The Dow Jones Industrial Average was forced lower after Procter & Gamble (PG) announced price hikes that raised another inflation red flag. However, Johnson & Johnson (JNJ) rallied after the EU green-lighted Covid vaccine distribution once more, while International Business Machines (IBM) flashed a buy signal.
XThe S&P 500, Nasdaq, Russell 2000 and growth stocks were all slapped lower by the bears. Tesla (TSLA) managed to post a gain after an upgrade, while Leaderboard stock Square (SQ) also managed to stay positive.
Proctor & Gamble became the biggest consumer-products company to announce price hikes amid rising costs. The firm said both materials and transportation were becoming more expensive.
Prices will increase in the mid to high-single-digit percentage point range from September. Lines affected include baby products, adult diapers and feminine-care products.
Oanda senior market analyst Edward Moya told Investor's Business Daily this could develop into a theme that forces Federal Reserve Chairman Jerome Powell to act further down the line.
"Rising manufacturing and raw materials costs are forcing Procter & Gamble to deliver price hikes in September," he said. "This price hike theme will become broad across many sectors and eventually could tilt the Fed away from that transitory stance with inflation."
Moya also said that while fundamentals remain strong for U.S. stocks, he believes they are currently in "excessive overbought territory." He thinks this makes the market ripe for a pullback.
Nasdaq, S&P Struggle As Tech Is Lashed
The tech-heavy Nasdaq fell back toward its 50-day moving average after giving up 0.9%. Chinese e-commerce stock Pinduoduo (PDD) was the biggest laggard, giving up more than 5%.
U.S. Stock Market Today Overview |
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|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 33820.51 | -257.12 | -0.75 |
| S&P 500 | (0S&P5) | 4134.96 | -28.30 | -0.68 |
| Nasdaq | (0NDQC ) | 13786.27 | -128.50 | -0.92 |
| Russell 2000 | (IWM) | 217.28 | -4.45 | -2.01 |
| IBD 50 | (FFTY) | 43.73 | -1.20 | -2.67 |
Last Update: 4:08 PM ET 4/20/2021 |
||||
The S&P 500 also slipped, losing around 0.7%. United Airlines (UAL) was the major loser here, giving up more than 8% in heavy volume.
The S&P sectors were mixed, with consumer discretionary and technology the biggest losers.
Small caps were mauled by the rampaging bears. The Russell 2000 fell 2% as it badly lagged the major indexes.
The Innovator IBD 50 ETF (FFTY) was battered lower as growth stocks took a pasting. It closed 2.6% lower.
Dow Jones Dives As IBM Stock Passes Buy
Meanwhile, the Dow Jones Industrial Average fell back about 0.8%, losing more than 250 points.
The top component was IBM stock. It is now in the buy zone after clearing a 137.17 buy point on strong earnings. The firm posted its first quarterly sales increase since the second quarter of 2018.
However, IBM stock has a weak IBD Composite Rating of 41, despite its gain. Stock market performance over the past 12 months is particularly weak, with its RS Rating sitting at 28.
Johnson & Johnson also broke out above a trend line Tuesday and its March 29 high of 167.03. It was buoyed after the EU cleared the way for its Covid-19 vaccine to be distributed again.
The EU Medicines Agency said a warning should be added to the product information that says unusual blood clots are a very rare possible side effect. However, it also said its benefits outweigh the risks.
It comes as the Centers for Disease Control and Prevention's independent vaccine advisory panel gets set to meet again Friday to discuss J&J's Covid-19 vaccine
The health care giant was also boosted after it reported Q1 earnings per share of $2.59, on revenue of $22.3 billion. This what better than Wall Street expectations.
Tesla Stock Gains On This
Tesla stock managed to post a gain of 0.6%, a moved that helped it move a bit further above its 50-day line.
Shares of Tesla were boosted after Mizuho upped its price target to 820 from 775. It also reiterated its buy rating.
Shares of Tesla regained their key 10-week moving average last week. It was the first time it mounted this critical support level since late February.
Tesla looks to be forming a new base. However it remains too early to say what the ideal buy point will be.
Tesla stock has fallen around 20% since hitting a record high of 900.40 on Jan. 25.
Leader Square Bucks Trend
Leaderboard stock Square was a bright spot, managing to stay positive despite the selling pressure. Its gain of 0.1% was meager, however. It is just above its 50-day moving average.
Square stock holds a near-perfect Composite Rating of 98. Both earnings and stock market performance are extremely strong.
The payments company is looking to build on a pandemic-fueled move to cashless payments.
The San Francisco-based company provides a point-of-sale system that allows small businesses to use mobile devices to conduct credit, debit card and smartphone based transactions. Cashless payments have grown increasingly popular during the coronavirus pandemic.
And the share of cashless business has more than doubled since pre-pandemic 2020 in the U.S., Australia, Canada, and the U.K. and nearly doubled in Japan, according to Square.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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