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The Dow Jones Industrial Average slipped but held up relatively well as other indexes fell. Spotify (SPOT) jumped on layoff news while Magnificent Seven stocks including Microsoft (MSFT), Tesla (TSLA) and Nvidia (NVDA) skidded. Famed manager Cathie Wood took some profits in a stock that has rocketed in 2023.
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Several stocks tested entries despite the challenging action. Blackbaud (BLKB), Booz Allen Hamilton (BAH) and Powell Industries (POWL) all attempted breakouts.
Treasury yields rose. The 10-year yield rose 4 basis points to 4.26% while the two-year yield jumped 7 basis points to 4.63%.
Bears Maul Nasdaq, Small Caps Bite Back
The Nasdaq fought its way off lows after getting spanked by the bears, closing down 0.8%. Sirius XM (SIRI) was among the laggards as it fell 6.6%.
The benchmark S&P 500 held up better, giving up 0.5%. Alaska Air (ALK) took a dive of 14.2% on news it has agreed to acquire Hawaiian Airlines (HA) for $1.9 billion. In contrast, HA stock soared nearly 200%.
Uber Technologies (UBER) closed off highs but the Leaderboard stock still rose almost 2.2% on news it is to join the S&P 500. The change becomes effective before the start of trading on Dec. 18.
The S&P 500 sectors ended the day mixed. Real estate and health fared best in the stock market today. Technology and communication services were hit the hardest.
Small caps managed to give the bears a bloody nose, with the Russell 2000 rising 1%. Growth stocks were slapped lower though, with the Innovator IBD 50 ETF (FFTY) falling 0.7%.
Dow Jones Today: Salesforce, Intel Stock Lag
The Dow Jones fared better than the other major indexes. It fell 41 points, or 0.1%.
Salesforce (CRM) lagged the most on the much-watched index as it fell 3.6%. It looks to be digesting some of last week’s massive 15.9% gain but remains extended.
CRM stock is actually the best performer in the index so far this year, with a lift of about 89%. It is a member of the IBD Leaderboard Watchlist.
Intel (INTC) also lagged on the Dow Jones today as it fell 3.2%. In contrast, 3M (MMM) fared best on the upside as it gained 3.6%.
Cathie Wood Sells Stock Amid Monster Run
Famous investors are not afraid to take profits off the table when it suits them. And this was the case with Ark Invest CEO and Chief Investment Officer Cathie Wood.
This time she opted to sell just shy of 65,000 of the ARK Innovation ETF’s (ARKK) holdings of Shopify (SHOP). SHOP stock is up 109% so far this year.
Shopify is a member of the prestigious IBD Leaderboard list of top stocks. It has a perfect IBD Composite Rating of 99.
She also sold nearly 312,000 shares of the fund’s position in UiPath (PATH). This stock has hardly been a laggard this year either, rising around 105%.
But Ark Invest was not just in sell mode on Friday. It also purchased about 191,000 shares of PagerDuty (PD) for ARKK.
In contrast to SHOP, PagerDuty stock is down about 14% so far this year. It is above the 50-day moving average but well below the 200-day line.
However, IBD recommends buying stocks with strong earnings and price performance rather than laggards. Look for leaders in strong industries that are showing superior earnings growth and sales.
Magnificent Seven: Nvidia Stock, Microsoft Struggle
It was a tough start to the trading week for the so-called Magnificent Seven.
Nvidia was having the toughest time as it fell 2.6%. The Leaderboard stock is now testing buying support at the 50-day moving average. It also has lost further ground on a 476.09 entry.
Google parent Alphabet (GOOGL) and Meta Platforms (META) also lagged. GOOGL fell 2% while META fell 1.5%. Both ended off session lows.
E-commerce giant Amazon.com (AMZN) fell 1.5% while Microsoft dipped 1.4%.
Apple (AAPL) fell 1% and lost ground on a 198.23 entry. It was also a disappointing session for Tesla stock, the EV maker falling 1.4% as it trades near its 50-day line.
Spotify Stock Pops Amid Layoffs
Layoffs are usually not good news for workers but they can certainly boost a company’s stock.
And that was the case for Spotify (SPOT) after the firm announced it was axing 17% of its workforce.
CEO Daniel Ek said in a missive to staff that the company had to “rightsize” its costs after hiring too many people in 2020 and 2021.
In total, the firm will be laying off about 1,500 employees. It is just the latest in a slew of tech companies trimming their workforces, with the likes of META getting boosts due to staff rationalization.
And it wasn’t all bad news, as SPOT stock closed the session up 7.5%. The digital music streaming stock is now up nearly 150% so far this year.
Outside Dow Jones: 3 Stocks Test Entries
While stocks in general were having a tough time, a few plucky stocks attempted breakouts.
Enterprise software stock Blackbaud is in a buy zone after clearing a consolidation entry of 78.71, MarketSmith analysis shows.
Overall performance is excellent here, with its IBD Composite Rating a muscular 97 out of 99. The relative strength line also hit fresh heights.
Consulting stock Booz Allen Hamilton is in a buy zone after clearing a cup-with-handle entry of 129.92. This is an early-stage base, a plus.
The firm provides management consulting services to the U.S. government as well as large corporations and nonprofit organizations. It is in the top 9% of stocks in terms of price performance over the past 12 months.
Powell Industries is trading in the buy zone of a cup-with-handle base. The ideal entry point is 97.83. Earnings and price performance are stout.
However the firm is getting set to report earnings on 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.
Please follow Michael Larkin on X, formerly known as Twitter, at @IBD_MLarkin for more analysis of growth stocks.
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