Stock Market Bounces But IBD 50, Small Caps Lag; This Stock Takes A Bath

The stock market rebounded moderately after Tuesday’s sell-off, as investors watched new comments from Fed Chairman Jerome Powell. But the IBD 50 was down.

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The Dow Jones Industrial Average led with a 0.7% increase. The S&P 500 rose 0.4% and the Nasdaq composite climbed 0.3%. Small caps lagged, as the Russell 2000 fell 0.6%.

Volume rose on the Nasdaq and fell on the NYSE compared with the same time on Tuesday. Breadth was weaker than the indexes would suggest. Declining stocks led advancers by about 2-to-1 on the NYSE and Nasdaq.

Powell, speaking at a European Central Bank forum on central banking, said Covid 19 disrupted the global economy in ways that may complicate how central banks manage economic growth.

“The economy is being driven by very different forces,” he said, adding that it’s unknown if conditions can go back to “something that looks like, or a little bit like, what we had before.”

The yield on the 10-year Treasury note fell 6 basis points to 3.15%.

IBD 50 Lags Stock Market

Innovator IBD 50 ETF (FFTY) fell 0.8%. Humana (HUM) edged to a new high but reversed lower. It is below a 469.44 alternate buy point. W.P. Carey (WPC) also poked into new highs but reversed lower. It is slightly below an 86.58 buy point.

Progress Software (PRGS) extended losses and is now 8% below an alternate entry at 51.04, which results in a sell signal. The database software stock fell despite beating quarterly expectations late Tuesday.

Equinor (EQNR) climbed above the 50-day moving average as it forms a double-bottom base.

Oil Prices Rise As OPEC Meets

The price of U.S. crude oil rose 1.5% to $113.43 a barrel, extending a rebound.

OPEC is meeting this week amid tight supplies and the potential for decreased demand if the global economy slows. OPEC members met Wednesday and will discuss oil policy Thursday during a meeting of the broader OPEC+ group. Few changes are expected.

Defense stocks erased premarket gains despite that NATO moved to shore up its forces to counter Russian aggression, and President Biden announced a buildup of U.S. troops in the continent.

Northrop Grumman (NOC) inched up 0.1%. Lockheed Martin (LMT) eased 0.4%. Raytheon Technologies (RTX) was down 0.4%. The iShares U.S. Aerospace & Defense ETF (ITA) fell 1%.

AeroVironment (AVAV), which makes the Switchblade missiles shipped to Ukraine, slid more than 12%. The company missed April-quarter expectations, citing supply chain problems and a tight labor market. The stock sank to its March lows.

Bed Bath & Beyond Takes A Bath

Tesla (TSLA) fell more than 3% on a Bloomberg report that the company cut 200 jobs in its Autopilot division. The stock is meeting resistance at the 10-week moving average.

Bed Bath & Beyond (BBBY) plunged more than 20% after the housewares retailer dismissed Chief Executive Mark Tritton as sales for the May-ended quarter plummeted 25%. The company posted a loss for the quarter. The stock is trading about 5 a share, around the lows of the Covid bear market.

“Today’s actions address company performance, the macroeconomic conditions under which we are operating, and the expectations of the Board on behalf of shareholders,” Chair Harriet Edelman said in a statement. Board member Sue Gove was named interim CEO.

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