Volatility in the Dow Jones Industrial Average was observed on Friday morning as investors analyzed comments made by Federal Reserve Chair Jerome Powell at the Jackson Hole Economic Symposium. The stock market initially saw gains, with Netflix (NFLX) being one of the early gainers after receiving a price target hike from Loop Capital.
However, the gains in the stock market faded after Powell stated that inflation is still too high and that the Fed is prepared to raise interest rates further if necessary. Despite this, Netflix stock was up 1.6% after Loop Capital upgraded its shares to buy from hold, setting a price target of $500. Although Netflix briefly surpassed its 50-day moving average earlier in the week, it experienced a sharp decline on Thursday, falling nearly 5% in light turnover. Like many other growth stocks, Netflix is currently below its 50-day moving average.
In other news, the 10-year Treasury edged higher to 4.26%. Federal funds futures traders believe there is an 80% chance that the Fed will leave the fed funds rate unchanged at the September meeting, within a range of 5.25% to 5.50%. However, the odds have risen to about 50/50 for another 25-basis-point hike at the November meeting.
Among the top gainers in the Dow Jones were Salesforce (CRM), Nike (NKE), and Microsoft (MSFT). Salesforce is set to release its earnings on Wednesday after the close, headlining another busy week of earnings in the software sector.
Outside of the Dow Jones, the Nasdaq composite was slightly lower, with winners only having a small edge over losers. Nvidia (NVDA) experienced a rough session on Thursday, with sellers pushing the stock to session lows by the close. Although the stock initially soared more than 6% early Thursday, it only ended the day with a 0.1% gain. This price action is considered a form of distribution in certain cases, characterized by heavy volume without further price progress.
Adobe stock, on the other hand, jumped 1.7% and showed strength by holding support at its 10-week moving average.
While the Dow Jones and Nasdaq briefly surpassed their 50-day lines on Thursday, the S&P 500 fell just short. The index reached a high of 4,458, approximately 1 point below its 50-day line.
Both the S&P 500 and Dow Jones index reduced their gains to less than 0.1%, with advancing stocks outnumbering losers by less than 2 to 1.
In terms of earnings winners, enterprise software giant Workday (WDAY) experienced a wild session on Thursday, with the stock reversing sharply lower. However, shares were up in morning trade after the company reported a 72% rise in quarterly profit, with revenue up 16% to $1.79 billion.
Ulta Beauty (ULTA), which has been on a downtrend since May, extended its losses after reporting slower earnings and revenue growth compared to the previous quarter. The stock is approaching a key test of the $400 level.
In the MarketSmith Growth 250, Marvell Technology (MRVL) faced selling pressure after experiencing a bearish outside day on Thursday, accompanied by heavy volume. The company reported a decline in earnings for the third straight quarter, with revenue falling 12% to $1.34 billion. The results were mostly in line with expectations, and revenue guidance for the current quarter was also in line.
On a positive note, Intuit (INTU) reversed higher after beating earnings expectations. The TurboTax maker also raised its dividend by 15%, although revenue guidance was light. Intuit stock remains in a bullish technical setup, just above a long consolidation after finding support at the 10-week moving average.
For more stock market analysis and insight, follow Ken Shreve on Twitter @IBD_KShreve.
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What factors contributed to the slight decline in the Nasdaq composite, and how did individual stocks such as Nvidia and Adobe perform during this time
N Friday morning, the volatility in the Dow Jones Industrial Average was evident as investors digested comments made by Federal Reserve Chair Jerome Powell at the Jackson Hole Economic Symposium. Initially, there were gains in the stock market, with Netflix being one of the early beneficiaries as Loop Capital raised its price target for the stock.
However, these gains didn’t last long as Powell expressed concerns about high inflation and the possibility of the Fed raising interest rates further. Despite this, Netflix stock still managed to rise by 1.6% after Loop Capital upgraded its shares. This was significant as Netflix had experienced a sharp decline earlier in the week, falling nearly 5% and falling below its 50-day moving average, which is a trend seen among many growth stocks currently.
The 10-year Treasury yield also slightly increased to 4.26%. Traders in Federal funds futures believe there is an 80% chance that the Fed will keep the fed funds rate unchanged at the September meeting, but the odds of a 25-basis-point hike in November have risen to about 50/50.
Among the top gainers in the Dow Jones were Salesforce, Nike, and Microsoft. Salesforce is scheduled to release its earnings after the market closes on Wednesday, contributing to a busy week of earnings in the software sector.
Outside of the Dow Jones, the Nasdaq composite saw a slight decline, with winners only marginally surpassing losers. Nvidia had a turbulent session on Thursday, with the stock falling to session lows despite an initial surge in the morning. This kind of price action, with heavy volume but limited price progress, is considered a form of distribution in certain cases.
On the other hand, Adobe stock displayed strength by jumping 1.7% and maintaining support at its 10-week moving average.
Both the Dow Jones and Nasdaq briefly crossed their 50-day lines but couldn’t sustain the momentum.
