Stock Market Slides On New Bank Fears After JPMorgan Bank Crisis Comments

Major stock market indexes slipped further at the noon hour Tuesday, trading near the lows of the day. The labor market finally showed signs of slowing after months of Fed tightening.

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The Dow Jones trimmed 0.8%. The Nasdaq shed 0.5% while the S&P 500 edged down 0.7%. The iShares Russell 2000 ETF (IWM) led the downside, pulling back 2%.

NYSE volume fell while Nasdaq volume rose compared with the same time on Monday.

The Nasdaq 100-tracking Invesco QQQ Trust ETF (QQQ) fell 0.3%. The Innovator IBD 50 ETF (FFTY) shed 1.3%.

Crude oil pulled back 0.3% to $80.13 per barrel. Bitcoin shed 0.3% to $28,175.

The 10-year U.S. Treasury yield ceded 9 basis points after weak jobs data, falling to 3.34%.

Gold futures edged up 1.9% to a 2023 high at $2,038 per ounce. The SPDR Gold Trust ETF (GLD) climbed 1.8% along with the yellow metal.

The CME FedWatch tool shows around 40% odds for a quarter-point rate hike at the May 3 meeting.

European stocks were mixed, with the German DAX inching up 0.1% and the Paris CAC relatively unchanged. The London FTSE pulled back 0.5% in afternoon trading.

February factory orders fell 0.7% vs. the -0.4% consensus. This data looks at the dollar level of new orders for both durable and nondurable goods.

The February Job Openings and Labor Turnover Survey (JOLTS) came in at 9.931 million vs. 10.4 million projections, lower than January’s 10.824 million openings. The 21-month low finally signals long-awaited slowing in the labor market.

Bank Stocks Retreat As VIX Rises

Regional bank stocks felt the pain in Tuesday’s stock market as Dow Jones component JPMorgan Chase (JPM) CEO Jamie Dimon addressed the recent banking crisis in his annual letter to shareholders.

Mr. Dimon assured readers that the situation was nothing like the 2008 financial crisis, but insisted the crisis “is not yet over” and would have “repercussions for years to come.”

Other key harsh comments included “this wasn’t the finest hour for many players,” and “most of the risks were hiding in plain sight.”

The S&P Volatility Index VIX surged 7.5% to a weekly high, indicating rising fear levels.

KeyCorp (KEY) tanked 6%, U.S. Bancorp (USB) gave up 2.6%, PNC Financial Services (PNC) lost 2.6%, and Fulton Financial (FULT) sank 2.8%.

JPM stock held up slightly better than regional banks, but still fell 1.9%.

Stock Market Breakouts Abound Despite Headwinds

AeroVironment (AVAV) gapped up over 13% after Raymond James upgraded the robotics and defense stock to a strong buy from outperform and raised its price target to 130 from 105.

Etsy (ETSY) popped 2.4% in Tuesday’s stock market after Piper Sandler upgraded the online marketplace stock to overweight from neutral and raised its price target to 140 from 135.

Chipotle (CMG) gained 1% and broke out of a cup base, hitting the 1,724.81 buy point.

Cloud-computing stock PagerDuty (PD) reversed course, dropping 0.7%. PD pulled back from the 5% buy zone of a cup-with-handle base, reaching to 39.76. PD was Monday’s IBD 50 Stocks To Watch pick.

IBD 50 stock Hess (HES) pulled back 2.7% after Monday’s 8.4% rally, triggered by OPEC’s surprise output cut announcement. The energy producer ranks second in the Integrated Oil & Gas group, which has fallen to a dismal 139th out of the 197 IBD industry groups.

Marathon Oil (MRO) gave back 3.2% after Monday’s nearly 10% lift. MRO is in a double-bottom base with a 29.95 buy point.

Recession Fears Hit Rally; AI Stock Dives As Losers Trounce Winners

Stock Market: Footwear Stock Pops

Burlington Stores (BURL) rose 0.5% after Loop Capital upgraded the off-price retailer to buy from hold and raised its price target to 225 from 220.

Swiss footwear retailer On (ONON) added 3.4%, triggering a power pivot flag according to MarketSmith pattern recognition. The flag signals a move of at least 20% from the buy point in 15 days or three weeks. These rallies point to exceptional market performance.

The IBD 50 stock catapulted after On’s recent Q4 earnings report, rallying over 26%. Analysts have high annualized EPS growth expectations of 30% in 2023 and 42% in 2024.

Dow component Boeing (BA) fell 2.5% after NorthCoast Research downgraded the aerospace and defense stock to sell from neutral.

Follow Kimberley Koenig for more stock news on Twitter @IBD_KKoenig.

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