Dow Jones Falls as Recession Fears Rise; Elon Musk lashes out over recall; Bitcoin Rally, Coinbase Falls

The Dow Jones Industrial Average fell late as recession fears rose after the Federal Reserve meeting. Tesla (TSLA) CEO Elon Musk verbally blasted a mass recall. Coin base (COIN) and Riot Blockchain (RIOT) fell, even as Bitcoin rose. Eli Lilly (LLY) appeared on an upgrade.

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Meanwhile, a trio of stocks near buy points showed impressive relative strength. JM Smucker (SJM), Eastern Bank shares (EBC) and HealthEquity (HQY) all impressed.

Volume was mixed, rising on the Nasdaq but falling on the New York Stock Exchange, according to early data.

The interest rate on the benchmark index for 10-year government bonds rose by 19 basis points to 3.7%. West Texas Intermediate crude rose 0.7% to settle at $83.53 a barrel.

Shares hit amid fears of a recession

The Dow Jones and other stocks are suffering from a hangover after the last Federal Reserve meeting on Wednesday. The Federal Open Market Committee, chaired by Fed Chairman Jerome Powell, raised interest rates by 75 basis points.

The “dot plot” also predicted that the Fed Funds rate would reach 4.6% next year before tightening ends.

Nomura senior US economist Rob Dent said the latest Fed move “really underscores the likelihood” of recession in the next 12 months.

“Global stocks are struggling as the world expects rising rates to trigger a much faster and possibly severe global recession,” Oanda senior market analyst Edward Moya said in a note to clients. “The Fed has succeeded in convincing markets that it will remain aggressive in fighting inflation, and that has many expecting another 75 basis point interest rate hike in November.”

Dow Jones Gains, Nasdaq Falls, Small Caps Dive

The Dow Jones fell late, closing down 0.4 percent. The Nasdaq was the most beaten out of the indices, falling 1.4%. The S&P 500 also lags behind, giving up 0.8%.

The S&P 500 sectors were largely negative. Health and communications services were the only winners while financials and consumer discretionary struggled the most.

Small caps were also decimated by the bears, with the Russell 2000 ending the day 2% lower.

The Innovator IBD 50 ETF ( FFTY ), a watch for growth stocks, fell 2.6%.

Inside Dow Jones: Merck Shines, American Express Lags

Merck was the best performer on the Dow Jones today as it turned a gain of 3.5%. However, it remains anchored below the key 50-day moving average.

American Express stock was the worst laggard of the venerable average, falling 3.8%. It is now below all the major moving averages.

The other worst priests were Boeing (BA), which fell 3.2%, and Goldman Sachs (GS), which yielded 2.4%.

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Elon Musk fretted over recall; Tesla shares

Tesla stock fell after the NHTSA issued a safety report for 1,096,762 Tesla vehicles. The problem involves Tesla’s automatic window reversing system.

CEO Elon Musk took to Twitter to criticize the recall.

“The terminology is outdated and imprecise,” he tweeted on Thursday. “This is a minor over-the-air software update. As far as we know, there have been no injuries.”

Tesla storage fell 4.1%, losing ground on a short consolidation pattern with an entry at 314.74.

Still, long-term performance remains strong for Tesla stock.

Revenues have grown an average of 173% over the past three quarters, well above CAN SLIM requirements. Annual results are also impressive, with three-year EPS growth of 197%.

Bitcoin Rally; Coinbase stock plummets

Coinbase fell hard despite Bitcoin rebounding on Thursday. Coinbase ended the session down 7%, although volume was light.

The stock was hit after a Wall Street Journal report about an alleged new speculative crypto trading venture.

The company, which cut its full-year forecast last month, lost ground on all of its major moving averages. The COIN share is down around 75% since the beginning of the year.

Bitcoin fought back from lows and is above the $19,000 mark after gaining 4.8% on Thursday.

However, other cryptocurrency games struggled. Grayscale Bitcoin Trust (GBTC) squeezed out a 0.4% gain as Bitcoin mining played out Riot Blockchain (RIOT) skidded 0.5%.

Eli Lilly Stock Pops

The pharmacy Eli Lilly shone after UBS took it to “Buy” from “Neutral”. It ended the session up 4.9%.

Analyst Colin Bristow said in a research note that the company’s new weight-loss treatment could be “the biggest drug ever.” He estimated that peak annual sales could reach $25 billion.

Bristow also insisted that LLY stock is now “the most attractive name” in UBS’s large coverage.

The relative strength line is picking up while the stock has formed a flat base, with an ideal entry point at 335.43, according to MarketSmith.

Outside the Dow Jones: These 3 stocks flex their muscles

JM Smucker saw its relative strength line reach new heights. This comes as it sees a cup-with-handle entry of 150, according to MarketSmith analysis.

The packaged food product is among the top 9% of stocks in terms of price performance over the past 12 months. It’s a double threat, as it offers investors a potent 2.9% dividend yield.

Eastern Bankshares also saw its RS line hit new highs. It is close to a buy point for cup with handle at 21.55.

EBC is among the top 7% of stocks followed in terms of earnings development. It’s flat so far in 2022, which is better than most stocks in this troubled year.

Finally, HealthEquity rose more than 2%. It is in the buy zone of a consolidation pattern with a buy point at 72.80. It is among the top 5% of stocks in terms of price performance over the past 12 months.

The RS line is trading at recent highs, an encouraging sign. Big money has also gotten behind the health savings account game lately, with its impressive B+ accumulation-distribution rating.

Follow Michael Larkin on Twitter at @IBD_MLarkin for more growth stock analysis.

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