The Dow Jones Industrial Average reversed higher and indexes were off their lows after a shockingly hot July jobs report raised Fed rate hike fears.
Volume was lower on both the Nasdaq and the New York Stock Exchange vs. the same time Thursday.
The yield on the benchmark 10-year Treasury note rose 15 basis points to 2.83%. West Texas Intermediate crude oil rose around 1% to just under $90 per barrel.
Hot Jobs Report Raises Fed Rate Hike Fears
Stocks reversed following the news the economy created 528,000 jobs in July, well ahead of the 250,000 consensus estimate. The unemployment rate ticked lower to 3.5%.
Oanda senior market analyst Edward Moya said the report poured cold water on the theory that high inflation and a global slowdown would act as a drag on the U.S. economy. This could prompt more aggressive action from the Federal Reserve.
“Fed officials were already pushing back on the idea of a Fed pivot and now it seems they will be debating whether they need to be even more aggressive to tackle inflation given how strong the labor market is performing,” he said in a note to clients.
Nasdaq Lags As Small Caps Shine
The Nasdaq was off session lows but remained down 0.5%.
The S&P 500 is trading lower by 0.3% at this hour.
S&P 500 sectors were mostly negative. Utilities and consumer staples, both defensive areas, were top performers in the risk-adverse environment. Technology and communication services also lagged.
Small caps stood out, grinding out modest gains, with the Russell 2000 index rising 0.5%.
The Innovator IBD 50 ETF (FFTY), a bellwether for growth stocks, whipsawed and is managing to squeeze out a 0.2% rise.
Dow Jones Today: Disney Stock Lags As JPMorgan Pops
The Dow Jones Industrial Average also managed to lift off session lows. It has turned slightly positive, squeezing out a 0.1% gain.
Disney stock is managing to hold above its 50-day moving average, according to MarketSmith analysis. It is down almost 32% so far in 2022.
Solar Stocks Mixed As Biden Spending Bill Wins Sinema Backing
Solar stocks were mostly positive after holdout Sen. Kyrsten Sinema (D-AZ) gave her support for President Joe Biden’s flagship climate and tax bill.
She managed to secure a 1% tax on share repurchases by large companies. In return, a provision on closing the so-called carried interest tax loophole was removed.
“We have agreed to remove the carried interest tax provision, protect advanced manufacturing, and boost our clean energy economy in the Senate’s budget reconciliation legislation,” Sinema said in a statement.
Her support is key to getting enough votes to pass the 50-50 split Senate. If passed, the Inflation Reduction Act will allocate $369 billion for clean energy incentives.
Leaderboard member Invesco Solar (TAN) rose 1.5%. The fund is now past the top of the buy zone from a 78.82 standard entry.
Tesla Stock Loses Key Level After Stock Split Approval
Tesla stock reversed Friday, despite news that shareholders have given the company permission to increase the share count.
This paves the way for a 3-for-1 stock split. Tesla believes the split, the second in two years, will make the stock more accessible to retail investors. It is also seen as giving employees more flexibility.
The firm previously performed a 5-for-1 stock split in August 2020.
Tesla stock has formed a consolidation with a 1,152.97 buy point, according to MarketSmith analysis.
It remains a long way from its entry, which makes TSLA one to watch for now. Shares fell back below the key 200-day moving average Friday, but remain well above the 50-day line.
Outside Dow Jones: These 3 Stocks Test Buy Points
Chart Industries is in a buy zone after clearing a 193.03 buy point in solid volume.
Earnings estimates are strong for the company, which manufactures cryogenic and heat-transfer equipment used throughout the liquid gas supply chain.
Institutional support is also rising, with its Accumulation-Distribution Rating coming in at a strong B+.
ATI is also actionable after clearing a double-bottom base. The buy point here is 28.91.
The stock has seen its relative strength line gather pace of late and has just hit fresh highs. This is a positive indicator. It is in the top 4% of stocks in terms of price performance over the past 12 months.
ATI is a leading producer of specialty metals for a variety of markets. Around 50% of production focuses on the aerospace and defense markets.
Constellation Energy is now extended after clearing a 68.78 consolidation pattern buy point. The IPO stock saw its RS line hit new highs as it popped more than 10%.
Earnings are a clear issue for the stock, which started trading in early February. It currently holds a weak EPS Rating of 32 out of 99.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
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