Major stock market indexes came off session lows Wednesday afternoon after the Federal Reserve released minutes from its December meeting, while small caps took heavy fire and Treasury yields were erratic.
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The S&P 500 was off 0.4% after the minutes came out at 2 p.m. ET. The Nasdaq composite fell 0.8% and is on track for a fourth consecutive loss. It would be the index’s longest and deepest decline since October.
The Dow Jones Industrial Average was down 0.4%. Merck (MRK) and Chevron (CVX) helped with gains of more than 2% each. Johnson & Johnson (JNJ) is on pace for its highest close since Sept. 21. And Travelers (TRV) is at its highest level since last January.
Small caps continued to lag, with the Russell 2000 down a hefty 1.7%. Its four-day slide has wiped out more than 1%.
Volume on the stock market today was lower on the New York Stock Exchange and Nasdaq compared with the same time on Tuesday.
In their December meeting, Fed officials developed a consensus that no further rate hikes were needed, according to minutes from the gathering. But the Fed was vague about when or how to trigger any rate cuts. Another rate increase wasn’t ruled out, but some cautioned that keeping a restrictive stance on rates threatens to hurt the economy.
The 10-year Treasury yield initially rose after the Fed minutes were released. But soon, the benchmark yield resumed a downward direction. In afternoon trading, it was down 4 basis points to 3.90%.
Santa Claus Indicator Bodes Poorly
While much of Wall Street referred to December market gains as the Santa Claus Rally, the indicator discovered by the Stock Trader’s Almanac is really a seven-day period. Stock market indexes tend to rise in the final five sessions of the year and the first two of the new year. But when indexes fall in that period, bear markets or significant declines can be expected, the Almanac says.
With the seven-day period ending with today’s trading, the S&P 500 is down 0.5% over that time span. That puts it on pace for its first Santa Claus Rally decline since 2015-16, according to Dow Jones Market Data. The Nasdaq also is down over the seven-day period and the Dow is barely higher.
Apple (AAPL) was down 0.5% and on pace for a third straight decline, falling about 5% over this period. That would be its worst three-day stretch since September, when it fell 6.1%. Shares are trading below the 50-day moving average, 4.5% below the 192.93 buy point of a Dec. 5 breakout.
For now, there’s no sell signal in Apple. The stock, which was the first to top a $3 trillion valuation last year, has lost more than $150 billion in market cap during the losing streak, according to Dow Jones Market Data.
IBD 50 Underperforms Stock Market
The Innovator IBD 50 (FFTY) exchange traded fund underperformed Wednesday with a 2.2% tumble. The ETF is now below its 200-day moving average. But it remains above the 50-day line and is forming a cup-with-handle base.
Among IBD 50 stocks of note, Cloudflare (NET) has erased a 14% gain from its 76.07 buy point, which is a round-trip sell signal. Irish airline Ryanair Holdings (RYAAY) is rapidly descending, along with other travel stocks.
Dozens of IBD 50 and other high-rated stocks have fallen below their 21-day exponential moving averages. While that’s not necessarily a sell signal, it does illustrate the broad weakness in growth stocks for the new year.
Tech leaders such as CrowdStrike (CRWD), SentinelOne (S), ServiceNow (NOW), Arista Networks (ANET), Salesforce (CRM) and Zscaler (ZS) are breaking below their 21-day lines.
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Source: investors.com
