The Dow Jones Industrial Average dropped more than 700 points in morning trades Thursday, as the index was hit by an earnings-fueled drop from component Caterpillar (CAT). Meanwhile, Facebook and Instagram operator Meta Platforms (META) led techs lower, gapping down and plunging as much as 16% on the stock market today.
X
Some commodities saw much milder declines. Gold price futures edged 0.3% lower to $2,332 an ounce while silver matched that decline, off 0.3% at $27.24. Crude oil traded at $82.51 a barrel, down less than 0.4%.
The Dow Jones index plunged 1.8%, near its session low. The blue chip average has seen its 2024 gains wither to less than 0.3%. Just two of the 30 stocks in the index rose one point or more: defensive plays UnitedHealth (UNH) and Merck (MRK) in the health-care space. Nine others dropped 4 points or more in the price-weighted Dow.
Other megacap techs also hurt the Nasdaq composite, which was off as much as 2% and cut below 15,400 before rebounding a tad. The S&P 500 sank 1.3% early and hovered just above 5,000.
Small Caps Sell Off, Cost Of Money Jumps
Small caps sold off in weak action on the stock market today as investors also exited long-term U.S. government bonds. The Russell 2000 slipped 1.3% while the benchmark 10-year Treasury yield jumped 6 basis points to 4.71%. That’s not far from a 52-week high of 4.99% set in October amid growing expectations the Federal Reserve may wait until after the November U.S. elections before trimming short-term interest rates.
The cost of money has jumped sharply in 2024, worrying stock market investors. Higher interest rates raise the cost of borrowing in order to fund dividends and stock buybacks or invest in growth. The 10-year Treasury bond started the year at 3.86%.
The stock market now turns to focus on Friday’s report on inflation, namely the personal consumption expenditures or PCE index, before the open.
Stock Market Today: Techs Drop
Meta’s plunge through its 10-week moving average suggested that its heady run since the market bottom during the fourth quarter may be over for now. Meta last closed below this key technical level in the week ended Oct. 27. The Magnificent Seven stock had initially broken out of a first-stage base in mid-March 2023, clearing a flat base at 197.16.
Meta dropped as much as 16% intraday.
Please read this IBD tech story on Meta’s softer-than-expected sales outlook for 2024 and plans to increase capital expenditures to infuse artificial intelligence into its digital ads and e-commerce initiatives to fuel future growth.
Caterpillar, the mining and construction equipment titan, reported adjusted earnings of $5.60 a share, beating Wall Street’s estimate by 46 cents. Operating margin rose 110 basis points to 22.2% vs. a year earlier. However, sales of $15.8 billion fell $200 million short of analyst forecasts. Caterpillar also noted the economy softening in the key Asia-Pacific region, excluding China.
Caterpillar stock sliced through the 50-day moving average on the stock market today, a key defensive sell rule, after making solid gains following a breakout past a base buy point at 293.88.
This Chip Play Advances
On the upside, Impinj (PI) led the day’s stock market winners by gapping up powerfully. Shares in the specialist in radio frequency-based semiconductor technology rose more than 14%. The stock cleared a flat base with a 132 buy point in strong turnover.
Impinj reported a 25% decline in first-quarter profit to 21 cents a share. Sales melted 11% lower to $76.8 million. The small cap growth stock has a market value of less than $4 billion.
Impinj’s relative strength line marked new highs, triggering the blue dot on MarketSurge. This indicates supreme outperformance vs. the S&P 500 in the stock market.
Chipotle Mexican Grill (CMG) also defied the drop on the stock market today, rising more than 2% and trying to clear upside resistance at 3,000 following another quarter of solid results. First-quarter profit rose 27% to $13.37 a share on a 14% sales jump to $2.7 billion.
Please follow Chung on X/Twitter: @saitochung and @IBD_DChung
YOU MIGHT ALSO LIKE:
Learning How To Pick Great Stocks? Read Investor’s Corner
William O’Neil, Legendary Investor And IBD Founder, Dies At 90
