Dow Jones Falls Amid Inflation Data Surprise; Elon Musk Offers This Defense Amid Big Tesla Recall

The Dow Jones Industrial Average fell on surprisingly strong economic data. Tesla (TSLA) CEO Elon Musk lashed out amid a big product recall. Virgin Galactic (SPCE) gained on a mother ship flight, while Microsoft (MSFT) lagged.

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There was some bullish action despite the negative overall picture. Super Micro Computer (SMCI) and Carlyle Secured Lending (CGBD) both attempted breakouts while new Leader Iridium Communications (IRDM) bounced off is 50-day moving average.

Stocks were trying to fight back after economic data rattled investors. January’s Producer Price Index from the Labor Department rose 0.7% on the month, hotter than the 0.4% estimate. That amounts to a year-over-year increase of 6%, down from 6.2% in December but higher than forecast. In addition, weekly first-time unemployment claims fell to 194,000 vs. 195,000 in the previous week. They were expected to rise to 200,000.

Oanda senior market analyst said the data strengthens the case made by Cleveland Fed President Loretta Mester for more robust interest rate hikes.

“Her reiteration that they need to bring rates above 5% and hold for some time is becoming the consensus view and should suggest the dot plots in March will be much higher,” he said in a note to clients. “She is a nonvoter but her comments suggest the Fed could do a lot more given how strong the economy remains.”

Nasdaq Falls, Small Caps Impress

The Nasdaq struggled most out of the major indexes, falling 0.5%. Datadog (DDOG) was having a “ruff” day here as it fell nearly 6% on guidance.

The S&P 500 was off lows for the session but still down 0.4%. Etsy (ETSY) was among the poor performers here as it gave up more than 6%.

The S&P 500 sectors were all lower. Utilities and consumer discretionary fared worst while energy and materials fell the least.

Small caps were impressive, with the Russell 2000 almost flat. Growth stocks fell, with the Innovator IBD 50 ETF (FFTY) down nearly 1%.

Dow Jones Today: Index Off Lows As Microsoft Stock Lags

The Dow Jones Industrial Average was also off its lows, but remained down just over 100 points, or 0.4%.

Microsoft stock was lagging, falling 1.5%. It remains clear of its major moving averages, MarketSmith analysis shows.

MSFT was giving back some of its gains after popping on recent excitement surround its integration of the technology behind the viral chatbot ChatGPT into its Bing search engine and Edge web browser.

Cisco Systems (CSCO), meanwhile, led the upside as it popped over 6% and broke out of a flat base. It was boosted after beating views on both the top and bottom lines. Cisco also raised its dividend.

Elon Musk Hits Out As Tesla Stock Falls On Recall

Tesla stock reversed lower after it emerged it had been hit by another recall snag.

The firm voluntarily recalling 362,758 vehicles after warning its Full Self-Driving Beta driver-assistance software may cause crashes.

The recall notice, which was posted on the National Highway Traffic Safety Administration website Thursday, said an over-the-air software update will be delivered to cars to address the issues.

Musk took to his social media platform Twitter to complain about the terminology used.

“The word ‘recall’ for an over-the-air software update is anachronistic and just flat wrong!” The eccentric executive said.

Tesla stock was down more than 1%. While it remains well off all-time highs, TSLA stock is up more than 70% so far in 2023.

Virgin Galactic Stock Up After Blast Off

While not quite having lift off, Virgin Galactic stock was having a good day as it jumped more than 3%.

The stock was lifted after it made a test flight Wednesday of its mother ship, Eve. The flight over Mojave, Calif., was the first for the travel company’s flagship since it underwent mechanical upgrades.

SPCE stock is now back above its major moving averages. Virgin Galactic stock is also up nearly 80% so far this year.

Nevertheless, it is one to be avoided for CAN SLIM investors as the stock is currently trading for less than $10.

Outside Dow Jones: New Leader Eyes Entry

Super Micro Computer is in a buy zone after breaking out from a double bottom. The ideal buy point here is 92.90 and topped another entry today at 95.32.

The stock boasts a perfect EPS Rating of 99. It has fought back well after getting rocked by a short selling firm’s bearish call on Jan. 10.

Carlyle Secured Lending surpassed a flat-base entry of 15.50. But volume was low. This is a first-stage pattern. Overall solid performance is reflected in the stock’s IBD Composite Rating of 83 out of 99.

Iridium Communications won a spot on Leaderboard as it rebounds off the 10-week line for the first time since a strong move out of a flat base. A new flat base could also form by Friday; the buy point would then be 62.58.

It comes after Iridium posted Q4 results that beat sharply on the top line; total revenue of $194 million beat the consensus view of $174.3 million and grew 24% vs. a year earlier.

Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.

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