The Dow Jones Industrial Average fell after the latest Fed Minutes showed some officials fear inflation could be more durable than expected. Apple (AAPL) was among the worst blue chip performers, while electric-vehicle stock Tesla (TSLA) charged higher as growth stocks fought back from recent losses. Lowe’s (LOW) surged higher on earnings, while Nvidia (NVDA) was slipping as it gets set to post results.
Fed Minutes Show This Fear
The Fed minutes from the July policy meeting showed central bank officials deliberated on when to scale back the current extraordinary support for the economy. Most think they will likely scale back the pace of asset purchases this year, as long as the economy progresses as they anticipate.
Some believe there is a risk that inflation could run above their 2% target longer than previously expected, and that the Fed’s bond buying program is worsening inflationary pressures.
However there are other bankers who believe current price pressures will subside, and that global forces could keep inflation under the 2% target despite the fact interest rates are at historically low levels.
“Looking ahead, most participants noted that, provided that the economy were to evolve broadly as they anticipated, they judged that it could be appropriate to start reducing the pace of asset purchases this year because they saw the Committee’s ‘substantial further progress’ criterion as satisfied with respect to the price-stability goal and as close to being satisfied with respect to the maximum employment goal,” the minutes said.
Nasdaq Reverses As Growth Stocks Lead
The Nasdaq reversed lower after the minutes were released. The tech-heavy index fell 0.3%. Trip.com (TCOM) was a top performer, posting a gain of more than 6%.
The S&P 500 also dipped, giving up 0.5%. A rally attempt for the index failed, and it was back near session lows. Cboe Global Markets (CBOE) was among the standouts, rising more than 8%. Jack Henry & Associates (JKHY) lagged, falling almost 4% despite an earnings beat.
U.S. Stock Market Today Overview
Last Update: 2:20 PM ET 8/18/2021
A majority of the S&P sectors were red, with only consumer discretionary and communication services in positive territory. Real estate and consumer staples were the worst laggards.
Small caps gave up some gains, though the Russell 2000 was still up 0.1%.
Growth stocks made the most impressive gains. The Innovator IBD 50 ETF (FFTY) was up 1.8%. This allowed it to move back above the key 50-day moving average.
Dow Jones Today: Index Slips As Apple Stock Dips
The Dow Jones Industrial Average was fighting it out with the S&P for the title of the day’s worst major index. It was also down about 0.5%.
Apple stock one of the worst performers, dropping more than 1%. The stock remains just above a trend line entry near 180. The firm is gearing up for the launch of the iPhone 13 next month.
While Apple was a laggard, Salesforce.com (CRM) was having a strong session. It was by far the best component, posting a gain of more than 3%.
It got a boost after JMP Securities analyst Patrick Walravens reiterated his outperform rating on Salesforce stock and hiked his target from 282 to 320. Salesforce reports earnings next week.
Coca-Cola (KO) was the worst laggard, dropping about 1.3%.
Tesla Stock Charges Higher
Tesla stock was trying to bounce back following recent struggles. It was up about almost 4%, which allowed it to pull away from its converged 50-day and 200-day moving averages.
Despite this, the stock is still down about 4% for the week. An aggressive buy point of 700.10 is looking increasingly irrelevant. However, Tesla bulls will be quick to point out a large base is continuing to take shape.
Tesla stock was punished earlier in the week on news the National Highway Safety Administration opened a formal investigation into Tesla’s Autopilot system. This could be a topic of discussion when the firm holds its AI Day on Thursday. The agency claims it has identified 11 crashes since early 2018 where a Tesla vehicle using Autopilot or the Traffic Aware Cruise Control unit hit vehicles, as well as heading toward road hazard indicators such as flashing lights, flares, an illuminated arrow board and cones warning of hazards.
Senate Democrats Richard Blumenthal and Edward Markey have upped the pressure on Tesla, saying in a letter to the FTC that the firm has “persistently misrepresented the capabilities of its cars and the company’s progress toward safe Autopilot and FSD technology.”
It has been a mixed year so far for Tesla stock. It has plunged from the record high of 900.40 it reached in late January.
Lowe’s Stock Surges On This
Lowe’s was near highs, remaining up almost 11% in heavy volume. The move saw it erase all of Tuesday’s 6% drop, while also driving higher. The stock bullishly moved back above its 50-day moving average
It comes after the home improvement retail stock posted better-than-expected Q2 results. Analysts cheered the firm’s strategy to gain more professional customers as do-it-yourself demand subsides.
CFRA’s Global Director of Equity Research Kenneth Leon reiterated his buy rating on the stock. His price target is 220. He said the firm is “well positioned to gain market share.”
“LOW is improving its processes to enhance store product offerings, operational improvement, and widen margins,” Leon said in a note to clients.
The stock had dropped hard following Home Depot‘s (HD) disappointing report. Home Depot stock was forced lower after U.S. same-store sales came in a little light amid fewer DIY customers. It bounced back with a gain of about 1.4% today.
Nvidia Earnings Due, Stock Lags
Nvidia stock was down around 0.6% as it gears up for its latest earnings report after the close.
The stock is forming a flat base after previously finding support at the 10-week moving average.
Bearish action saw Nvidia exposure cut Tuesday on the prestigious Leaderboard list of leading growth stocks.
Nvidia has been a star stock so far in 2021, despite recent struggles. It is up around 48% so far this year.
In Q1, Nvidia beat Wall Street’s targets on strong sales of gaming and data-center processors. Investors will be looking to see if the momentum continues.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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