Stocks Turn Tail After Fed Holds Rates Steady; STX, SNOW, ARQT In Focus

0:00Ken Shreve:Mississippi is breaking new ground for business at a historic pace. Amazon, XAI, Toyota, Milwaukee Tool, and GE Aerospace have all tapped into our deep talent pool, prime geographic location, and welcoming communities. This is bigger than mega sites. Mississippi offers a thriving business ecosystem with affordability, greater collaboration with energy partners, and record-breaking speed to market. Looking to expand? Break new ground at Mississippi.org.

0:40Ken Shreve:good afternoon everyone and welcome to stock market today for july 29th it's alissa corham and ken shrieve here with a look at the action in today's session we're also going to take a look at some earnings movers late but a lot to get to today ken what's on your radar uh i've got three Three stocks to watch, Ali, on a tough day for the stock market, unfortunately. But three tech names that fought a good fight today. Nice earnings report from Seagate STX. Another good day for software stocks. They kind of sold off late with the NASDAQ, but we'll take a look at Snowflake, which had a pretty good day and a good breakout.

1:23And then Biotech, ARQT, Arcutis Dermatology. So those are my stocks.

1:31Ken Shreve:All right, we'll take a look at those. But first, a closer look at the major indexes. And we will kick things off with a look at the S &P 500 down 1.5 % by the end of the day, Ken. And meanwhile, the Nasdaq composite down some 1.7 % today. Blue chip stocks got hit pretty hard, down 2.2 % the Dow was. And then the Russell 2000 down 1.6%. There was a little rally intraday on the Fed, but we gave that all back and then some, Ken, to close at session lows. What a roller coaster. Where was that rally intraday? Let me see if I can find that rally somewhere. Oh, there. Okay, yeah. There was. There was.

2:26No, there was. Yeah.

2:28Ken Shreve:Yeah. So, Ken, your thoughts on how the day unfolded? Disappointing but not surprising. Right. Yeah, we're kind of in the throes of a correction here, And we were all looking forward to the Fed meeting at 11 a.m. Pacific time and 2 p.m. Eastern. And, boy, the market really, really gyrated. We actually turned positive. I saw the NASDAQ was up a half a percent. And then the Q &A started, the press conference. And, yeah, it was really, really interesting. The vote was 9 to 3. There were actually three committee members that wanted rates to go up, and that was kind of interesting. But then there were some questions during the press conference and kind of asking Chairman Warsh, you know, you seem to have enough evidence.

3:28Why not just raise interest rates now? No, and then I heard Steve Leisman on CNBC talking about it, and they just really didn't get a clear answer from Kevin Warsh. Maybe he's still just getting used to his job as Fed chairman and answering questions. So the answer wasn't really clear, and the yield curve as he was talking was steepening. The 30-year was going up, and the two-year yield was going down. And, you know, you tend to see the yield curve steepening when the economy is doing well and, you know, inflation expectations are on the rise. And that's kind of the situation that we're in now.

4:10So the market is kind of expecting, you know, interest rates to go up. So there are expectations that rates are going up, but the Fed held steady again. So now you have expectations, you know, that rates are going to go up in September. But all the while, you know, it just resulted in another, you know, sell off for stocks. What was interesting is that the 10-year yield the whole time was just kind of sitting higher, edging higher by about two basis points. And then it hasn't shown on the intraday chart yet, but just in the final few minutes of trading, that 10-year yield all of a sudden spiked up about seven basis points.

4:50And it's not showing here yet.

4:52Ken Shreve:Here's the TLT, which moves the opposite direction. So that 10-year Treasury yield right now is up 7 or 8 basis points, all the way up to 4.68 % right now. And that's as of 4-12, 12 minutes past the hour. So 10-year yield right now is up at 4.68%. So that's kind of interesting, seeing that selling in the bond market that's lifting that 10-year yield quite higher right now. So lots of interesting action near the close, but it just resulted in some pretty nasty selling in that NASDAQ composite. It was, you mentioned that it was a nice intraday rally, but boy, what an outside day for the NASDAQ there.

5:40And you could see how violent that selling was late in the session.

5:45Ken Shreve:Right. And I believe, you know, the market was reacting favorably to some of the things Warsh was saying. And perhaps I wonder if part of the non-answer was, you know, maybe he is in the camp that really doesn't want to raise interest rates. So maybe he was balking at that a little bit, you know, to try to hedge those expectations there. Yeah, I don't think he did. I don't think he did a bad job at all. I think he's, first of all, getting used to a new job, you know, and getting used to press conferences. This is a new position for him, so I don't think he did a bad job answering questions. But he was getting a steady diet of questions saying, you know, you seem to have enough information, you know, to be raising rates at this point.

6:34And again, the vote was 9 to 3, and there was division among committee members headed into this meeting. There were committee members that felt that rates could be raised now, and the vote was 9 to 3. And so there was just a little confusion among some people in the press conference about why rates weren't going up. And, you know, it wasn't a big deal, but, you know, so it was, you know, the meeting came and went and the market's reaction was, you know, it just reacted the way it did. But again, we knew the market was kind of in a tough position headed into this meeting. And it was really just more of the same, just more institutional selling.

7:25And we're kind of in the very early stages of a pullback here. We know that NASDAQ 100 just yesterday just went into an intermediate term correction, went 10 % off its high. Now maybe 11%, a little 11 % off its high. The rest of the indexes, NASDAQ Composite, wasn't even 10 % off its high yesterday. I think it probably went 10 % off its high today. S &P 500 and Dow, not even 10 % off their highs. So we're still kind of early in a pullback here, digesting some huge gains for the market here. So we'll see. But yeah, just kind of a tough, tough day of selling today. We undercut the lows of the very early rally for the S &P 500 today.

8:18So we'll start looking for day one of a rally attempt. Another good shakeout today for sure. So we are getting sellers shaken out of this market and we like to like to see that. But kind of ugly action for sure.

8:32Ken Shreve:Mississippi is breaking new ground for business at a historic pace. Amazon, XAI, Toyota, Milwaukee Tool, and GE Aerospace have all tapped into our deep talent pool, prime geographic location, and welcoming communities. This is bigger than mega sites. Mississippi offers a thriving business ecosystem with affordability, greater collaboration with energy partners, and record-breaking speed to market. Looking to expand? Break new ground at Mississippi.org. Yeah, and the Fed news wasn't the only thing on investors' minds. There was more of the ratcheting up of the commentary once again on Iran, how much of that is priced in versus not.

9:15Ken Shreve:Just one of the other cross currents going on amongst other things. Yeah, we had oil prices up almost 7 % today. And so it was three sharp drops in a row for oil prices, and then we had oil spike well over$84 a barrel. That was the early headline that Iran had fired several ballistic missiles at a military base in Jordan. And I don't know that there was damage or any serious damage caused, but still they were fired in the vicinity. And that prompted, obviously, a response from Trump that he's going to start firing again at Iran. And that started things off on not a good foot for the market this morning.

10:11So we have that to deal with now. that initially caused this big spike in oil prices. That all happened even before the Fed. So lots of cross-currents out there. Now we have spiking interest rates to deal with as well. So lots of negative cross-currents here that the market is trying to deal with.

10:33Ken Shreve:Indeed. And then in terms of levels that we're watching on the major indexes now at this point, Of course, we are quite oversold here short term, but to the downside, and we'll see what Mike Webster, IAB's chief market strategist himself, says when he returns shortly from vacation. But it does seem like if he were here, I would imagine him saying it does seem like that$24 ,000 in the 200-day line now a magnet to the downside for the NASDAQ. What say you? Yeah, it doesn't seem like there's any more lows that the NASDAQ is gunning for at this point. That 25 ,000 level has been pierced. And so now, yeah, it's interesting to see that 200-day moving average just sitting right at that round number here.

11:23So it looks like even if, you know, even if we do get, you know, a rally tomorrow, you know, day one of a rally attempt, it seems likely that we'll probably get a test at some point of that 24 ,000 level. And we'll see how it goes. The fact that that round number is right at the 200-day moving average, you know, hopefully that'll be a support level. We'll see if it holds.

11:51Ken Shreve:Yeah, man, what a difference a couple of weeks makes, right, Ken? Yeah. All right. And then for the S &P 500, we saw this tight trading range over the last couple of days, but now we've broken well below that, Ken. It seems like to the downside, we're keeping an eye on 72.94 as well as 72.37. Mm-hmm. And then you've got 7 ,200 below that. So you do have some marked lows to keep an eye on for the 7 ,200. Hard to believe that the 200-day moving average for the S &P 500 is all the way down at 7 ,000. And it just shows you how close to highs the S &P 500 is still. So even that pullback for the S &P 500 down to the 7 ,400 level, that was only about, what, 4 % off its high, 3 % off its high, something like that.

12:52So it's been a fairly moderate pullback. I mean, that first pullback from 7 ,600 down to 7 ,200, I think even that initial pullback was maybe 4%, something like that. So even though it was pretty sharp percentage-wise, it just wasn't that much. So on a relative basis compared to the NASDAQ, S &P 500 is still holding up pretty well, but pretty nasty bar today.

13:22Ken Shreve:Okay. And then mentioned blue chips with a pretty gnarly decline on the day coming down to the 50-day line. So testing that level, closing slightly below it today, Ken. Yes. And, you know, yesterday I was writing the big picture column and talking about almost half of the blue chip components were up 2%. And we were, you know, talking about great earnings reports in the Dow yesterday from Sherwin-Williams and Boeing. They happen to be among the two worst decliners in the Dow today, Sherwin-Williams and Boeing. And the market was cheering great earnings reports from both of those companies yesterday.

14:04So Boeing, Sherwin-Williams, Goldman Sachs, J.P. Morgan, Caterpillar, they all got taken apart today in the Dow. And, I mean, look at these blue-chip names. blue chip name. So the Dow had a tough day today. And that price bar in the Dow, even though this index has not corrected nearly as much as both of the NASDAQ indexes, yeah, right at the 50-day moving average here. So believe it or not, still maintaining its uptrend here. And this is just a test, a key test of support here. So it's not a break of the 50-day yet, but we'll see if it can stage some kind of bounce. You do have some defensive kind of names in the Dow, some dividend-paying stocks, so maybe it'll find support.

14:58But sometimes these bear markets, these weak markets, they tend to go after every last stock. So I don't know if even the blue chips are going to hold up here, but maybe the Dow will make a stand. We'll see.

15:11Ken Shreve:We will see. And something similar can be said for the Russell 2000, because this was an area that we were pointing out is holding up pretty well, now definitively below the 50-day line. Obviously, it could get back above that level, but a notable development on the chart there. Let's take a look at the RRSP. This is the equal-weighted S &P 500 ETF. Made a new high yesterday, but today down about nine-tenths of a percent, something that we're keeping an eye on, Right. As we're seeing these continued, you know, shifts underneath the surface, Ken. And then we'll just quickly go through a few ETFs of note and then get to the stocks that you want to highlight today.

15:56Ken Shreve:Here's IGV. It was up on the day software. Six tenths of a percent. It did close off highs. Yeah, this was a bright spot all day in the stock market. Again, saw a lot of outperformance all the way up until, you know, after the Fed-induced sell-off. This IGV was up nicely all day, and then it just got pulled down late when the market started selling off after the press conference. So still managed a gain of about six-tenths of a percent. And we'll look at Snowflake in a little bit. But, you know, software stocks had some good days today. Got pulled down late, but up four days in a row. So still seeing some strength out there in software stocks.

16:40Ken Shreve:Okay. And then we have IYT, the transports, to take a look at here, Ken. The chart is loading momentarily. This is an area that had been holding up, now starting to weaken, too, down 1.4%, touching the 50-day. Yeah, still impressed talking about this with my colleague, Hatman Dave Chung. Still impressed that it's holding support here at the 50-day moving average. We're going to see how this test holds up, even though the trucking stocks have come under a lot of selling pressure, seeing a lot of trucking stocks in this ETF breaking their 50-day moving averages, but still seeing some airlines holding their 50 days, and seeing jets as well making a nice test of the 50 days.

17:33So IYT impressed that it's still holding support here, even though some of the trucking stocks have broken support here. So we're still watching IYT and impressed that that is still holding the 50-day and JETS as well. Okay.

17:50Ken Shreve:Let's turn our attention now to a couple of individual names. Here's STX, one of the big AI plays out with earnings. It closed up 2.3 % on a day, well off highs, also well off of levels from overnight trading. impressive growth here once again, acceleration, triple digit, bottom line growth, earnings up 120%, revenue up 48%. So some really incredible numbers here and an up day for the stock, but it's still in a vulnerable and weak position. I don't think that this was viable here personally on the earnings today. No, it wasn't. And when the NASDAQ started to turn and when the whole market started to turn, I just wanted to see which stocks in the NASDAQ 100 were the first ones to turn.

18:45And Seagate was among a handful of stocks that were really starting to turn with the NASDAQs. I said, okay, we'll give Seagate some love in the stock market today video because not all tech stocks were turning with the NASDAQ when the market started to turn with the Fed. And so Seagate was looking good. And then, you know, just everything turned negative. And then Seagate eventually got pulled down. But a good lesson because there's a lot of damage that was caused in the stock when it did pull back and eventually break down below the 50-day moving average. So it was looking good for a moment there when it started to rally back above the 800 level and the NASDAQ was up a half a percent.

19:31It started rallying with Western Digital and some other tech names, but Western Digital got turned away at that short-term moving average as well. So the numbers from Seagate were excellent. It's not in the exact business as a Micron and a Western Digital. Seagate is more just on the storage side of things. But again, the results for the June quarter, 120 % top-line growth and 48 % earnings growth. The numbers were very, very strong, and they were still talking good growth outlook as well. So it does look just below the 50-day moving average. This is probably just going to form another base here, and as the market corrects, it's probably just going to bide some time below the 50-day moving average.

20:25But I suspect, you know, as it bases and the market does eventually turn, this one eventually will, you know, start to turn higher and, you know, eventually start to retest those highs. But that base building process can take a little time, just like the market correction can take a little time to play out. So this one will probably have its day in the sun again, but you got to be patient and just do your best not to buy early when it's basing below the 50-day moving average because that can be a money-losing proposition most of the time.

20:59Ken Shreve:Yeah. And we've been talking about how software is one of these more resilient tech areas, and we did get a breakout today. Vermont Stock, we've been tracking closely in the sector. Snowflake up 4.6 % on the day. It did close off highs, but above a cup with handle bite points. Mississippi is breaking new ground for business at a historic pace. Amazon, XAI, Toyota, Milwaukee Tool, and GE Aerospace have all tapped into our deep talent pool, prime geographic location, and welcoming communities. This is bigger than mega sites. Mississippi offers a thriving business ecosystem with affordability, greater collaboration with energy partners, and record-breaking speed to market.

21:41Ken Shreve:Looking to expand? Break new ground at Mississippi.org. Yeah, this was Bestock. We talked about this one. Talked about a few software names this morning with Mark Minervini on IBD Live this morning. This was among a handful of software names that he talked about. And Snowflake was another stock that the breakout really started to strengthen when the market was turning higher after the Fed. But again, this one got pulled down as well. Still a name to keep an eye on here. Earnings aren't due till the end of August, but just a name to watch because, again, it's one of a handful of software stocks showing good relative strength.

22:25I mean, the relative strength line is still pointing up near highs. You're not seeing a whole lot of that in the software group at this point. You are seeing a lot of software stocks that are trying to kind of break out of these bottoming bases. And Snowflake is not one of those stocks. It's showing a lot of relative strength with a relative strength line near high. Great fundamentals here. So we'll see if it can hold above this buy point here or at least kind of maintain this uptrend above these moving averages. But fundamentals are still outstanding here and earnings are until several weeks, three or four weeks away.

23:07So just like the relative strength here and we're kind of watching this for the leaderboard model portfolio as well. So just going to keep an eye on it. But got pulled down with the market today, but still kind of holding in a buy zone here. Very risky buying stocks in a market that is trending lower like it is. But we just want to keep an eye on these tech names showing relative strength.

23:32Ken Shreve:No doubt. And another one we're keeping an eye on is ARQT. We've got earnings coming up in a week. For this biotech name, it's setting up. And we've seen a lot of relative strength in biotech stocks lately, Ken. Yes, this is another dermatology company. and their main drug is a drug that treats atopic dermatitis, atopic dermatitis, and then the other plaque psoriasis, plaque psoriasis and atopic dermatitis. So anyway, they just turned profitable, and this is a nice base setting up here, just below a cup with handle buy point. You can see that pivot just below 30 here. Now, earnings are coming up next week, So there's obviously some earnings risks.

24:22It's kind of hard to find companies not reporting earnings because we're kind of right in the thick of earnings season. So a lot of earnings reports after the close today as well. So next week is actually going to be even busier than this week in terms of top-rated biotech stocks and top-rated growth stocks in the IBD 50 and leaderboard and market surge. We have so many growth stocks reporting earnings next week. It's going to be a big week of earnings. So we'll see what Arcutis has to say, but one of several biotech stocks acting well. And again, you know, great fund sponsorship here. The top line growth, bottom line growth, look what they did in the first quarter.

25:03Their revenue was up 60 % year over year. Their earnings were up 55%. So like the growth story here and with biotechs acting so well, you know, I think this one has a chance of working. So we'll keep an eye on earnings next week.