Dow Jones Closes Lower; A Bush-Era Correction or Broken-Bubble Bear Market?

Stock indices closed lower on Tuesday after investors returned from the long holiday weekend. The Dow Jones Industrial Average fell 0.7% in early trading and fell as much as 0.8%, before closing at the morning’s low.




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The S&P 500 sold 0.8%, paring losses and ending the day 0.5% lower than Friday’s final print. The Nasdaq Composite and the Russell 2000 Index fell nearly 1% each.

Volume was higher on the Nasdaq and NYSE, according to preliminary data.

Crude oil fell to $86.71 a barrel after OPEC+ announced a production cut and Russia warned its Nord Stream pipelines will not be fully restored until Western sanctions are lifted.

The benchmark 10-year Treasury bond yield rose sharply to 3.34%.

The Innovator IBD 50 Fund (FFTY) lost 0.4%.

Correction or bust?

Carl Ludwigson of Bel Air Investment Advisors draws a parallel to the Bush era of 1990-91 when the stock market fell -20% and cut losses to -7%, before jumping 26% in 1991. At the same time, Caution is advised if the 2001 tech bubble bear market is the correct analogy, complete with numerous bull traps.

In another sign of cooling inflation, the Purchasing Managers’ Index showed a slowdown in business activity in August. The PMI business activity index fell to 43.7, down from a previous estimate of 44.1 and from 47.3 in July.

However, services grew even as the prices paid by purchasing managers fell. Furthermore, prices fell to January 2021 levels, strongly suggesting that we may have passed the peak of inflation.

New orders also increased, raising the possibility of GDP growth and expansion in the third quarter, according to Jeffrey Roach, chief economist at LPL Financial.

Beyond September, a seasonally strong fourth quarter and midterm elections will likely boost the stock market, if history is any guide, added Jeffrey Buchbinder and Barry Gilbert, chief equity and asset allocation strategist at LPL.

Dow Jones Leaders in the News

Verizon Communications (VZ) consolidated its position as the Dow revenue leader, raising its yield at 6.32%.

The dividend will increase to 65.25 cents from 64 cents per share, payable on November 1 to shareholders of record on October 7.

The telecommunications blue chip announcement follows 16 years of quarterly dividend growth.

Stocks continue to correct and trade flat.

Current summary of the US stock market

Index Symbol Price gain loss % Change
dow jones (0DJIA) 31107.41 -211.03 -0.67
S&P 500 (0S&P5) 3903.19 -21.07 -0.54
nasdaq (0NDQC ) 11530.99 -99.87 -0.86
Russell 2000 (IWM) 178.37 -1.72 -0.96
IBD 50 (FFTY) 27.33 -0.35 -1.26
Last update: 07/27/2022 at 12:00 PM m. ET

Apple (AAPL) fell below his 50 day mobile line. The September 7 event will likely launch the iPhone 14, as well as the newer, faster A16 chip.

CVS Health (CVS) beat the Dow Jones component united health (UNH) Y Amazon (AMZN) in the offer of mean health.ker simb=SGFY].

It will acquire the company in an all-cash deal valued at $30.50 per share, for a total valuation of $8 billion.

The healthcare software and services company will be one of CVS’s biggest acquisitions since the merger with Aetna. CVS fell 1% while SGFY rose fractionally.

Outside of Dow Jones

Elsewhere, nvidia (NVDA) continues to face serious obstacles in its data center chip business. The stock is down 24% in the past seven trading days and is at its lowest price since the March 2021 pandemic sell-off, when it closed at $133.48.

Nvidia’s new AI-enabled chip for data centers competes with veteran chips advanced micro devices (amd) Y Intel (INTC).

But last week’s China sales ban will likely put a dent in its projected $1 trillion market. A weakening in demand for games is also hurting more valued tech stocks.

Shares of the three chip giants are pushing down the Philadelphia Semiconductor Index, which is down 1.1%.

Dow Jones’s competitor and technology leader, chip giant Intel, is falling for the same reasons. The shares have fallen 2.1% and are at their lowest level since May 2016, when they traded at 30.23.

Intel fell more than 4% to a five-year low on August 26. AMD is down nearly 20% in the same time frame.

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