Dow Jones Dives 450 Points As Stock Sell-Off Accelerates; Banks Fall But Chip Stocks Rally

The stock market sell-off accelerated Friday afternoon as the Dow Jones Industrial Average shed 450 points to dip below its 50-day moving average.

The Dow Jones industrials lost 1.2%, the S&P 500 fell 0.9% and the Nasdaq gave up 0.8% in the stock market today. Small caps tracked by the Russell 2000 slumped 1.5%. Volume was higher on both major exchanges vs. the same time Thursday.

Among exchange traded funds, Innovator IBD 50 (FFTY) fell 1% and it remains well below its 200-day moving average. The iShares Russell 1000 Growth ETF (IWF) dropped 0.9% while Invesco QQQ Trust (QQQ) slid 0.4%.

The U.S. economy has been struggling to recover from the Covid-19 pandemic, which triggered nationwide lockdowns nearly two years ago. A resurgence in cases fueled by the more contagious delta variant had been slowing as vaccinations rise.

But the new omicron coronavirus variant is now spreading rapidly in the U.S. Currently available vaccinations and boosters may offer some protection against severe illness from the highly transmissible virus.

Globally, Covid-19 cases are approaching 322 million, with more than 5.5 million deaths, according to Worldometer. In the U.S., cases have topped 65 million with over 869,000 deaths.

Growth Stocks To Watch

Onto Innovation (ONTO) surged 6% in fast trade to lead the IBD 50 upside. The stock is rebounding off its 10-week moving average for the second time since a November breakout. That sets up a chance to buy or add shares, though all purchases are riskier with the market uptrend under pressure.

Chip stocks showed strength as Lam Research (LRCX), Ultra Clean (UCTT), Applied Materials (AMAT) and KLA (KLAC) rallied more than 3% each.

Ultra Clean, one of the few IBD 50 stocks forming bases, is working on a cup base with a 60.94 entry.

China-based electric-vehicle maker Xpeng Motors (XPEV) gained nearly 2% to recoup its Thursday loss. The stock continues to build a consolidation with a 56.55 entry. Aggressive investors could use 51.60 as an earlier entry.

But Kinsale Capital Group (KNSL) and Simon Property Group (SPG) tumbled more than 5% each. Both stocks fell below their 50-day moving average lines.

Dow Jones Movers

Financials were among the biggest blue chip losers Friday, as JPMorgan Chase (JPM), Goldman Sachs (GS) and American Express (AXP) each fell more than 3%.

JPMorgan gapped down and dived 6% in heavy trade to tumble below its 50-day and 200-day lines. The stock is working on a flat base with a 173.06 buy point. Before the open, the bank reported mixed Q4 results as earnings beat but revenue missed Wall Street targets.

Other banks reporting early Friday included Citigroup (C) and Wells Fargo (WFC). Both reported better-than-expected Q4 earnings and revenue. Citigroup, down more than 2%, is building a double-bottom base with a 74.74 buy point.

Wells Fargo rallied 3% in heavy volume to its highest level in over three years. The stock is extended after an early-January breakout above a flat-base buy point of 52.66.

Back on the Dow, Goldman Sachs gapped down more than 3% to undercut its 50-day and 200-day lines. The stock has been shaping a cup-with-handle base with a 412.76 buy point. It's now 8% below the entry.

AmEx tumbled more than 4% and fell below its 50-day line. It continues to work on a consolidation with a 189.13 entry.

Other big Dow losers included Disney (DIS) and Home Depot (HD), off more than 3% each.

Microsoft (MSFT) and Chevron (CVX) gained over 1% apiece. Microsoft continues to etch a flat base with a 349.77 buy point, though it is currently near the bottom of the base. Chevron is on track for a new closing high as oil prices remain high.

Follow Nancy Gondo on Twitter at @IBD_NGondo

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