Dow Slides As Biden Stimulus Plan Raises These Fears; GM Reverses As IPO Stock Passes Buy

DATE POSTED:January 15, 2021

The Dow Jones Industrial Average slid lower amid fears President-elect Joe Biden's massive stimulus plan could lead to higher interest rates or tax hikes. Small-cap stocks were clubbed lower, while growth stocks also struggled. Home Depot (HD) and Amgen (AMGN) were the best performing blue chips, while IPO stock SciPlay (SCPL) passed a buy point.


Meanwhile General Motors (GM) looked to end a strong week on a sour note as it reversed sharply lower. EV giant Tesla (TSLA) turned negative after early gains, while Chinese rival Nio (NIO) dived.

The market had rallied Thursday ahead of the unveiling of Joe Biden's new $1.9 trillion stimulus plan. The President-elect's scheme proposes measures including $1,400 direct checks to Americans, and an increase in jobless benefits that will extend through September. He also wants to funnel hefty funds to state and local governments, as well as schools. But Wall Street is worried about the costs, and fear higher interest rates or tax hikes in the future.

"One question on investors minds has been what a stimulus package of this size will mean for interest rates and bond buying over the coming years, with yields rising in the aftermath of the Democrats' victory in Georgia," Oanda market analyst Craig Erlam said in a research note. "Clearly the expectation has been that it will mean tightening will be necessary sooner but Fed officials have sought to play down these worries."

The plan is ultimately expected to pass in a slimmed down version that wins over Republicans.

Nasdaq, S&P 500 Fall

The Nasdaq gave up 0.3%. Seagen (SGEN) was the best performer as it gained around 4%, while Skyworks Solutions (SWKS) was among the worst after retreating almost 4%.

U.S. Stock Market Today Overview Index Symbol Price Gain/Loss % Change Dow Jones (0DJIA) 30929.04 -62.48 -0.20 S&P 500 (0S&P5) 3783.08 -12.46 -0.33 Nasdaq (0NDQC ) 13074.72 -37.92 -0.29 Russell 2000 (IWM) 211.86 -2.08 -0.97 IBD 50 (FFTY) 44.33 -0.34 -0.76 Last Update: 1:22 PM ET 1/15/2021

The S&P 500 also gave up 0.3%, with Wells Fargo (WFC) and Citibank (C) among those posting the worst losses. Both stocks posted mixed earnings earlier.

Volume was higher compared with the same time on Thursday. It rose by around 2% on the Nasdaq and by around 30% on the NYSE.

Sectors were also mixed, with slightly more losers than winners. Real estate and utilities were performing best.

Small caps were notably underperforming, though they rallied from lows. The Russell 2000 slipped by around 1.2%.

Growth stocks were also lagging, with the Innovator IBD 50 ETF (FFTY) falling more than 1%. Leaderboard stock Palantir Technologies (PLTR) was a notable outperformer, rising by almost 7%.

Home Depot Stock Gains As Dow Jones Slips

The Dow Jones Industrial Average was outperforming the other major indexes, though it still slipped 0.2%.

Home Depot was among the top performers, gaining around 2.5%, with Amgen just behind with a gain of almost 2%. But this was not enough to lift the index into positive territory.

The worst laggard was Dow (DOW), as it fell more than 3%, while Chevron (CVX) was the next biggest loser.

GM Stock Reverses As Tesla Hits Reverse

General Motors gave up some of its gains as it reversed nearly 3%. It had cleared a 46.81 cup-base buy point on Tuesday, according to MarketSmith chart analysis. The move has helped its IBD Composite Rating improve to a solid 83.

While it has slipped back, GM stock is still near new highs after the automaker doubled down on its move into the electric-vehicle market. Plans include a new electric van, which will go on sale later this year.

IBD Leaderboard stock Tesla gave up gains as it also fell back. It ended up surrendering almost 1%. It is managing to trade tightly despite the fall, which means it could go on to form a new base. The stock has a best-possible Composite Rating of 99.

Tesla has flashed several signs of a climax top amid a sharply vertical run over the past few weeks.

The EV giant's Chinese rival Nio fell back into a prior buy zone after giving up almost 7%. It had broken out from a 57.30 buy point in a short cup base last week, but buyers should keep an eye on the stock in case it flashes a round-trip sell signal.

Nio stock had been given a boost after the firm unveiled its new Nio ET7. Deliveries are due to begin in the first quarter of 2022, though preorders started Saturday.

IPO Stock Reverses After Breakout

IBD 50 stock SciPlay managed to stage a breakout from a cup-without-handle base, MarketSmith analysis shows. However the IPO stock has since fallen back below its ideal buy point of 18.60.

The video game maker has a top-notch Composite Rating of 95, and a rare perfect EPS Rating of 99.

SciPlay is best known for its free-to-play mobile casino games. It was spun off from Scientific Games (SGMS) in 2019. Its offering price was 16 per share.

In June, SciPlay acquired Israeli video game developer Come2Play, putting SciPlay into the fast-growing casual gaming segment.

Terms weren't disclosed, but the deal didn't materially impact SciPlay's liquidity position.

Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.


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