Dow Jones plunges as inflation fears mount; This stock will pop if Warren Buffett raises the stakes; Nike dives

by Brent G. Oneal

The Dow Jones Industrial Average fell sharply during midday trading on Tuesday amid increased concerns about the health of the US economy. A share of Warren Buffett surfaced after news that Berkshire Hathaway (BRKB) had increased its stake again. As technology stocks struggled, Nike (NKE) collapsed on gains with Apple (AAPL), another blue-chip loser.

A few stocks were still trying to break out despite the challenging move. Humana (HUM) and Molson Coors (TAP) fell back after passing buy points.


Dow Jones plunges as inflation fears mount;  This stock will pop if Warren Buffett raises the stakes;  Nike dives

Volume was mixed and rose on the Nasdaq but fell on the New York Stock Exchange compared to Monday.

The benchmark 10-year government bond yield was roughly flat at 3.2%. West Texas Intermediate crude was up about 2% to nearly $112 a barrel.

Fears of inflation rise as consumer confidence falls

Conference Board consumer confidence fell from 103.2 in May to 98.7 in June. This was a sharper drop than analysts had expected and the lowest since February last year.

In addition, the inflation expectations index rose from 7.5% to 8%. This was the highest level since its inception in 1987.

Jefferies economists Thomas Simons and Aneta Markowska said in a note to customers that inflation expectations are “going in the wrong direction for the Fed.”

Nasdaq slumps as tech stocks struggle

The Nasdaq underperformed the major indices. It collapsed by 2.5%. Datadog (DDOG) was among the worst performers, dropping nearly 8%.

The S&P 500 also lagged, falling nearly 2%. Etsy (ETSY) struggled again here, dropping almost 8%.

Sectors of the S&P 500 were mostly negative. Only energy made a profit, with the biggest backlogs of technology, consumer discretionary, and communication services.

The bears also mauled small caps, with the Russell 2000 falling nearly 2%.

Growth stocks took even worse, with the Innovator IBD 50 ETF (FFTY), a clockmaker for growth stocks, falling 2.5%.

Dow Jones Today: Nike Earnings Blow, Apple Stock Falls

The Dow Jones Industrial Average also struggled. It gave up more than 400 points or more than 1%.

Nike was the worst-performing stock in the index, falling on a weak outlook. It fell more than 6%, losing ground on the 50-day moving average, MarketSmith analysis shows.

NKE took a hard hit after the company said it expects revenues to grow in fiscal 2023 on a currency-neutral basis with low double digits. Real dollar sales in the current first quarter will increase only flat to slightly, slightly below analyst targets.

Other stocks struggling on the Dow Jones today included Apple and Microsoft (MSFT). AAPL lost 2.5%, while MSFT fell close to 3%.

Both are trading below their 50-day moving average.

Warren Buffett Shares Rise as BRKB Buys More Shares

Warren Buffett stock Occidental Petroleum (OXY) managed to fight its way higher after Berkshire Hathaway increased its stake in the oil company again.

With energy being the only sector that made headway, Occidental stock gained nearly 3%.

OXY stocks were now up nearly 95% so far in 2022. It is now trying to regain its key 50-day moving average after falling from highs, MarketSmith analysis shows.

According to an SEC filing, Berkshire Hathaway, Buffett’s firm, took up an additional $44 million in shares. It now owns nearly 153.5 million shares or about 16% of the company.

Callon Petroleum (CPE) rose more than 2% among other oil stocks, while Diamondback Energy (FANG) gained more than 1%. Apache parent APA (APA) also increased by more than 1%.

The Vanguard Energy Index Fund ETF (VDE) was up more than 1% and is currently up about 30% since the start of the year.

Outside of Dow Jones: These Stocks Test Buying Points

A few stocks tried to break out despite the challenging move. They are worth checking out to see if they can hold up.

Managed healthcare stocks Humana is one to watch after it briefly passed a consolidation pattern buy of 475.54.

The relative strength line has just hit a new high and remains on a strong long-term uptrend.

HUM stocks boast strong gains and are in the top 8% of the stock in market performance over the past 12 months.

Other healthcare stocks, such as leaderboard stocks UnitedHealth Group (UNH) and Centene (CNC), have also been doing well recently.

Molson Coors has also fallen below the buy zone after going past a cup with an entry of 57.55.

The RS line is holding new highs on the daily and weekly charts.

Overall performance is top-notch, reflected in the near-perfect IBD Composite Rating of 98.

Follow Michael Larkin on Twitter at @IBD_MLarkin for more growth stock analysis.

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