Dow Jones Wavers;  Fed Powell's preferred rotating sign flashes;  Buffett Unloads Stocks;  Fake tweet hits healthcare

The Dow Jones Industrial Average rested after Thursday’s 3.7% gain. After opening 0.2% lower, the blue-chip index fell 0.7% at midday. The S&P 500 pared previous gains of 0.5% to trade 0.1% higher. The Nasdaq also gave up half of its early gains and was up nearly 0.7% at noon ET.




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The Russell 2000 gained 0.5%. The innovator IBD Fifty (FFTY) also rose 0.5%

Volume on the NYSE and Nasdaq was lighter compared to the same time on Thursday.

Crude oil rose 2% on news of China easing Covid restrictions, rising to $88.65 a barrel.

The University of Michigan’s consumer sentiment index came in at 54.7, down from 59.9 last month, indicating deepening weakness in the economy.

The Fed’s preferred yield curve is inverting

The spread between the current yield on three-month Treasury bills and their expected yield 18 months from now turned negative by 14 basis points. The Federal Reserve is watching this indicator closely, so the pivot to raising rates could come sooner than expected. The spread was positive 2 basis points at the Fed’s last meeting.

Powell said this type of inversion indicates that “the Fed is going to cut, which means the economy is weak.” The minus-14 basis point reversal added to Thursday’s lower inflation data and boosted optimism for the Dow Jones and other indexes.

The yield curve between 3-month Treasuries and 10-year Treasuries has been inverted for some time.

Bond markets are closed Friday for Veterans Day.

The US dollar continued to weaken after its steepest plunge since 2009 on Thursday, down more than 1%. Investors are likely to shift to riskier assets.

Bitcoin rallied slightly after the FTX failure and is trying to hold the $17,500 level.

News of the easing of Covid restrictions in China is adding to the rosier outlook for the market. The Asian nation has shortened quarantine times and reduced airline penalties related to Covid. The yuan rose to a one-month high of 7.10 to the dollar.

Stocks move outside the Dow Jones

Warren Buffett Berkshire Hathaway (BRKB) unloaded more than 90 million shares on US Bancorp (USB). The fund now owns 52.5 million shares, or a 3.5% stake, down from 119.8 million and 8%. Shares of BRKB were higher by more than 1% and traded above their 200-day line.

Long-term bull and Wedbush analyst Dan Ives downgraded Tesla (TSLA) shares, lowering the price target to $250. The analyst maintained his buy rating on the stock.

CEO Musk sold nearly $4 billion in shares of the EV maker to save Twitter, adding to the $15 billion sold earlier this year. The new owner is not ruling out bankruptcy and is trying to offset declining ad revenue by increasing subscriptions, according to reports. Tesla shares fell more than 1% today, but pared losses at midday.

JP Morgan (JPM) analyst Harlan Suhr resumed coverage of Intel (INTC) with an Underweight rating and a $32 price target. The rating is a sharp reversal from the previous bullish and $64 target.

The analyst sees declining market share and slowing demand for PCs dampening the chip maker’s outlook. Intel shares sold off nearly 1%, but reversed to post a 0.5% gain.

Also in Dow Jones, Walgreens (WBA) received an upgrade to Buy from Deutsche Bank analyst George Hill and a price target of $50 from $41. Shares rose nearly 5%.

Healthcare stocks plunge after fake tweet promising free insulin for diabetes patients leads insulin maker To Eli Lilly (LLY) 4% dive.

Dow Jones Stocks, Johnson and Johnson (JNJ) and Amgen (AMGN) fell by 3%, along with Harmony (HRM.) Humana (HUM), Running (CCRN) and Vertex (VRTX) fell by 6%.

Stocks to watch and buy

Dow Jones Leader United Healthcare (UNH) fell over 5%. The stock is in a cup and handle basis with a buy point of 553.23. Caterpillar (CAT) is basically a cup with a purchase point of 238.00.

IBD Stocks in the Ranking, Albemarle (ALB) is in a buy zone above a buy point of 308.34. BJ Wholesale (BJ) falls to the base of the bowl with a buy point of 79.79. Watch for a handle forming, which may represent a lower entry.

Follow VRamakrishnan @IBD_VRamakrishnan on Twitter for more stock market news.

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