The Dow Jones Industrial Average sold off in today’s stock market as the major indexes fell below key areas of support. Dow giant Microsoft (MSFT) fell nearly 5% despite reporting very strong earnings late Tuesday. But amid the broad market sell-off, online pet product retailer Chewy (CHWY) broke out into a key buy zone.
Stock Market Today
The S&P 500 fell 3.5%, while the Nasdaq composite led the market on the downside with a 3.7% decline. The Dow Jones sold off 3.4%. The Russell 2000 small-cap index traded 2.9% lower. Volume was sharply higher on both major exchanges vs. the close on Tuesday. This is a bearish sign that indicates heavy institutional selling.
Hospitalizations in the U.S. related to Covid-19 rose by 10% over the past week in 32 U.S. states, according to data compiled by Bloomberg. But they remain well below the heights reached in July. Daily deaths also remain stable below the 1,000 mark.
The total number of confirmed Covid-19 cases in the U.S. topped 9 million on Wednesday, according to the Worldometer data tracker. Meanwhile, total worldwide coronavirus cases reached over 44.6 million since the start of the outbreak.
Dow Jones Today
As for the Dow Jones, nearly all of the 30 components traded lower with Nike (NKE) and Visa (V) among hardest hit stocks. Apple (AAPL) stock also posted a notable decline of more than 4%. The Dow tech giant continues to fall below its 50-day line.
Apple earnings are due Thursday, Oct. 29, after the market close. Shares are currently shaping a cup with handle with a 125.49 buy point.
Elsewhere in the Dow, Microsoft fell nearly 5% after smashing analysts’ estimates for the September quarter. The company earned $1.82 a share on sales of $37.2 billion in its fiscal first quarter. Wall Street projected earnings of $1.54 a share on sales of $35.72 billion.
Microsoft stock is currently below a 225.31 buy point in a cup with handle. Despite today’s sell-off, Microsoft remains a top performer among Dow Jones stocks year-to-date, with a 35% gain through Wednesday’s close.
IBD 50 Stocks: Dynatrace, Activision
The Innovator IBD 50 ETF (FFTY) fell 3.1% on Wednesday, after it broke below key support at its 50-day line on Monday. Top decliners in the index included Dynatrace (DT) and XP (XP), which fell 11.5% and 5.8%, respectively.
Dynatrace, a cloud-computing software maker, sold off despite reporting better-than-expected fiscal Q2 earnings and sales. The company’s revenue guidance came in ahead of estimates. Shares continued to fall below the 50-day line and the low of the current base.
Elsewhere in the IBD 50, Activision (ATVI) is holding up inside a flat base with an 87.83 buy point. Shares are roughly 10% away from the buy point. Activision reports earnings Thursday after the market closes and its stock was featured as today’s pick for IBD 50 Stocks To Watch.
Breakout Stocks To Watch: Chewy.com
Chewy stock broke out from a cup with handle base with a 70.82 buy point on Wednesday. Shares rose 6.2% in afternoon trading on news that the company launched a telehealth service for pets called “Connect-with-a-Vet.” The service allows customers to get advice in real time from a licensed vet about their dogs or cats.
This growth stock has decent IBD ratings with a Composite Rating of 81 and a strong Relative Strength Rating of 96. The RS line also hit a new high alongside the breakout, a bullish sign. The current 5% buy zone tops out at 74.36.