Dow Jones Dives After Fed Decision; GameStop Stock Surges; Apple Earnings Due| Investor’s Business Daily

Stocks sold off hard after the Federal Reserve monetary policy decision Wednesday, sending the Dow Jones Industrial Average down over 600 points.

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The Nasdaq and S&P 500 sank around 2.5% to 2.6% each, while the Dow Jones industrials shed more than 2% in the stock market today. Small caps tracked by the Russell 2000 tumbled 1.9%. Early data showed sharply higher volume on both major exchanges vs. Tuesday.

At the 2:30 p.m. ET press conference, Fed chief Jerome Powell gave no indication of a change in policy on the horizon. He noted the economy’s resilience and brighter outlook as Covid-19 vaccines pick up. But he also said the recovery has a long way to go.

When asked about when the central bank might start to taper asset purchases, Powell said it’s “premature” to focus on an exit. “We want to see substantial further progress before we modify our asset purchases,” he said, adding the Fed needs to see “actual progress,” not just improvement in the economic outlook.

Tech stocks boosted the Nasdaq to a 43.6% gain in 2020 for its fifth best year ever. The S&P 500 rose 16.3% and the Dow added 7.2%. Read The Big Picture for detailed daily market analysis.

U.S. Stock Market Today Overview
Index	Symbol	Price	Gain/Loss	% Change
Dow Jones	(0DJIA)	30302.97	-634.07	-2.05
S&P 500	(0S&P5)	3750.95	-98.67	-2.56
Nasdaq	(0NDQC )	13270.60	-355.47	-2.61
Russell 2000	(IWM)	209.53	-3.77	-1.77
IBD 50	(FFTY)	43.63	-1.84	-4.05
Last Update: 4:04 PM ET 1/27/2021

On Nov. 4, after Election Day, IBD’s market outlook returned to “confirmed uptrend” as the major indexes staged big rallies. That gave the green light to buy leading stocks that are breaking out of solid bases.

Covid-19 Update

Meantime, Covid-19 cases continue to rise globally. Worldwide cumulative coronavirus cases have topped 101 million, with nearly 2.2 million deaths, according to Worldometer. In the U.S., confirmed cases since the beginning of the pandemic are approaching 26.1 million, with a death toll close to 437,000.

In Covid-19 vaccine news, Moderna (MRNA) surged 7% to extend its advance for a third straight session. The Massachusetts-based biotech confirmed it’s in talks with the U.S. government to supply another 100 million doses of its Covid-19 vaccine for Q3 delivery. That would bring the government’s total order to 300 million.

Moderna stock is about 9% away from a 178.60 buy point of a cup base, according to MarketSmith chart analysis. Shares rose 3% and 12% the previous two days.

Johnson & Johnson (JNJ), expected to soon announce Phase 3 trial results for its single-dose Covid-19 vaccine, slipped 1.3%. On Tuesday, the Dow stock rose nearly 3% after a Q4 earnings and sales beat. Shares remain extended from a 155.57 buy point of a flat base.

Dow Jones Winners And Losers

Among other blue chips, 3M (MMM) and Walgreens Boots Alliance (WBA) rallied 6% and 4%, respectively.

3M blasted past a 177.56 buy point of a double-bottom base in heavy volume. On Tuesday, the diversified industrial giant reported Q4 earnings and sales that beat views, thanks to demand for its N95 face masks. Shares are near the top of the potential buy zone, which goes up to 186.44.

Walgreens is extended from a 44.97 buy point of a shallow consolidation. Late Tuesday, the drugstore chain said Rosalind Brewer will become CEO effective March 15. The Starbucks (SBUX) executive and former CEO and president of Sam’s Club will succeed Stefano Pessina.

On the downside, Boeing (BA), Disney (DIS) and Merck (MRK) were among eight stocks down more than 3% each.

IBD Leaderboard stock Apple (AAPL) gave up 0.8% ahead of its earnings due after the close. Analysts expect the iPhone maker to earn $1.41 a share on revenue of $103.1 billion. Apple stock remains in buy range from a 138.89 buy point.

Chip Stocks Tumble

Chip, solar and automobile-related stocks led the downside among IBD’s 197 industry groups. But drugstore, oil and gas, and computer-related stocks advanced.

In the chip sector, Advanced Micro Devices (AMD) gapped down and sank 6% despite reporting better-than-expected earnings and sales results late Tuesday. AMD earned 52 cents per share, up 63% vs. a year earlier, as sales grew 53% to $3.24 billion. They came in above forecasts for 47 cents on $3.02 billion, respectively.

The stock broke support at its 50-day line.

AMD was one of the biggest losers on the IBD 50, along with Monolithic Power Systems (MPWR), Chegg (CHGG), Crocs (CROX) and Rent-A-Center (RCII).

The Innovator IBD 50 ETF (FFTY) slumped 4% as growth stocks got slammed. The iShares PHLX Semiconductor ETF (SOXX) dived 5%.

In other news, GameStop (GME), a short-squeeze play, skyrocketed as much as 156% Wednesday, while movie theater giant AMC Entertainment (AMC) briefly soared 310%. Shares of GameStop are up more than 426% this week. Trade was briefly halted on Wednesday after the stock triggered a circuit breaker.

Follow Nancy Gondo on Twitter at @IBD_NGondo

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