The stock market opened higher on Thursday morning, wiping out losses overnight. The rise in the stock market is increasing, while Nasdaq and growth stocks have been under great pressure over the past few weeks amid rising yields. Federal Reserve Chairman Jerome Powell will speak today and seek investors’ possible comments on Treasury returns.
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The Dow Jones industrial average rose 0.1%, while the S&P 500 fell 0.1% and the Nasdaq composition fell 1%.
Dow component Boeing (BA) is close to a buyout after flirting with an outbreak on Wednesday. Brazilian miner Vale (VALE), global steel giant Arcelor Mittal (MT) and manufacturer of specialty chemicals Element Solutions (ESI) is also close to entries.
The Boeing share rose 2% early Thursday. But this is a difficult market for any purchases.
The UK has launched an antitrust investigation vs. appeal (AAPL) on alleged anti-competitive practices in its App Store. Apple is already facing anti-trust officials in the US and the European Union in the App Store investigation.
Apple stock fell 1%. Shares lost 2.45% on Wednesday. The AAPL share is lower than its 50-day line after a breakout in late January.
Walt Disney (DIS) will close at least 20% of its Disney stores by the end of the year, including at least 60 in the US. It will focus more on e-commerce. This is just the latest example from Disney moving its business online. Disney shares have fallen 1% and are nearing the top of its buying range from a flat base.
DraftKings (DKNG) reversed lower after initially having an agreement with the UFC to become an exclusive sports book and daily fantasy partner in the US and Canada.
Square (SQ) buys a majority stake in Jay-Z’s music platform Tidal for $ 297 million. Jay-Z will join Square’s board. Square inventory fell by 5%.
Burlington Shops (BURL), hovered from a flat base and jumped. The out-of-price selling price reported a 3% revenue gain after three quarters of declining sales.
Chipmaker and software manufacturer Broadcom (AVGO) reported late tonight. The AVGO share fell to its ten-week line on Wednesday, but remained above the level after the open. Broadcom is an Apple iPhone supplier, but it’s just part of the business.
Disney shares are on SwingTrader.
The 10-year Treasury yield was constant at 1.47% after rising on Wednesday and ending a three-day decline. Ten-year treasury yields briefly rose 1.6% last week.
Initial unemployment claims rose to 745,000 from 730,000 last week. Economists expected new applications to increase to 760,000.
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Fed Chief Powell plot ‘Twist’?
The head of the Fed, Jerome Powell, will speak at a conference just after noon Eastern Time. This is his last public comment before the Fed meeting on March 16-17. Ten-year treasury yields have risen in recent weeks amid expectations that a massive Biden stimulus bill, coupled with the coronavirus pandemic fading in the coming months, will spur a major economic recovery that could boost inflation. Crude oil, copper and many commodity prices have skyrocketed recently. While this was good news for mining, finance and many other so-called ‘real economy’ companies and equities, it was a catalyst for the sale of growth stocks.
Powell and other policymakers have indicated they want faster inflation and are probably not too worried about Treasury returns for less than 2%. But the rate of rising yields has caught the attention of the Fed government, Lael Brainard, she admitted on Tuesday.
Powell stressed that he was focused on full employment and not worried about financial markets, but that was in the context of the rise in the stock market to new highs. But investors may want to hear him say he is at least paying attention to Treasury returns.
Can Powell point to a policy change? It is speculated that the Federal Reserve may try to lower long-term returns by buying long-term treasury and buying shorter-term treasury. The Fed previously used this ‘Operation Twist’ in 1961 and again in 2011.
But even if Powell is ready for such a move, he may not want to tip his hand before the mid-March Fed meeting.
Stock market rally on the edge
The stock market rally may be on its last leg. The confirmed upward trend has been an ‘upward trend under pressure’ for several days now.
The Dow Jones industrial average fell 0.4% during the day. The S&P 500 index fell 1.3% to close just above the 50-day high. The Nasdaq composite fell 2.7%, tumbled below its 50-day line and closed below its February 23 low. All major indices were closed near the session low.
If the S&P 500 falls through its 50-day line and the Nasdaq loses further ground, the stock market may be over after the election.
Investors need to scale back their focus on sectors that work and exposure to speculative growth.
Read The Big Picture tonight to keep up with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter @IBD_ECarson for stock market updates and more.
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