Dow Jones Dives After Fed Eyes Earlier Rate Hikes; Tough Day For Meme Stocks

Stocks extended their losses late Wednesday, with the Dow Jones Industrial Average down as much as 362 points after the Fed’s monetary policy statement.


With an hour to go in the regular session, indexes trimmed some of their losses. The Dow Jones industrials shed 0.8%, the S&P 500 was down 0.7% and the Nasdaq dropped 0.7% in the stock market today. Small caps tracked by the Russell 2000 were down 0.7%. Volume was mixed, higher on the NYSE but lower on the Nasdaq vs. the same time Tuesday.

The indexes sold off after 2 p.m. ET, when the Fed unexpectedly signaled its intent to hike rates twice in 2023 amid higher inflation. Fed officials now expect to raise interest rates by late 2023, sooner than they projected in March.

“Progress on vaccinations has reduced the spread of Covid-19 in the United States,” the Fed said in a statement. “Amid this progress and strong policy support, indicators of economic activity and employment have strengthened.”

U.S. Stock Market Today Overview

Index Symbol Price Gain/Loss % Change
Dow Jones (0DJIA) 33964.56 -334.77 -0.98
S&P 500 (0S&P5) 4208.94 -37.65 -0.89
Nasdaq (0NDQC ) 13933.98 -138.88 -0.99
Russell 2000 (IWM) 228.24 -2.12 -0.92
IBD 50 (FFTY) 44.41 -0.51 -1.14
Last Update: 2:54 PM ET 6/16/2021

Among exchange traded funds on Tuesday, Innovator IBD 50 (FFTY) lost 1.1%, while the Nasdaq 100-tracking Invesco QQQ Trust (QQQ) fell as much as 1.4% but shaved that loss to nearly 0.7%.

Covid-19 Update

Last year, tech stocks boosted the Nasdaq to a 43.6% gain — its fifth best year ever. The S&P 500 rose 16.3% in 2020, and the Dow added 7.2%. Read The Big Picture for more detailed daily market analysis.

The U.S. economy is recovering from the Covid-19 pandemic, after it triggered nationwide lockdowns over a year ago. But most states have relaxed restrictions as vaccinations continue to roll out and cases decrease.

Cumulative Covid-19 cases worldwide are approaching 178 million, with over 3.8 million deaths, according to Worldometer. In the U.S., cases have surpassed 34 million with nearly 616,000 deaths, although the number of new cases and deaths in the U.S. has slowed dramatically in many states.

Dow Jones Movers

Within the 30-chip blue chip index, chemicals and plastics giant Dow Inc. (DOW) and Walmart (WMT), down about 2% each, were the biggest blue chip losers.

Dow Inc. lost 2.5% to breach its 50-day moving average for the first time since late April, according to MarketSmith chart analysis. It’s also pulled back below a 67.37 buy point of a flat base and is now about 2% below the entry.

Walmart fell 2% as it gives up support at the 50-day line. The discount giant continues to work on a long consolidation with a potential 153.76 buy point. A 32 Relative Strength Rating and downward sloping relative strength line could use some help.

Intel (INTC), Visa (V) and Walgreens (WBA)were among a half-dozen other blue chips down more than 1.5%.

Merck (MRK) gapped up and rose 2% in above-average trade. It’s on pace for a fifth gain in the past six sessions. Last week, the pharma giant inked a $1.2 billion supply deal with the U.S. government for its experimental Covid pill, molnupiravir, which is in Phase 3 testing.

Merck stock is building the right side of a cup with an 81.72 buy point, according to MarketSmith. It’s about 6% away from the entry.

JPMorgan (JPM) advanced 0.7% as it tries to halt a seven-session losing streak. It’s trading about 3% below a 161.79 buy point of a flat base, following last week’s nearly 4% drop. JPMorgan stock has slipped below its 50-day moving average.

Outside The Dow

Gaming software, consumer electronics retailers and steel stocks led the downside among IBD’s 197 industry groups. But solar, enterprise software and automaker stocks advanced.

Roblox (RBLX) weighed on the gaming software group with an 8% dive. Shares plunged as much as 11% early Wednesday, after the game developer reported mixed results late Tuesday. The company said daily active users rose 28% in May from a year ago to 43 million. But that was down 1% from 43.3 million in April of this year.

The new IPO stock triggered the round-trip sell signal from an 83.51 buy point in a short consolidation. Roblox broke out on May 21 and climbed as much as 24% past the entry on June 4.

Among other meme stocks, AMC Entertainment (AMC) plunged 10% to snap a three-day advance. Despite the drop, the stock is still up more than 2,400% since the start of the year. The movie theater operator is taking advantage of the spike in interest in its stock and announced on June 3 plans to sell up to 11.55 million shares.

Follow Nancy Gondo on Twitter at @IBD_NGondo


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