Dow Jones, Nasdaq Close Below Key Support Level; LNG Stocks See Major Sell-Off

The Nasdaq composite led the downside in Thursday’s market while the Dow Jones and S&P 500 slid lower into the close. The major indexes closed below an important level of support, which may signal further losses in the market.

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Dow Jones Today

The Dow Jones Industrial Average sold off in afternoon trading and closed 1.9% lower. The S&P 500 fell 2.4% while the small-cap Russell 2000 was down 1.8%. As for tech stocks, the Nasdaq composite fell roughly 2.7% and fared the worst. Volume was mixed, trading higher on the Nasdaq and lower on the NYSE vs. the close on Wednesday, according to early data.

Following Thursday’s declines, the Dow Jones and other indexes all undercut support at their 21-day lines, an important area to watch. The indexes are trending lower again before even getting the chance to challenge resistance at their 50-day lines. The threat of long-term stagflation continues to worry investors. Stagflation occurs when rising inflation is accompanied by low economic growth.

Economic News Weighing On Markets

To make matters slightly worse, weekly filings for unemployment insurance hit 229,000 last week, up from 202,000 claims the previous week. Economists polled by Econoday expected 210,000. Last week’s number was the highest since January.

Investors will be watching the Bureau of Labor Statistics’ consumer price index, a key U.S. inflation report, due Friday before the open. Econoday’s consensus estimate expects a 0.7% rise in consumer prices for May vs. the prior month and an 8.2% year-over-year increase. In April the CPI index rose 0.3% vs. March and 8.3% year over year.

Oil prices fell slightly but remained above $121 per barrel, and the U.S. 10-year Treasury yield continued to push higher, to 3.04%. The 10-year Treasury yield broke above the 3% level this week for the first time since early May.

As for IBD industry groups, several transportation groups continued to underperform on Thursday, alongside steelmakers. Also, liquefied natural gas stocks like Golar LNG (GLNG) traded lower after a fire hit one of the largest U.S. liquefied natural-gas export plants, putting it out of service for at least three weeks.

Outside Dow Jones: Liquefied Natural Gas Stocks Making Moves

U.S. LNG prices dropped after privately held Freeport LNG, operator of one of the largest U.S. export plants producing LNG, had an explosion at its Texas Gulf Coast facility. This leaves a large share of would-be U.S. LNG exports backed up with nowhere to go.

Several major LNG stocks including LNG exporter Cheniere Energy (LNG), LNG transporters Golar LNG and Flex LNG (FLNG) sold off in decent volume.

Shares of Golar fell below the 7% sell zone, after a failed breakout from a 26.70 buy point. The stock closed right at its 50-day line, an important area to watch for support. Meanwhile, Cheniere Energy is struggling to follow through on a breakout from a flat base. Shares lost over 3% on Thursday.

Flex LNG fared the worst, however, falling over 9% and gapping below Wednesday’s low. Shares are also coming up against support at the 50-day line. The stock briefly broke out above a 32.87 buy point this week. Shares moved lower is heavy volume on Thursday, indicating institutional selling.