The stock market opened higher on Thursday morning, erasing losses overnight. The stock market recovery is staggering, with Nasdaq and growth stocks under heavy pressure in recent weeks amid rising bond yields. Federal Reserve Chairman Jerome Powell will speak today with investors looking for possible comments related to Treasury yields.
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The Dow Jones Industrial Average rose 0.1%, while the S&P 500 fell 0.1% and the Nasdaq compound sank 1%.
Dow component Boeing (BA) is close to a buying point after flirting with a breakout on Wednesday. Brazilian miner OK (VALE), global steel giant Arcelor Mittal (MT) and manufacturer of specialty chemicals Element Solutions (ESI) are also close entries.
Boeing shares rose 2% on Thursday. But this is a complicated market for any purchase.
The United Kingdom launched an antitrust investigation against Apple (AAPL) on alleged anti-competitive practices on its App Store. Apple is already facing investigations on the App Store by United States and European Union antitrust authorities.
Apple’s shares fell 1%. The shares lost 2.45% on Wednesday. AAPL’s stock is below its 50-day line after a late January breakout failed.
Walt Disney (DIS) will close at least 20% of its Disney stores by the end of the year, including at least 60 in the United States. It will focus more on e-commerce. It is just the latest example of Disney changing its online business. Disney shares are down 1% and are near the top of their buying range on a flat basis.
DraftKings (DKNG) reversed down after initially rallying an agreement with the UFC to become an exclusive sportsbook and daily fantasy partner in the US and Canada.
Square (SQ) is buying the majority of Jay-Z’s music platform, Tidal, for $ 297 million. Jay-Z will join Square’s board. Square’s stock fell 5%.
Burlington Stores (BURL), fired and left a flat base. The discount retailer reported a 3% revenue gain after three consecutive quarters of declining sales.
Chipmaker and software maker Broadcom (AVGO) reports at the end of this night. AVGO’s stock fell to its 10-week line on Wednesday, but remained above that level after the opening. Broadcom is a supplier of Apple’s iPhone, but that is only part of the deal.
Disney shares are on SwingTrader.
The 10-year Treasury yield was stable at 1.47% after rising on Wednesday, ending a three-day decline. The 10-year Treasury yield briefly surpassed 1.6% last week.
Initial claims for unemployment benefits increased from 730,000 to 745,000 last week. Economists had expected to see new records increase to 760,000.
Join IBD experts as they analyze actionable stocks at the stock market’s high on IBD Live.
Fed Chief Powell Plots ‘U-turn’?
Fed chief Jerome Powell will speak at a conference shortly after noon, Eastern Time. These will be his last public comments before the Fed meeting on March 16-17. The 10-year Treasury’s yield has soared in recent weeks with the expectation that a huge Biden stimulus project, along with the weakening of the coronavirus pandemic in the coming months, will spur a huge economic recovery that could raise inflation. Prices for crude oil, copper and many commodities have soared recently. While this was good news for mining and financial stocks and companies and many others in the so-called “real economy”, it was a catalyst for the liquidation of growth stocks.
Powell and other policymakers have signaled that they want faster inflation and are probably not too concerned about 10-year Treasury yields below 2%. But the pace of rising yields caught the eye of Fed Governor Lael Brainard, she admitted on Tuesday.
Powell emphasized that he is focused on full employment, not worrying about the financial markets, although this has occurred in the context of the stock market’s recovery to new highs. But investors may want to hear him say that he is at least paying attention to Treasury yields.
Could Powell suggest a policy change? It is speculated that the Federal Reserve could try to reduce long-term yields by buying long-term Treasury bills and buying short-term treasury bills. The Fed has employed this “Operation Twist” before, in 1961 and again in 2011.
But even if Powell is ready for such a move, he may not want to report it before the Fed meeting in mid-March.
Stock market rally on the brink
The stock market recovery may be in its last steps. The confirmed bullish trend has been a “bullish trend under pressure” for several days.
The Dow Jones Industrial Average fell 0.4% in Wednesday’s stock market trading. The S&P 500 fell 1.3%, closing just above its 50-day line. The Nasdaq compound plunged 2.7%, falling below its 50-day line and closing below its February 23 low. All major indices closed close to session lows.
If the S&P 500 falls into its 50-day line and Nasdaq loses even more ground, the post-election high in the stock market may be over.
Investors need to focus on sectors that are working and reduce exposure to speculative growth names.
Read The Big Picture tonight to stay in sync with the direction of the market and key stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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