Dow Jones plunges amid high inflation; Twitter up for Elon Musk vote; Coinbase falls while Bitcoin dives

The Dow Jones Industrial Average fell sharply after warm inflation data, closing near session lows. Twitter shares rose after shareholders voted on the offer of Tesla (TSLA) CEO Elon Musk is buying the firm. Coin base (COIN) and Riot Blockchain (RIOT) dropped as Bitcoin melted. apple (AAPL) dived.

With the market under pressure, investors should look for stocks that form bases that could be good opportunities when the market improves. CMS energy (CMS) and Comstock Resources (CRK) are solid examples.

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Volume was higher on Nasdaq and the New York Stock Exchange, according to early data. This is a bad sign of a down day.

The interest rate on the benchmark index for 10-year government bonds rose five basis points to 3.42%. West Texas Intermediate crude fell marginally to trade near $88 a barrel, but finished well off the low for the day.

Inflation data hurts the stock market

Stocks generally fell after the consumer price index showed prices rose 0.1% in August compared to the previous month. That turned out to be warmer than estimates for a monthly drop of 0.1%. Inflation rose 8.3% in August from a year ago, higher than the expected 8.1% increase. Core inflation was up 0.6% compared to the previous month.

The move prompted Nomura to forecast a possible rate hike of 100 basis points at the Federal Reserve Open Market Committee meeting in September. It had previously forecast a rise of 75 basis points. It also expects a terminal rate of 4.50%-4.75% by February 2023.

“The Fed will likely have to be even more aggressive in raising interest rates, and that’s bad news for risky assets,” Oanda senior market analyst Edward Moya said in a note to clients.

Nasdaq Crushed as Small Caps Plunge

The Nasdaq struggled the most of the major indexes, closing sessions nearly down after falling 5.2%. Nvidia (NVDA) was a big loser as it fell 9.5%.

The S&P 500 also struggled, falling 4.3%. Eastman Chemical (EMN) suffered the most as it fell 11.3%.

The S&P 500 sectors were all negative, with technology and communications services the worst performers. Energy gave up the least ground, but still dropped sharply.

Small caps were also decimated by the bears, with the Russell 2000 down 3.8%.

The Innovator IBD 50 ETF (FFTY), a watch for growth stocks, fell 3%.

Dow Jones today: Apple shares narrow, Boeing team

The Dow Jones Industrial Average was crushed. It plunged just 1,300 points, or 3.9%. This was the worst session since June 2020.

Aggressive investors moving into Apple stock spoiled the decision after it fell 5.9%. It had been the previous session’s best performer but has now turned back below the 50-day and 200-day moving averages.

AAPL stock also lost ground on an aggressive trendline entry and a handle entry at 176.25.

But Apple’s losses were not as severe as those of others Boeing (BA) and Intel (INTC). They were the worst performers on the Dow Jones industrial average today, as both fell 7.2%.

Twitter stock gains after Elon Musk vote

Twitter shareholders voted Tuesday to approve Elon Musk’s takeover bid despite him currently trying to get out of the deal.

It comes after the social media firm slammed the eccentric executive’s latest attempt to scuttle the $44 billion deal.

While Musk has claimed an alleged $7.75 million severance payment to whistleblower Peiter Zatko is a breach of the takeover agreement, the firm said his latest letter regarding the termination agreement is “null and void.”

Meanwhile, Zatko told the Senate Judiciary Committee on Tuesday that Twitter executives’ incentives “led them to prioritize profits over security.”

While he claims he was fired after raising security concerns, Twitter says he was dismissed for “ineffective leadership and poor performance.”

Twitter stock rebounded after the vote, but gave back some gains under heavy pressure. It closed 0.7% higher, retreating from the 50-day line.

Tesla storage ended sharply lower and gave up 4%. It lost ground on a short pattern buy point of 314.74. It has now fallen back below its 200-day moving average, according to MarketSmith analysis.

Coinbase Stock, RIOT Plunges as Bitcoin Melts

Coinbase ended the day at a low as it plunged 8.8%. The volume was lighter, just a bit of comfort.

The stock, which cut its full-year forecast last month, managed to stay above its 21-day exponential moving average and 50-day line. COIN stock is down 70% since the beginning of the year.

Bitcoin took a dive as risky assets struggled. It’s just above the $20,000 mark after giving up more than 9% in the past 24 hours, according to CoinDesk.

Other cryptocurrency games also fell sharply. Grayscale Bitcoin Trust (GBTC) fell 10.6% while Bitcoin mining is in play Riot Blockchain (RIOT) plunged 9.9%.

Stocks dive on call for biggest Fed hike in 40 years

Outside the Dow Jones: These 2 stock points

Utility stock CMS Energy is showing relative strength as it sees a handle entry of 71.29. CMS is among the top 15% of stocks in terms of price performance over the past 12 months. Big Money is also getting behind the stock, with its accumulation/distribution rating at a solid B-.

CMS energy offers a dividend yield of 2.7%.

Comstock Resources forms a cup-with-handle base. It is shooting for a buy point of 21.28. It has fought back above the 21-day exponential moving average, an encouraging sign.

The oil and gas explorer is a member of the list of IBD sector leaders. This is our strictest and most powerful screen.

Follow Michael Larkin on Twitter at @IBD_MLarkin for more growth stock analysis.

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