Dow Jones Gains As Powell Issues Pledge; Elon Musk Digs In On Twitter; Warren Buffett Stock Soars
The Dow Jones Industrial Average jumped as Federal Reserve Chairman Jerome Powell issued an inflation pledge. Twitter (TWTR) rebounded as the takeover bid by Tesla (TSLA) CEO Elon Musk took another twist. New Warren Buffett stock Citigroup (C) soared. Boeing (BA) was the top blue chip.
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Meanwhile a number of noteworthy stocks made bullish moves, including Broadcom (AVGO), ZIM Integrated Shipping (ZIM) and Huntsman (HUN).
Volume was up on both the Nasdaq and the New York Stock Exchange, according to early data. This is a good sign when the market is trying to rally. IBD moved its market outlook to “confirmed uptrend.”
Meanwhile, the yield on the benchmark 10-year Treasury note popped 10 basis points to 2.98%. Oil slipped though, with West Texas Intermediate crude falling nearly 2% to more than $112 per barrel.
Market Purrs Amid Jerome Powell Inflation Pledge
Fed Chairman Jerome Powell has become something of a pied piper for the equity markets. And the stock market whisperer struck again as he helped guide the market higher as he issued another inflation pledge.
The powerful central banker said he would not shy away from continuing to raise interest rates until he manages to tame spiraling prices. “If that involves moving past broadly understood levels of neutral, we won’t hesitate to do that,” Powell told the Wall Street Journal.
And he said there will not “be any hesitation” in taking action until “we’re at a place where we can say financial conditions are in an appropriate place.”
Amid fears that inflation could spiral out of control, Powell’s comments helped bolster confidence that he can achieve his so-called “softish landing.”
Nasdaq Jumps As Small Caps Surge
The Nasdaq surged the most out of the major indexes as tech stocks rebounded. It closed the day up 2.8%. Advanced Micro Devices (AMD) was a major winner, closing up 8.7%.
The S&P 500 also made a strong move, closing up 2%. Paramount Global (PARA) surged 15.4% on the news Warren Buffett’s Berkshire Hathaway (BRKB) has taken a big stake in the firm.
U.S. Stock Market Today Overview |
||||
|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 32655.05 | +431.63 | +1.34 |
| S&P 500 | (0S&P5) | 4088.93 | +80.92 | +2.02 |
| Nasdaq | (0NDQC ) | 11984.52 | +321.73 | +2.76 |
| Russell 2000 | (IWM) | 182.77 | +5.55 | +3.13 |
| IBD 50 | (FFTY) | 31.40 | +0.75 | +2.45 |
Last Update: 4:08 PM ET 5/17/2022 |
||||
The S&P sectors were almost all green. Consumer discretionary and technology were the best performers. Consumer staples was the only area that closed lower.
Small caps impressed the most though, with the Russell 2000 surging 3.1%.
Growth stocks also had a strong day. The Innovator IBD 50 ETF (FFTY), a bellwether for growth stocks, closed with a gain of 2.5%.
Dow Jones Today: Boeing Stock Takes Off
The Dow Jones Industrial Average lagged the other major indexes but still closed up more than 400 points, or 1.3%.
Boeing stock was the top performer as it blasted 6.5% higher. It remains well shy of its major average though, MarketSmith analysis shows.
American Express (AXP) was the next best performer as it rose 3.5%. Walmart (WMT) dived 11.4% following a disappointing earnings report.
Twitter Stock Gains As Elon Musk Digs In, Donald Trump SPAC Falls
Twitter managed to make back some lost ground as Tesla CEO Elon Musk dug in as he attempts to takeover the social media giant. The eccentric executive has now called on the SEC to evaluate Twitter user numbers.
It comes after he said Monday that a deal for the company is “not out of the question” at a lower price, so this could be an attempt to strong-arm the social media giant into accepting a lower price.
Musk said in a Tweet early Tuesday the deal “cannot move forward” until the firm proves less than 5% of its accounts are fake. The Tesla CEO has claimed spam and fake accounts likely account for at least 20% of all Twitter accounts.
Twitter CEO Parag Agrawal has defended the firm’s estimates. He said in a Tweet that “internal estimates for the last four quarters were all well under 5%.” And Twitter said in a statement Tuesday it is “committed to completing the transaction on the agreed price and terms.”
TWTR closed the day up 2.5%, though it remains below its April 1 closing price of 39.31, just before the Musk bid became public knowledge. It also has much work to do to reach the 54.20 price offered by Musk to take the firm private.
EV stock Tesla also ended the day 5.1% higher. It remains stalled below its major moving averages. TSLA stock has been hit hard since news emerged that Musk is trying to snap up Twitter.
Donald Trump SPAC Digital World Acquisition (DWAC), which is set to host the former president’s rival social media network Truth Social, fought back late to rise around 1%. It remains rooted below the key 10-week moving average.
New Warren Buffett Stock Soars
Bank stock Citigroup surged on the news it is the newest Warren Buffett stock.
His firm Berkshire Hathaway have added more than 55 million shares in the firm to its portfolio. It ended the day up nearly 8%, taking out its short-term moving averages in the process.
The next step for C stock will be retaking its 50-day moving average. The 200-day moving average will be a tougher nut to crack as the stock sits around 19% below this key benchmark.
While Citigroup does not qualify as a CAN SLIM stock, it certainly offers some attributes that would be attractive to a value investor like Warren Buffett.
It currently holds an extremely low P-E ratio of 6, well below the S&P 500 average. It also offers a dividend yield of 4%, which is far better than the S&P 500 average.
Market Rally Shows Bullish Action; This Chip Giant Is A Buy
Outside Dow Jones: 3 Stocks Build Bases
Chip giant Broadcom ended the day clear of a trendline entry of 593.40. The stock also has a cup-with-handle entry of 645.41. The relative strength line has just hit a new high and it remains in a long-term uptrend.
This bullish action saw the stock win a spot on the prestigious IBD Leaderboard list of leading stocks Monday.
Zim Integrated Shipping is one to add to your watchlist as it forms the right side of a cup base. The buy point here is 79.05. It could also go on to form a handle, which would provide a lower entry.
A reason to be cautious is first-quarter earnings for the ocean container fleet operator are due Wednesday.
An approach highlighted by Investor’s Business Daily is to use options as a strategy to reduce risk around earnings. It’s a way to capitalize on the upside potential of a stock’s move around earnings, while reducing the downside risk.
Finally, Huntsman is also worth watching as it forms a base with an ideal buy point of 41.75. It climbed back above its 50-day moving average Tuesday as it closed up 3%.
Huntman is a chemical manufacturer that ranks near the top of the highflying basic chemicals industry group. Both earnings and, in particular, stock market performance are strong.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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