Dow Jones fades; Bitcoin Gains After Sam Bankman-Fried Arrest; Elon Musk loses title
The Dow Jones Industrial Average saw early inflation data gains fade as what looked like a promising day for the stock market turned into a disappointment.
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Tesla (TSLA) CEO Elon Musk lost a prestigious title. Bitcoin got but cryptocurrency stocks like Coin base (COIN) and Riot Blockchain (RIOT) was shuffled after Sam Bankman-Fried was arrested and charged. Modern (MRNA) boosted vaccine news.
Meanwhile, a number of notable stocks attempted to break out. Illinois Tool Works (ITW), Lattice semiconductor (LSCC) and Calix (CALX) all tested purchase points.
CPI Data Cools, But Crunch Fed Meeting Awaits
Shares were only given a big boost after the release of consumer price index data for November.
Prices rose 7.1 per cent from the previous year. This was lower than October’s reading of 7.7% and better than the consensus forecast of 7.3%. Core prices, which exclude food and energy, rose 6%, also below October’s reading of 6.3% and better than the 6.1% consensus. The core CPI had the smallest monthly increase in over a year.
But enthusiasm cooled as the morning progressed. Traders appeared to be taking stock of the fact that a crunch Federal Reserve meeting started today. The Federal Open Market Committee (FOMC) will announce its latest move tomorrow, with Fed Chair Jerome Powell holding a press conference afterwards.
Oanda senior market analyst Edward Moya said the CPI report supports the idea that the Fed may be done raising interest rates after the February meeting.
“The Fed may not need to take rates to 5% or higher, and that is surprising news for equity traders,” he said in a note to clients. “Fed tightening appears to need a half point increase tomorrow and a 25 (basis point) increase in February.”
Nasdaq, Small Caps Hold Up
The Nasdaq held out the best of the major indexes. It was up 1%. DocuSign (DOCU) did well here with a gain of almost 7%.
The S&P 500 also tried to rally, rising 0.7% after nearly erasing all of the day’s gains. Halliburton (HAL) was strong here, rising almost 7%.
S&P 500 sectors were mostly positive, with energy and communications services performing best. Tools and consumables took a back seat.
Small caps held in positive territory, with the Russell 2000 up 0.5%.
The Innovator IBD 50 ETF (FFTY), a watch for growth stocks, rose 0.8%.
Dow Jones today: Index fades while Chevron shines
The Dow Jones Industrial Average managed to move out of negative territory, but was well off highs for the day. It rose 0.3% in afternoon trade.
Chevron (CVX) was the best performer on the index. The oil major rose just over 2%.
Such of Salesforce (CRM) and Merck (MRK) were other top performers. Amgen (AMGN) and UnitedHealth (UNH) lagged behind with falls of more than 1%.
Bitcoin gains after Sam Bankman-Fried arrest
Bitcoin surged a day after FTX founder Sam Bankman-Fried was arrested in the Bahamas.
The former crypto king is accused of eight felonies, including wire fraud and violating campaign finance laws. He is expected to be extradited to the United States, although he will reportedly contest automatic extradition.
Bankman-Fried, known as SBF, has previously denied knowingly committing fraud.
Bitcoin was slightly lower for the day, but held up nearly 4% compared to 24 hours ago, according to CoinDesk. It was trading just above the $18,000 mark.
Crypto games were mixed. Grayscale Bitcoin Trust (GBTC) surged over 2% while Bitcoin miner Riot Blockchain reversed more than 1% lower.
Cryptocurrency exchange Coinbase plunged nearly 7%. That’s down around 84% so far this year.
Modern Stock Rockets On Cancer News
While it’s known for being a Covid vaccine maker, Moderna exploded on Tuesday amid promising news about a potential skin cancer vaccine.
The firm announced that its experimental melanoma vaccine reduced the risk of skin cancer recurrence by 44% when combined with Merck (MRK) cancer treatment Keytruda compared to treatment with Keytruda alone.
Moderna shares held close to highs even as the broader stock market retreated. It was up almost 23 percent. MRNA stock has extended from a cup with handle buy point to the 188.75 it peaked today, according to MarketSmith.
Merck shares posted a more modest gain of almost 1%.
Tesla shares fall, Elon Musk is no longer the richest man
Tesla’s Musk lost his title as the world’s richest man as TSLA shares fell again on Tuesday.
TSLA stock was down more than 4% and is trading about 20% below its 50-day moving average. It is now down around 60% so far this year.
This was enough to see Musk lose the title of world’s richest man to Bernad Arnault, the Wall Street Journal reported. Arnault is chairman and CEO of LVMH Moët Hennessy Louis Vuitton.
Tesla is currently on track to close with a market cap below $500 billion for the first time since November 23, 2020, according to Dow Jones Market Data.
It is currently the seventh largest US company by market capitalization, behind the likes of apple (AAPL), Microsoft (MSFT) and Amazon (AMZN)
Outside the Dow Jones: These 3 Stock Test Entries
Illinois Tool Works is trading just below the entry after testing a cup handle buy point at 230.86.
The Industrial Machinery share is among the top 15% of shares in terms of price development over the past 12 months.
Lattice Semiconductor is trading in a buy zone after clearing a cup-with-handle entry at 73.63. The relative strength line hit fresh highs, a good sign.
Strong performance has earned the Lattice share a place on the leaderboard’s watch list. The Hillsboro, Oregon, designer of programmable gate arrays focuses on four key markets: data center, computing, automotive and industrial.
Computer network play Calix is trading just below a 75.56 buy point it crossed earlier today.
Follow Michael Larkin on Twitter at @IBD_MLarkin for more growth stock analysis.
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