Dow Jones Up As Powell Issues Inflation Warning; Tesla Stock Falls Amid Closure; Apple Stock Gains

The Dow Jones Industrial Average rose despite Federal Reserve Chairman Jerome Powell issuing an inflation warning. Tesla (TSLA) stock fell following news it is closing a Silicon Valley office. Bed Bath & Beyond (BBBY) plunged on earnings. Apple (AAPL) was a top blue chip.

A couple of stocks attempted breakouts despite the mixed action. General Mills (GIS) passed a buy point on earnings while AstraZeneca (AZN) also tested an entry.

X

Volume was mixed. It was up on the Nasdaq but lower on the New York Stock Exchange, according to preliminary data.

The yield on the benchmark 10-year Treasury note fell 11 basis points to 3.1%. West Texas Intermediate crude oil fell 2.2% to trade at just over $109 per barrel.

Fed Chair Powell Issues Inflation Warning

Federal Reserve Chairman Jerome Powell issued a warning on inflation at the European Central Bank forum on central banking.

He said there is “no guarantee” the Fed will be able to tame the problem of rising prices without damaging the jobs market.

Powell also warned it is getting more difficult to achieve a so-called soft landing, though he believes it is still possible.

“It’s gotten harder,” he said. “The pathways have gotten narrower.”

Meanwhile, U.S. gross domestic product was revised down in the third estimate for Q1. It was changed to a 1.6% year-over-year drop from the previous estimate for a 1.5% decline. This is the first economic contraction since Q2 of 2020. Analysts had expected no revision.

Personal consumption spending was also revised lower to a 1.8% growth pace from a previous estimate for a 3.1% gain. No revision had been expected.

Nasdaq Firm As Small Caps Suffer

The Nasdaq ended the day fractionally negative. Paychex (PAYX) was the worst laggard as it fell 4.2%.

The S&P 500 also closed lower, this time falling 0.1%. Carnival (CCL) was a major laggard, dropping 14.1% as cruise stocks struggled.

The S&P 500 sectors were mixed. Health care and consumer staples were the best-performing areas. Energy and real estate were the worst laggards.

Small caps were given a spanking by the bears though, with the Russell 2000 falling 1%.

Growth stocks were mauled by the bears, with the Innovator IBD 50 ETF (FFTY) closing the day down 1.3%.

Dow Jones Today: Apple Stock, McDonald’s Lead

The Dow Jones Industrial Average bucked the trend by gaining around 80 points, or 0.3%.

Apple stock was one of the top components on the Dow Jones today. It ended the session up 1.3%.

It remains rooted below its 50-day moving average despite the gain, according to MarketSmith analysis.

Fellow tech giant Microsoft (MSFT) also did well as it muscled 1.5% higher.

But it was McDonald’s (MCD) that made the meatiest move on the Dow Jones today as it rose 2%.

Tesla Stock Falls Amid Closure

Tesla stock ended the day lower following reports the firm is closing an office in Silicon Valley.

The stock fell after it emerged the firm is closing a facility in San Mateo, Calif., where employees worked on the firm’s Autopilot systems. An estimated 200 jobs are being lost.

The news comes after CEO Elon Musk previously revealed the firm was looking to cut about 10% of its salaried staff even as it hires more hourly production workers. Tesla previously moved some Autopilot data employees to its Palo Alto, Calif., location. It has also mustered data annotation teams in Buffalo, N.Y.

Cutting costs is becoming a key aim for the EV giant. Musk previously described the firm’s new factories in Berlin, Germany, and Austin, Texas, as “gigantic money furnaces.”

Tesla stock closed the day off lows but still fell 0.4%. The former Leaderboard stock remains stuck well below its 50-day moving average. It is near the lows of a consolidation pattern with a 1,208.10 entry.

BBBY Stock Dives On Earnings, Management Shake-Up

Bed Bath & Beyond cratered after the firm served up a disastrous earnings report.

The home goods retailer lost $2.83 while analysts had expected a $1.39 loss. Revenue of $1.46 billion was also lower than expected. The firm also announced that CEO Mark Tritton has fallen on his sword. He is being replaced on an interim basis by Sue Gove, an independent director on the board.

“I step into this role keenly aware of the macroeconomic environment,” she said in a statement.

The retail giant ended the day down nearly 24%. It sold off in mammoth volume. It sits 50% below its 50-day moving average, according to MarketSmith data. 

Ailing Rally Seeks Direction; Inflation, Jobs Data Due

Outside Dow Jones: These Stocks Test Entries

With the current uptrend under pressure, investors should exercise caution on breakouts. Nevertheless, a couple of stocks made bullish moves Wednesday.

General Mills managed to break out of a cup base with an ideal buy point of 74.09.

It was boosted after posting an earnings beat. Revenue also came in above Wall Street expectations. EPS rose 23% to $1.12 per share.

The relative strength line hit a new high and the stock spiked in heavy volume. All-around performance is very strong, with its IBD Composite Rating coming in at 87 out of 99. It is in the top 6% of stocks in terms of price performance over the past 12 months.

AstraZeneca managed to break out from a double-bottom base, though it closed below the entry. The ideal entry point here is 67.50.

AZN is back above the 50-day moving average while the relative strength line is hitting fresh heights. All-around performance is excellent and earnings are seen spiking. EPS is expected to grow by 34% this year before slowing to 17% growth in 2023.

AZN specializes in biopharmaceuticals, oncology and rare disease treatments.

Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.

YOU MIGHT ALSO LIKE:

MarketSmith: Research, Charts, Data And Coaching All In One Place

These Are The 5 Best Stocks To Buy And Watch Now

This Is The Ultimate Warren Buffett Stock, But Should You Buy It?

Software Growth Stocks To Buy, Watch Or Sell

This Is The Ultimate Donald Trump Stock: Is DWAC A Buy?