Techs Slide As Dow, S&P 500 Meet Resistance; Homebuilder Surges | Stock News & Stock Market Analysis

An early burst of upside energy devolved into broad-based losses Tuesday, despite a positive reading on inflation, in a session at least partly upended by White House politics.


The Nasdaq Composite dropped 1%, while the Dow Jones industrial average slipped 0.7% and the S&P 500 took a 0.6% loss.

Stocks rose for the first half-hour of trade Tuesday, then backtracked aggressively with Qualcomm (QCOM) spearheading the sell-off among tech names, as General Electric (GE) spiraled to the bottom of the Dow and as health care groups posted three of the day’s five worst losses among the 197 industries tracked by IBD.

February consumer price data released before the open was in line with forecasts, easing inflation concerns. The Trump Administration’s order blocking an attempted takeover of Qualcomm by Singapore based Broadcom (AVGO) sent Qualcomm sprawling and Broadcom down 0.5%. The news initially sent Intel (INTC) up 4%, but gains fizzled to 0.2% by the close. News reports Friday said Intel was considering a takeover of Broadcom, in order to avert the competitive threat of a Broadcom/Qualcomm combination.

It is difficult to tell how prominent other events in Washington were in investors minds Tuesday. The White House’s sudden, though not unexpected, replacement of Rex Tillerson with Mike Pompeo as Secretary of State, the break between GOP and Democrats in the House Intelligence Panel’s release of findings in its Russia probe, and the Senate’s progress toward Dodd-Frank banking oversight reforms may all have weighed on the stock market today.

The result showed the Dow clearly stymied at its 50-day moving average, while the S&P 500 again met resistance at the 2800 level and the Nasdaq pulled back to test support at the level of its recent high, from Jan. 26.

GE, Qualcomm Dive; Apple Briefly Hits High; PG&E Leads S&P 500

On the Dow, General Electric dived more than 4% after JPMorgan slashed its price target, with Microsoft (MSFT) and American Express (AXP) each booking losses of more than 2%.

Among medical stocks, hospital operators Community Health System (CYH) and software developer Tabula Rasa Healthcare (TRHC) each skidded 7% lower. Still, insurer UnitedHealth (UNH) rose 2% to lead the Dow after naming Andrew Witty, GlaxoSmithKline’s (GSK) former chief executive, to head Optum health-services — the company’s pharmacy benefits manager.  The positioning of a high-profile CEO to head the company stirred speculation that UntiedHealth could be considering a spin off. UnitedHealth shares are below their 10-week moving average, crawling along the bottom of a six-week consolidation.

Chip stocks had rolled out to a strong start Tuesday, but gave in to Qualcomm’s funk and trimmed gains throughout the session. Advanced Micro DevicesAMD was the only Philly Chip Index issue to end the session with a gain of more than 1%.  Marvel Technology (MRVL) and Qualcomm fell more than 5% to the bottom of the Philly index. Silicon Motion (SIMO) and Cavium (CAVM) dived more than 4% each.

Fang stocks took one on the muzzle, with Google parent Alphabet (GOOGL) falling more than 2%, and Facebook (FB) and Netflix (NFLX) off more than 1% each. Apple (AAPL) briefly scored a new high during the session, only to reverse course and end with a 1.1% loss.

It’s often not a good sign for markets when defensive plays such as utilities show strength, and PG&E (PCG) took the top spot among S&P 500 stocks, rising more than 7% in above-average trade. Xerox (XRX) and Alaska Air Group (ALK) were close behind, however, rising 6% and 4%, respectively. So the market’s tone was not predominantly defensive.

On the upside, IBD 50 stock LGI Homes (LGIH) jumped more than 4% in soft trade. The gain left shares 21% above an early march low as the homebuilder continues to rebound from support at its 40-week moving average. It now faces a test of resistance at its 10-week line, as it attempts to climb the right side of a three-month long base pattern.


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Originally posted 2019-09-19 23:10:58.


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