The Dow Jones Industrial Average hit another record high Wednesday, but a wave of selling hit the stock market after the minutes from the mid-December Federal Reserve meeting were released at 2 p.m. ET. Salesforce stock lagged badly in the Dow Jones today, hurt by a downgrade from UBS.
To be sure, the Fed’s policy statement in mid-December sounded a lot more hawkish. But the minutes revealed even more hawkishness because the Fed is ready to start reducing its bloated balance sheet by selling its massive bond holdings. Last month, the Fed said it would end its monthly bond purchases by March.
The 10-year Treasury yield spiked over the 1.70% level.
The S&P 5o0 slumped 1.9%, but Nucor (NUE) and Signature Bank (SBNY) were bright spots, up 4.8% and 1.8%, respectively. Nucor jumped past a 122.16 buy point in strong volume, while New York-based Signature Bank surged out of a seven-week cup base with a conventional entry of 342.13.
U.S. Stock Market Today Overview
Last Update: 4:24 PM ET 1/5/2022
As money flows out of technology stocks with high price-to-earnings (P-E) ratios, it’s finding its way into low P-E names in the S&P 500 like AT&T (T), Intel (INTC), Cardinal Health (CAH) and Hewlett-Packard Enterprise (HPE).
Dow Jones Today
The Dow Jones industrials gave back 1.1%. Intel fell off highs but still rose 1.4%. But it’s still a laggard in the chip sector as the stock tries to regain its 200-day moving average. Merck (MRK) moved above its 50-day moving average, but it still looks like damaged goods after the stock plunged nearly 15% in November.
Honeywell (HON) also outperformed in the Dow Jones with a bullish move above its 50-day line. But gains faded. But in addition to the 50-day line, the stock’s 200-day moving average, currently around 221, is another potential resistance level to watch.
Outside The Dow Jones
Another sell-off in software stocks weighed on the Nasdaq composite, which closed down 3.3%. The Nasdaq 100 fell 3.1%, hurt by weakness in Adobe (ADBE), which also got a downgrade from UBS.
Several software-related industry groups in IBD’s database showed losses of at least 3%.
Qualcomm (QCOM) was in a small group of technology stocks that outperformed in the Nasdaq 100, but the stock reversed slightly lower. After an earnings surge in early November, Qualcomm is trying to move above a prior buy point of 188.87.
Several oil and gas stocks continue perform well in the stock market. Benchmark WTI crude oil futures have rallied sharply off their late November low around 65. Oil settled Wednesday at $77.85 a barrel, up 1.1%.
The relentless selling in software stocks continued Wednesday. But the VanEck Vectors Semiconductor ETF (SMH) is still holding above its 10-week moving average and only 5% off its high. Leaderboard stocks Advanced Micro Devices (AMD) and Nvidia (NVDA), which have been under selling pressure lately, are major SMH components.
The Innovator IBD 50 ETF (FFTY) crashed 6.4%, while the Innovator IBD Breakout Opportunities ETF (BOUT) fell 3%. FFTY is in a bear market of its own after a 21% pullback. BOUT is in much better shape, only 3.5% off its high.
The iShares Expanded Tech-Software Sector ETF (IGV) fell nearly 5% and is now down more than 8% for the week.
Follow Ken Shreve on Twitter @IBD_KShreve for more stock market analysis and insight.
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