The Dow Jones Industrial Average rallied off lows after Federal Reserve Chairman Jerome Powell spoke out on inflation. Apple (AAPL) was the leading blue chip, while Virgin Galactic (SPCE) crashed lower again, this time under a key benchmark. Meanwhile, AMC Entertainment (AMC) also suffered another brutal session, with fellow meme stock GameStop (GME) also suffering
The Dow Jones Industrial Average rallied off lows after Federal Reserve Chairman Jerome Powell spoke out on inflation. Apple (AAPL) was the leading blue chip, while Virgin Galactic (SPCE) crashed lower again, this time under a key benchmark.
Meanwhile, AMC Entertainment (AMC) also suffered another brutal session, with fellow meme stock GameStop (GME) also suffering a painful dip. Finally, it was a tough day for breakouts, but chip stock Qorvo (QRVO) still managed to move above a buy point.
Fed Chair Powell Tells Congress This On Inflation
Fed Chairman Powell told Congress Wednesday that it is still too early to raise interest rates due to inflation.
“You wouldn’t react to something that is likely to go away,” he said.
Powell did concede to the House Financial Services Committee that inflation has been “higher than we’ve expected and a little bit more persistent than we had expected and hoped.”
But he claimed Covid-related supply constraints led to the “perfect storm of high demand and low supply.” Powell thinks the inflationary effects “should partially reverse as the effects of the bottlenecks unwind.”
The 10-year Treasury yield retreated somewhat, and was sitting at 1.354%. Yields move in the opposite direction of bond prices.
Nasdaq Slips; S&P Rallies Back
Weakness in growth stocks meant the tech-heavy Nasdaq closed down 0.2%. At-home fitness play Peloton Interactive (PTON) fell hardest, dipping more than 5%. Covid vaccine play Moderna (MRNA) was the star of the day, rising almost 5%.
The S&P 500 managed to fight its way back into positive territory, closing with a modest 0.1% gain. Bank stock Wells Fargo (WFC) fared best here, rising around 4%. Occidental Petroleum (OXY) was the worst laggard, giving up more than 7%.
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The S&P sectors were mixed, with a nearly equal balance of losers and winners. Real estate and consumer staples turned in the biggest gains, while energy and financials were the worst laggards.
Small caps were slapped lower, with the Russell 2000 falling 1.5%. However, the bears saved the biggest mauling for growth stocks. This negative action sent the Innovator IBD 50 ETF (FFTY) down 2.8%.
Apple Stock Leads As Dow Jones Edges Up
The Dow Jones Industrial Average managed to managed to rally off its lows, and closed the session with a 0.1% gain.
With its iPhone business maturing, investors are looking for a new big growth driver for Apple stock. Services and wearables are seen as two key drivers. Apple’s Wearables, Home and Accessories unit saw sales increase 25% to $7.8 billion in the March quarter.
Coca-Cola (KO) was the next biggest winner, rising 2.3%. The stock is just below a flat-base buy point of 56.58. Stock market performance is weak overall for the dividend favorite, however.
Virgin Galactic Plunges, AMC Stock Dives
Virgin Galactic stock compounded its deep losses on Monday and Tuesday by falling yet again. SPCE fell under its 10-week line. It dived more than 12% as it continues to reel following news of a big share offering.
The sharp drop for SPCE stock came after the firm revealed in a regulatory filing that it plans to sell up to $500 million in stock. This saw the stock fall hard, despite the company making its first fully crewed flight during the weekend.
Meme stocks were also being clubbed lower by the bears. AMC stock, which had been the meme stock darling, was given a painful spanking.
It dropped around 15%, a move that sent the stock under the key 50-day moving average.
AMC stock has now shed a quarter of its value since the start of the week. This comes after it slumped more than 11% last week.
Despite its brutal drawback, the stock still has a perfect Relative Strength Rating of 99.
GameStop also lagged, giving up almost 7%. It remains up almost 800% for the year.
Qorvo Stock Clears Buy Point
In a challenging day for breakouts, chip stock Qorvo still managed to briefly move above a buy point.
But it still closed marginally lower and ended up falling back below the ideal entry point of 199.05, MarketSmith analysis shows.
This is a second-stage base, which is encouraging for those interested in the semiconductor play. However the relative strength line has been moving sideways of late.
The stock has a strong Composite Rating of 93, with earnings its key strength.
Big money has been backing the stock of late, which is reflected in its Accumulation/Distribution Rating of B-. This represents moderate institutional buying over the past 13 weeks.