Dow Jones slams more than 500 points as House Speaker McCarthy loses confidence vote

The Dow Jones Industrial Average took a big hit in the stock market today, at one point falling more than 500 points (over 1.5%) and hitting a session low of 32,916. Despite a small rebound in the final minutes of the regular session, the index closed The leader lost 1.3% at 33002, down 0.4% for the year.

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Other averages fared worse as the cost of borrowing money rose again in US financial markets.

As the yield on the benchmark 10-year Treasury note rose 11 basis points to 4.80%, a 16-year high, the Nasdaq Composite fell as much as 2.2%. I failed to bounce much at all. The technical-weighted index may make a fresh test of support at 13,000. On Tuesday, the composite index hit a session low of 13,008 before closing at 13,059, down 1.9%.

The S&P 500 fell 1.5%, slightly better than the small Russell 2000’s 2% decline.

Some sector indices also performed poorly. The Dow Jones Transportation Average fell less than the major indices, yet was down approximately 0.9%. At 14,671, the Dow broke its 200-day moving average and pared its year-to-date gains to 9.4%. One of the best transportation stocks of the year, fedex (FDXIt fell 1.9% but remained near the 50-day line at 260.21.

FDX has built a new flat base that represents a potential entry point at 270.95. FedEx’s Relative Strength Rating of 95 is impressive.

The breadth was terrible in the stock market: losers outpaced winners by more than a 5-1 margin on the New York Stock Exchange. On the Nasdaq, declining stocks outpaced gainers by 3,359 to 966, according to early data from Thinkorswim. As IBD continues to forecast ‘market in correction’ Investors should raise more money and wait on the sidelines until better market conditions emerge.

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Dow Jones declines as trading volume rises

Financial companies slid hard. Interest Rate Sensitive Financial Sector SPDR ETF (XLF) fell 1.6% and reached a new four-month low. However, the Dow Jones Utilities Index rebounded from its lows. It rebounded 0.8% to 789.40.

However, the defensive index fell as much as 14% after losing the bullish resistance battle at its bearish 50-day moving average near 902 two weeks ago. On Tuesday, the Dow Jones Utilities Index fell as much as 2.2% on the day.

Trading volume increased by more than 3% compared to Monday on the Nasdaq Stock Exchange as well as on the New York Stock Exchange, According to Market Smith.

The continued rise in the cost of borrowing appears to be weighing heavily on Wall Street. Higher interest rates make it more expensive for companies to borrow money to trigger new stock buybacks or increase shareholder dividends. Mergers and acquisitions are also becoming more expensive.

The high yields now being offered on fixed income instruments, especially among less risky or so-called risk-free Treasury assets, are distorting the attractiveness of stocks.

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McCarthy is removed from the position of Speaker of the House of Representatives

House Speaker Kevin McCarthy lost his position as House Republican leader. McCarthy lost a primary referendum to put up or kill Rep. Matt Gaetz’s proposal to vacate the Speaker of the House position.

Shortly after the stock market closed, the House of Representatives narrowly voted to remove McCarthy as Speaker of the House. Republicans, who hold a majority in the House of Representatives, must now elect a new president.

Within the Dow Jones Industrial Average, at least 10 of the 30 components fell by two points or more. Those listed Goldman Sachs (A), which is scheduled to announce third-quarter results on October 17.

Goldman Sachs fell nearly 4% to 306.36 on above-average trading volume, falling further below its 50-day moving average and longer-term 200-day line. It was his worst day since January.

Amid the apparent weakness, IBD’s chart analysis suggests that now is not the time to short sell a stock when the stock has already fallen sharply below those key technical levels. Short selling ideas and timing rules got significant airtime during that period “IBD Live” show on Tuesday.

Goldman Sachs shows a weak EPS rating of 46 on a scale of 1 to 99. Its Relative Strength Rating of 53 means that GS outperforms only 53% of all companies in the IBD database over the past 12 months.

According to Yahoo Finance, analysts expect Goldman to report a 21% decline in third-quarter earnings to $6.51 per share versus $8.25 a year earlier. Keep in mind that among the 16 analysts surveyed, EPS estimates range from $4.77 to $8.35.

Wall Street sees revenue falling 4% to $11.54 billion, but rebounding 10.2% to $10.68 billion in the fourth quarter. This would boost Goldman’s fourth-quarter earnings to $6.80 per share, an increase of 105%.

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AXP stock

Dow Jones Index Fellow American Express (XP) fell 3% to 145.05. Trading volume jumped 50% above usual levels. The charging card and financial services giant is now roughly 11% below its 200-day moving average.

Looking at the daily chart, the ideal time to short AXP stock arrived on September 18, when the stock, after rising for six straight sessions, failed to hold above its 50-day line. AmEx has a worse Relative Strength Rating of 40.

Boeing (Bachelor’sIt rose 1.09, or 0.6%, to 188.92. No other member of the Dow Jones Industrial Average rose a single point on Tuesday. But the giant stock has now risen only four times out of the past 23 sessions, including Tuesday’s move.

The aerospace giant has fallen into the red for the year after rising as much as 28% since the first trading day of 2023. Analysts surveyed by FactSet see Boeing losing $3.64 per share this year but then returning to strong profitability next year, with earnings $5.02 per share.

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