Dow Jones Falls As Disney Gets Huge Bid; Fed Meet Looms

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The major indexes finished near session lows on witching Friday ahead of the Federal Reserve meeting next week. The Dow Jones Industrial Average failed to reclaim its 50-day moving average and fell nearly 300 points, finishing 0.8% lower at 4 p.m. ET.

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The S&P 500 and Nasdaq composite suffered a harsher fate and fell 1.2% and 1.6%, respectively on Friday. Both indexes finished near session lows and below their 50-day moving average.

The Federal Reserve will hold a two-day meeting next week to make a rate decision. According to CME FedWatchTool, the odds of rates remaining unchanged are an overwhelming 97%. The current target rate is 5.25%-5.5%.

Tech stocks dragged the Nasdaq lower after Taiwan Semiconductor (TSM) asked for a delay in chip equipment deliveries. Super Micro Computer (SMCI), Axcelis Technologies (ACLS), KLA (KLAC) and Applied Materials (AMAT) were big losers in the MarketSmith Growth 250.

Volume was higher on the NYSE and Nasdaq, compared with the same time on Thursday. Triple-witching is when stock options, stock index futures and stock index contracts expire on the same day. Increased market volume and volatility is often seen on such days.

The small-cap Russell 2000 also lagged, falling 1%, while the Innovator IBD 50 ETF (FFTY) saw a 1.3% decline at closing bell.

Crude oil rose 0.5% to trade at $90.62 a barrel.

The yield on the benchmark 10-year Treasury note surged 3 basis points to 4.32% ahead of the Fed meeting.

Dow Jones Stocks

Disney (DIS) pared some gains in the afternoon after news of a $10 billion offer for its ABC network along with the FX and National Geographic channels. The company has been in talks to sell some of its TV assets since July as streaming services gain. Disney shares face resistance at the 50-day line.

Health care stock Merck (MRK) gave up gains after a promising start, while UnitedHealth (UNH) held some gains. MRK failed to retake the 50-day line Friday, while UNH remained below it.

Stocks Moving Today

Arm (ARM) rose in morning trade after its successful first day of trading Thursday. But shares reversed sharply in the afternoon Friday and were down more than 4% at the closing bell. Shares had closed at 63.59 Thursday, 25% higher than the IPO listing price of 51.

Meanwhile, food delivery company Instacart raised the price target for its proposed IPO to $28 to $30 a share, up from $26 to $28.

Another IPO, Softbank-backed Neumora Therapeutics (NMRA) had a dull day in the first day of trading, debuting at 16.50 a share and falling slightly lower at the close, below the offer price of $17.

Adobe (ADBE) plunged to its 50-day line after results. The software company expects revenue of $5 billion with earnings per share of $4.15 at the high end for the fourth quarter.

Outside the Dow Jones, Lennar (LEN) fell after it reported third-quarter earnings late Thursday. Margins came under pressure in a rising interest rate environment and fell to 24.4% after 29.2% in the previous year same quarter. The Warren Buffett-backed homebuilder pared some losses after undercutting its base in heavy volume but remained over 2% lower on Friday.

Lennar is one of three recent homebuilder picks by Warren Buffett’s Berkshire Hathaway (BRKB), the other two being D.R. Horton (DHI) and NVR (NVR).

Only NVR has an IBD EPS Rating above 80. And all three have relative strength lines in decline with stock prices under their 10-week moving averages, which are bearish signs.

Used-car auctioneer Copart (CPRT) also pared some losses but remained below the 50-day line after fourth-quarter results.

Three leading automakers faced fire as the deadline for striking a deal with the UAW passed. However, Ford (F) pared some early losses and was flat at market close, while General Motors (GM) and Stellantis (STLA) rose as well in the stock market today. STLA rebounded from its 50-day line.

The New York Fed’s monthly survey of New York manufacturers beat consensus expectations of -10 with a 1.9 reading for September, according to Econoday. Consumer sentiment for September, measured by the University of Michigan’s Consumer Survey Center, fell however, to 67.7 from August’s 69.5.

Please follow VRamakrishnan on X/Twitter for more news on the stock market today.

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