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Dow Jones Fades; Bitcoin Gains After Sam Bankman-Fried Arrest; Elon Musk Loses Title


The Dow Jones Industrial Average saw early inflation-data gains fade as what looked like a promising day for the stock market turned into a disappointment.




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Tesla (TSLA) CEO Elon Musk lost a prestigious title. Bitcoin gained but cryptocurrency stocks like Coinbase (COIN) and Riot Blockchain (RIOT) were mixed after Sam Bankman-Fried was arrested and charged. Moderna (MRNA) rocketed on vaccine news.

Meanwhile, a number of noteworthy stocks attempted breakouts. Illinois Tool Works (ITW), Lattice Semiconductor (LSCC) and Calix (CALX) all tested buy points.

CPI Data Cools But Crunch Fed Meeting Awaits

Stocks were initially given a big boost after the release of consumer price index data for November.

Prices were up 7.1% year over year. This was lower than October’s reading of 7.7% and better than the 7.3% consensus forecast. Core prices, which exclude food and energy, rose 6%, also below October’s reading of 6.3% and better than the 6.1% consensus. Core CPI had the smallest monthly increase in over a year.

But enthusiasm cooled off as the morning wore on. Traders seemed to be taking stock of the fact a crunch Federal Reserve meeting started today. The Federal Open Market Committee (FOMC) will announce its latest interest rate move tomorrow, with Fed Chair Jerome Powell giving a news conference afterward.

Oanda senior market analyst Edward Moya said the CPI report supports the idea that the Fed could be done with hiking rates after the February meeting.

“The Fed might not have to take rates to 5% or higher and that is surprising news for stock traders,” he said in a note to clients. “Fed tightening is looking like it will just need a half-point increase tomorrow and a 25 (basis point) increase in February. “

Nasdaq, Small Caps Hold Up

The Nasdaq was holding up best out of the major indexes. It was up 1%. DocuSign (DOCU) fared well here with a nearly 7% gain.

The S&P 500 was also trying to firm up, rising 0.7% after nearly erasing all the day’s gains. Halliburton (HAL) was strong here, rising almost 7%.

The S&P 500 sectors were mostly positive, with energy and communication services faring best. Utilities and consumer staples lagged.

Small caps were holding in positive territory, with the Russell 2000 up 0.5%.

The Innovator IBD 50 ETF (FFTY), a bellwether for growth stocks, rose 0.8%.

Dow Jones Today: Index Fades As Chevron Shines

The Dow Jones Industrial Average managed to rally out of negative territory but was well off highs for the day. It rose 0.3% in afternoon trading.

Chevron (CVX) was faring best on the index. The oil major gained just over 2%.

The likes of Salesforce (CRM) and Merck (MRK) were other top performers. Amgen (AMGN) and UnitedHealth (UNH) lagged with dips of more than 1%.

Bitcoin Gains After Sam Bankman-Fried Arrest

Bitcoin was gaining a day after FTX founder Sam Bankman-Fried was arrested in the Bahamas.

The former crypto king is accused of eight offenses, including wire fraud and violation of campaign finance laws. He is expected to be extradited to the U.S., though he will reportedly contest automatic extradition.

Bankman-Fried, known as SBF, has previously denied knowingly committing fraud.

Bitcoin was slightly off highs for the day, but remained up nearly 4% vs. 24 hours ago, according to CoinDesk. It was trading just above the $18,000 mark.

Crypto plays were mixed. The Grayscale Bitcoin Trust (GBTC) popped more than 2% while Bitcoin mining play Riot Blockchain reversed more than 1% lower.

Cryptocurrency exchange stock Coinbase plunged nearly 7%. It is down about 84% so far this year.

Moderna Stock Rockets On Cancer News

While it is famous for being a Covid vaccine maker, Moderna exploded Tuesday amid promising news on a potential skin cancer vaccine.

The firm announced its experimental melanoma vaccine reduced the risk of skin cancer recurrence by 44% when combined with Merck (MRK) cancer treatment Keytruda, compared to treatment with Keytruda alone.

Moderna stock was holding near highs even as the broader stock market pulled back. It was up nearly 23%. MRNA stock is extended from a cup-with-handle buy point at 188.75 it topped today, according to MarketSmith.

Merck stock was making a more modest gain of nearly 1%.

Tesla Stock Tumbles, Elon Musk No Longer Richest Man

Tesla’s Musk lost his title as the world’s richest man as TSLA stock tumbled again Tuesday.

TSLA stock was down more than 4% and is trading about 20% below its 50-day moving average. It is now down about 60% so far this year.

This was enough to see Musk lose his title as the world’s richest man to Bernard Arnault, the Wall Street Journal reported. Arnault is the chair and CEO of LVMH Moët Hennessy Louis Vuitton.

Tesla is currently on track to close with a market cap of under $500 billion for the first time since Nov. 23, 2020, according to Dow Jones Market Data.

It is currently the seventh largest U.S. company by market cap, behind the likes of Apple (AAPL), Microsoft (MSFT) and Amazon (AMZN)

Outside Dow Jones: These 3 Stocks Test Entries

Illinois Tool Works is trading just below its entry after testing a cup-with-handle buy point of 230.86.

The industrial machinery stock is in the top 15% of stocks in terms of price performance over the past 12 months.

Lattice Semiconductor is trading in a buy zone after clearing a cup-with-handle entry of 73.63. The relative strength line hit fresh highs, a good sign.

Strong performance won Lattice stock a place on the Leaderboard Watchlist. The Hillsboro, Ore., designer of programmable gate arrays focuses on four key markets: data center, computing, automotive and industrial.

Computer networking play Calix is trading just below a 75.56 buy point it crossed earlier today.

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

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