The stock market retreated mid-morning Wednesday with long-time FANG stock leaders Amazon (AMZN) and Netflix (NFLX) leading the way down. Top retail stock Lululemon Athletica (LULU) advanced to new highs after reporting strong quarterly earnings results.
The Nasdaq fell 1.4%, undercutting Tuesday’s lows. The Dow Jones industrial average slid 0.5%.
The S&P 500 index lost 0.7%, right above its 200-day moving average. The S&P 500 has tested its 200-day a few times, notably finding support there on Feb. 9. But it hasn’t closed below that key level since June 2016, just after the Brexit vote.
Among Dow Jones components, Apple (AAPL) declined 1.5% after Goldman Sachs slashed its iPhone sales estimates amid weaker-than-expected demand. Shares are finding resistance at their 50-day moving average line and are about 9% off their all-time high.
Among companies reporting earnings, Leaderboard member Lululemon topped Q4 earnings and sales estimates late Tuesday. The company now has two quarters of accelerating earnings growth — a bullish fundamental metric. Shares jumped nearly 10% to move back above their 50-day line and are hitting a new high in heavy volume.
Two of the four FANG stocks were hit hard. Amazon fell 6%, tumbling through the 50-day line for the first time since an Oct. 27 breakout above a 1,083.41 cup-shaped base entry.
Netflix found itself back at its 50-day line for the first time since a Jan. 3 breakout above a 204.48 flat-base entry. Shares dropped nearly 5%, just above that crucial 50-day.
Inside The IBD 50 Stocks
Among leading growth stocks, only a handful of names were in positive territory amid the market’s sell-off. Five Below (FIVE) rose more than 1% as it tries to again clear a 71.69 cup-with-handle entry. The stock has had trouble clearing that entry given the stock market’s weakness.
On the downside, new IPO PagSeguro Digital (PAGS) declined 2.7% after rebounding from heavier losses. Shares remain well-extended from an IPO base’s 30.02 buy point. The stock hit a new high Tuesday and is acting well given the market environment.
Meanwhile, the Commerce Department reported fourth-quarter earnings rose at a revised 2.9% annual rate, higher than the expected 2.7% rate.
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