Dow Jones Dives Under Janet Yellen Warning, Stocks Sell Out as Bond Yields Rise

The Dow Jones Industrial Average plunged nearly 500 points Tuesday afternoon as stocks sold on Treasury Secretary Janet Yellen’s standard risk warning and bond yields rose.


The Nasdaq fell 2.6%, the S&P 500 lost 1.8% and the Dow Jones index lost 1.3% in the stock market today. Small caps, followed by the Russell 2000, were down 1.8%. Volume was higher on both major exchanges versus the same time on Monday.

Of the exchange-traded funds, Innovator IBD 50 (FFTY) fell 5.5%, while the Nasdaq 100-tracking Invesco QQQ Trust (QQQ) fell 2.2%. The IBD 50 ETF, which hit a new high on Thursday, fell below a consolidation buy point of 50.06 and is testing its 50-day moving average.

Rising government bond yields are putting pressure on interest-rate sensitive stocks such as technology. The yield on the 10-year bond rose 7 basis points to 1.56%, the highest since June.

Standard risk fears

Late Monday, Senate Republicans blocked a bill to fund the federal government until Dec. 3 and raise the debt ceiling. Fed Chair Jerome Powell and Treasury Secretary Yellen testify before the Senate Banking Committee. Yellen warned Congress must raise the debt limit before October 18.

Overview US stock market today

Table of contents Symbol Price Profit loss % Change
Dow Jones (0DJIA) 34413.14 -456.23 -1.31
S&P 500 (0S&P5) 4361.69 -81.42 -1.83
Nasdaq (0NDQC ) 14586.89 -383.08 -2.56
Russell 2000 (AND SO FORTH.) 222.34 -4.10 -1.81
IBD 50 (FFTY) 47.64 -2.76 -5.48
Last update: 11:38 AM ET 9/28/2021

“It is imperative that Congress tackles the debt limit quickly. If not, America would default for the first time in history,” Yellen said in prepared remarks. “The entire confidence and creditworthiness of the United States would be affected, and our country would likely face a financial crisis and economic recession.”

The US economy continues to recover from the Covid-19 pandemic, which led to nationwide lockdowns more than a year ago. Most states had eased restrictions as vaccinations continued to roll out and cases fell. But in some places, cases are rapidly increasing again, and in some states, mask mandates are returning as the delta variant spreads.

Cumulative Covid-19 cases worldwide have surpassed 233 million, with nearly 4.8 million deaths, according to World Meter. In the US, cases are approaching 44 million with more than 709,000 deaths.

Growth stocks to watch out for

Thor Industries (NS) crossed 9% higher in fast sales to recapture its 50-day and 200-day moving average. The RV maker delivered fiscal and fourth quarter earnings that exceeded Wall Street’s targets. Shares have been consolidating since May.

there in the IBD 50, InMode (IMND), SiTime (SITM) and Worldwide e-Online (CAP) each dived more than 10% in heavy volume. InMode and SiTime remain above their 50-day limit, but Global e-Online has breached support.

Shoot Social (tax returns), asana (SIMPLE) and snap (SNAP) were among the IBD 50 stocks that fell more than 7% each. Snap cleared a flat-base buy point of 80.95 Friday, but has now activated the 7%-8% loss-limiting sell rule of imports.

Covid-19 vaccine maker Modern (MRNA) fell nearly 7% in twice normal trading, falling below the 50-day line for the first time since May. The biotech’s stock has formed a handle cup, but losses this week have clouded the pattern.

IBD 50 financials were among the better performers in relative terms, boosted by higher bond yields. Western Alliance Bancorp (WAL) climbed 0.3%, to within 2% of a 109.94 entry. Jefferies Financial (JEF) gave up 0.3% and Stifel Financial (SF) fell 1.2%.

Dow Jones Movers (CRM) and Microsoft (MSFT), each down more than 3%, were the blue chip’s biggest losers.

Salesforce fell below a buy point of 275.32 from a handle cup it cleared Thursday. The stock has not given a sell signal.

Microsoft slumped and fell below the 50-day mark. It also undercuts the underside of a six-week flat base, but the pattern is still intact and well within the range of the flat base. Microsoft is a IBD standings and IBD Long-Term Leader stocks.

Apple (AAPL), Do-it-yourself shop (HD), Boeing (BA) and Disney (DIS) gave up almost 2% each.

Home Depot has slipped below a 338.65 buy point from a five-week flat base, which it had climbed past Monday. The stock is holding well above the 50-day line.

Follow Nancy Gondo on Twitter at @IBD_NGondo


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