The Dow Jones industrial average was forced lower Procter & Gamble (PG) announced price increases that raised another red flag for inflation. But, Johnson & Johnson (JNJ) regrouped after the EU distribution of Covid green light vaccine once again, while International business machines (IBM) flashed a buy signal.
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The S&P 500, Nasdaq, Russell 2000 and growth stocks were all hit lower by the bears. Tesla (TSLA) manages to make a profit after an upgrade, while Leaderboard shares Square (SQ) also managed to stay positive.
Proctor & Gamble has become the largest consumer products company announcing price increases amid rising costs. The firm said both materials and transportation are becoming more expensive.
Prices will rise from mid-September to high single-digit percentage point. Lines affected include baby products, adult diapers and female care products.
Oanda senior market analyst Edward Moya told Investor’s Business Daily it could develop into a theme that forces Federal Reserve Chairman Jerome Powell to take further action.
“Rising production costs and raw material costs are forcing Procter & Gamble to deliver price increases in September,” he said. “This price-raising theme will spread across many sectors and could eventually tip the Fed from that transition position with inflation.”
Moya also said that while the fundamentals remain strong for U.S. equities, he believes it is currently in an excessively overbought territory. He believes this is making the market ripe for a setback.
Nasdaq, S&P Struggle As Tech Is Lashed
The tech-savvy Nasdaq fell back to its 50-day moving average after giving up 0.9%. Chinese e-commerce stock Pinduoduo (PDD) was the largest backlog, with more than 5% price.
US stock market overview today |
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|---|---|---|---|---|
| Index | Symbol | Price | Profit / loss | % Change |
| Dow jones | (0DJIA) | 33820.51 | -257.12 | -0.75 |
| S&P 500 | (0S & P5) | 4134.96 | -28.30 | -0.68 |
| Nasdaq | (0NDQC) | 13786.27 | -128.50 | -0.92 |
| Russell 2000 | (IWM) | 217.28 | -4.45 | -2.01 |
| IBD 50 | (FFTY) | 43.73 | -1.20 | -2.67 |
Last updated: 16:08 ET 20/20/2021 |
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The S&P 500 also slipped, losing about 0.7%. United Airlines (UAL) was the biggest loser here and gave up more than 8% in heavy volume.
The S&P sectors were mixed, with consumer discretionary and technology the biggest losers.
Small caps were smashed by the raging bears. The Russell 2000 fell by 2% because it severely lagged behind the major indices.
The Innovator IBD 50 ETF (FFTY) hit lower as growth stocks plunged. It closed 2.6% lower.
Dow Jones plunges as IBM’s inventory passes
Meanwhile, the Dow Jones Industrial Average fell by about 0.8%, losing more than 250 points.
The most important component was IBM shares. It is now in the buying zone after clearing a buying point of 137.17 on strong earnings. The firm achieved its first quarterly increase since the second quarter of 2018.
However, IBM shares have a weak IBD Composite Rating of 41, despite its gains. The performance in the stock market over the past 12 months has been particularly poor, with its RS rating at 28.
Johnson & Johnson also broke Tuesday and a March 29 high of 167.03 above a trend line. It was rumored after the EU paved the way for the distribution of its Covid-19 vaccine.
The EU Medicines Agency has said that a warning should be added to the product information stating that unusual blood clots are a very rare possible side effect. However, it also said that its benefits outweigh the risks.
This comes as the Independent Advisory Panel of the Centers for Disease Control and Prevention meets again on Friday to discuss J & J’s Covid-19 vaccine
The health giant also strengthened after reporting a Q1 earnings per share of $ 2.59, with revenue of $ 22.3 billion. This is better than Wall Street’s expectations.
Tesla shares get on top of this
Tesla stock managed to make a gain of 0.6%, a shift that helps it move a little further than the 50-day line.
Shares in Tesla were raised after Mizuho raised its price target from 775 to 820. He also reiterated his buy rating.
Shares in Tesla last week regained their most important ten-week moving average. It was the first time it had raised this critical support level since late February.
It looks like Tesla is forming a new base. However, it remains too early to say what the ideal buying point will be.
The Tesla share has fallen by about 20% since reaching a record high of 900.40 on January 25th.
Leader Square Bucks Trend
Leaderboard stock Square was a bright spot and was able to remain positive despite the selling pressure. However, the gain of 0.1% was small. This is just above its 50-day moving average.
Square equities have an almost perfect composition of 98. The earnings as well as the stock market performance are exceptionally strong.
The payment company wants to build on a transition to cashless payments through pandemics.
The San Francisco-based company offers a point-of-sale system that allows small businesses to use mobile devices to perform credit, debit card, and smartphone-based transactions. Cashless payments became increasingly popular during the coronavirus pandemic.
And the share in cashless business has more than doubled since the pre-pandemic 2020 in the US, Australia, Canada and the UK, and according to Square has almost doubled in Japan.
Follow Michael Larkin on Twitter @IBD_MLarkin for more information on growth stocks and analysis.
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