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Dow Drops Amid Covid Variant Fears But Nasdaq Reverses Higher

Stocks ran mixed early Tuesday, as the Dow Jones Industrial Average dropped 230 points, while the Nasdaq swung between gains and losses.




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The Dow Jones industrials lost 0.7% and the S&P 500 fell 0.6%. The Nasdaq briefly edged 0.2% higher, the cut back to a 0.5% loss in the stock market today. Small caps tracked by the Russell 2000 lagged, down 0.8%. Volume was lower on both major exchanges vs. the same time Monday.

Among exchange traded funds, the Innovator IBD 50 (FFTY) dipped 0.3%, after finding support last week at its 200-day moving average. The iShares Russell 1000 Growth ETF (IWF) reversed early losses and rose 0.2%. The Nasdaq 100-tracking Invesco QQQ Trust (QQQ) gained 0.2%.

Treasury Secretary Janet Yellen and Federal Reserve chief Jerome Powell were scheduled to go before the Senate Committee on Banking, Housing, and Urban Affairs at 10 a.m. ET, this morning in a hearing titled, “CARES Act Oversight of Treasury and the Federal Reserve: Building a Resilient Economy.”

In prepared remarks released late Monday, Powell said, “the recent rise in COVID-19 cases and the emergence of the Omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation.”

Covid-19 Update

The U.S. economy has been trying to recover from the Covid-19 pandemic, which triggered nationwide lockdowns more than a year-and-a-half ago. A resurgence in cases fueled by the more contagious delta variant had been slowing as vaccinations rise.

U.S. Stock Market Today Overview

Index Symbol Price Gain/Loss % Change
Dow Jones (0DJIA) 34903.25 -232.69 -0.66
S&P 500 (0S&P5) 4639.22 -16.05 -0.34
Nasdaq (0NDQC ) 15800.30 +17.47 +0.11
Russell 2000 (IWM) 220.82 -1.89 -0.85
IBD 50 (FFTY) 48.38 -0.10 -0.21
Last Update: 10:16 AM ET 11/30/2021

But a new coronavirus variant with a large number of mutations, first reported in South Africa, among visitors there from Botswana, is raising concerns. It’s unclear if the B.1.1529 Covid variant, dubbed the omicron variant on Friday, is more deadly or infectious than prior strains, or whether vaccinations or prior Covid infection provide substantial protection.

However, a coronavirus adviser to the South African government, as well as the Pretoria doctor who first sounded the alarm about the omicron variant, said that cases generally seem to be “mild.”

Globally, Covid-19 cases are approaching 263 million, with over 5 million deaths, according to Worldometer. In the U.S., cases have topped 49 million with more than 801,000 deaths.

Covid-19 Vaccine Stocks Fall

Coronavirus vaccine makers fell Tuesday, after Moderna (MRNA) CEO Stephane Bancel said in a Financial Times interview he expects existing vaccines to be less effective against the new omicron variant.

Moderna stock dropped 7% in heavy trade to give back part of Monday’s 12% surge. It remains above the 50-day moving average, which it regained on Friday.

BioNTech (BNTX) shed 6% in heavy volume to erase Monday’s 4% gain. But it’s still holding most of Friday’s 14% jump. The German biotech and Pfizer (PFE) partner has a 99 Relative Strength Rating, which means it’s in the top 1% of all stocks.

Pfizer stock reversed to a 2.5% gain early Tuesday, after staging a 3% downside reversal on Monday. Shares remain in potential buy range from a 51.96 entry of a cup base, according to MarketSmith chart analysis. The buy zone tops out at 54.56. Pfizer’s 98 Composite Rating leads the 30-stock ethical drugs group.

Omicron fears hit the travel industry, sending travel and airline stocks sharply lower. Expedia (EXPE) fell 3% in fast turnover, while American Airlines (AAL) and United Airlines (UAL) gave up about 2% each.

Growth Stocks To Watch

Ambarella (AMBA), NetApp (NTAP) and Zscaler (ZS) edged slightly higher ahead of their quarterly earnings reports due Tuesday after the close.

Analysts expect chip designer Ambarella to earn 49 cents per share on sales of $90.3, representing year-over-year increases of 444% and 61%, respectively.

NetApp’s earnings are expected to grow 15% to $1.21 per share year over year on revenue of $1.55 billion. NTAP shares are tracing a flat base with a 94.79 buy point.

Cybersecurity leader Zscaler is expected to earn 12 cents per share on sales of $212 million. Shares closed Monday just 5% off their 52-week high.

Dow Jones Movers

Specialty chemicals maker Dow Inc. (DOW) and American Express (AXP) — down 2.7% and 1.8%, respectively — led the downside on the blue chip index. Both stocks are trading below their 50-day and 200-day lines and are about 20% off their 52-week highs.

Apple (AAPL), up 2.5% in triple normal trade, was the biggest Dow gainer. Shares are now extended from a 153.27 buy point of a cup with handle. The buy range topped out at 160.93.

Salesforce.com (CRM) shed 0.6% in heavy volume, ahead of its quarterly results due after the close. Analysts expect the enterprise software company’s earnings to fall 47% to 92 cents a share on 25% higher revenue of $6.8 billion.

CRM stock regained its 50-day line during Monday’s 4% advance. Shares remain extended from a 275.32 buy point of a cup with handle.

Follow Nancy Gondo on Twitter at @IBD_NGondo

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