain just shy of a 1,152.97 buy point of a cup-with-handle base.
Late Wednesday, Tesla beat Wall Street expectations with a 246% surge in first-quarter earnings to $3.22 a share and an 81% jump in sales to $18.76 billion. The EV leader is slowly reopening its plant in Shanghai after a three-week shutdown due to a Covid-19 spike in China.
Elsewhere, United Airlines (UAL) and American Airlines (AAL) rallied 11% and 4.4%, respectively, after both airliners gave bullish outlooks on travel demand. Even in light of higher fuel costs, both companies expect to turn a profit in Q2 of 2022.
United Airlines climbed 11.7% to a five-month high. The company narrowed its Q1 loss to $4.24 per share on revenue of $7.6 billion, slightly missing analysts’ consensus estimates. Meanwhile, American Air topped expectations with a Q1 loss of $2.32 a share, a smaller loss than expected. Revenue jumped 122% to $8.9 billion, beating views.
Both UAL and AAL trade on the Nasdaq.
Despite first-quarter losses and mixed Q1 results, both predicted booming travel demand, in the wake of similar predictions from Delta (DAL), which reported earnings last week. Renewed enthusiasm for the travel space has also boosted shares of major hotel chains such as Marriott (MAR) and Hilton (HLT) in recent sessions, although these stocks are pulling back in Thursday’s market. Both hotel giants are currently trading above key buy points after breaking out.
Growth Stocks Continue To Underperform
The Innovator IBD 50 ETF (FFTY), a benchmark for growth stocks, traded down more than 2% and hit a five-week low as growth stocks continue to get hammered in this current market.
But one stock from the MarketSmith Growth 250 index appeared to stage a breakout from a cup-with-handle base. Shares of property REIT Crown Castle International (CCI) briefly broke out from a 199.82 entry before fading gains in afternoon trading. The current base is first stage, which bodes well for the breakout.
Crown Castle is one of two major companies that dominate the cellphone tower leasing business.
Follow Rachel Fox on Twitter at @IBD_RFox for more Nasdaq and stock market commentary.
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