Dow Jones Gains As Yields Spike; Berkshire Slumps As Warren Buffett Snaps Up These Assets

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The Dow Jones Industrial Average managed to stretch its winning streak to six-straight sessions Monday despite spiking Treasury yields. Meanwhile, Berkshire Hathaway (BRKB) fell after the holding company’s quarterly report revealed Warren Buffett has pulled back on share buybacks. And Apple (AAPL) and Nvidia (NVDA) led the charge amid a rally by nearly all Magnificent Seven stocks, though Tesla (TSLA) lagged.


Elsewhere, a number of stocks attempted breakouts, though gains were fading. Leaderboard stock DraftKings (DKNG), Dell Technologies (DELL) and Consolidated Water (CWCO) all flashed bullish signals.

Fed’s Cook Issues Warning As Yields Spike

Stocks rallied hard last week, turning in their best gains of the year so far amid plunging Treasury yields. But gains were harder to come by Monday, as those yields suddenly surged higher.

The 10-year Treasury note jumped 9 basis points to 4.65% while the 30-year vaulted 6 basis points to 4.82%. The 5-year yield popped 11 basis points to 4.6% while the 2-year surged 11 basis points to 4.94%.

Federal Reserve Gov. Lisa Cook said Monday she hopes current interest rates “will be restrictive enough such that we can return to our 2% (inflation) target over time” but also said that central bankers will “will continue to be vigilant.”

Cook also warned that nonbank financial institutions, or NBFIs, could exacerbate market stress as financial conditions tighten.

“Vulnerabilities at certain NBFIs could play a key role in amplifying stress associated with tightening financial conditions and slowing economic activity,” she during an event at Duke University.

Nasdaq Gains As Bears Feast On Small Caps

The tech-heavy Nasdaq labored its way out of negative territory to post a 0.3% gain. It now has risen for seven sessions in a row, its best run since January. Constellation Energy (CEG) fared best as it popped 6.5% after the company raised its earnings outlook.

The S&P 500 managed to squeeze out a 0.2% lift, and now is up for six straight sessions. Covid vaccine stock Moderna (MRNA) was among the worst laggards as it fell 7%.

The S&P 500 sectors ended the day mixed. Health, technology and consumer staples performed best on the stock market today. Real estate and energy suffered the worst losses.

Small caps were spanked by the bears though, with the Russell 2000 plunging 1.3%. Growth stocks also fell, but closed off lows, with the Innovator IBD 50 ETF (FFTY) dipping 0.1%.

Dow Jones Today: Disney Stock Lags Amid CFO Pick

Dow Jones industrials managed to squeeze out a 35-point gain as the index closed the session up 0.1%.

Outside of Apple stock, Amgen (AMGN) was the top performer on the Dow Monday, rising 1.1%. Merck (MRK) followed closely behind with a 0.9% lift.

Walt Disney (DIS) lagged, falling 1.2%. It lost ground despite the news it is appointing PepsiCo’s (PEP) longtime Chief Financial Officer Hugh Johnston as its new CFO.

Finally, Walgreen Boots Alliance (WBA) fared worst on the Dow, falling 1.5%. Banking giant Goldman Sachs (GS) also lagged.

Berkshire Stock Falls As Warren Buffett Builds A War Chest

Berkshire Hathaway posted third-quarter results over the weekend, with the earnings report giving a deeper insight into how legendary investor Warren Buffett currently sees the market.

The company posted a 41% third-quarter operating profit increase to $10.8 billion, with Geico leading the way. But it also suffered a painful investment loss of $24.1 billion.

Buffett continues to build up a substantial war chest. The firm held a record $157.24 billion in cash, up from $147.4 billion at the end of the second quarter.

Berkshire has been bulking up its position in short-term Treasury bills. The firm owned just over $126.4 billion worth at the close of the quarter. At the end of 2022 the firm held about $93 billion. Further, Berkshire continued to reduce its equity holdings, selling a net $5 billion in Q3, bringing the year-to-date total to about $23 billion.

The conglomerate also dialed back on share buybacks. It bought $1.1 billion of its stock in Q3 vs. $1.4 billion in the second quarter. Year-to-date, Berkshire buybacks have totaled $7 billion.

Berkshire Hathaway finished the day down 1.5%, losing ground on its 50-day moving average in the process. BRKB stock continues to form a flat base with an ideal buy point of 373.34, MarketSmith analysis shows.

Magnificent Seven: Nvidia, Apple Up But Tesla Stock Lags

Nvidia and Apple stock fared best out of the so-called Magnificent Seven on Monday, rising 1.7% and 1.5% respectively.

AAPL trades above its 50-day moving average but is well shy of a 198.23 entry. NVDA is nearing a double-bottom base buy point of 476.09.

Dow Jones stock Microsoft also had a solid session as it rose 1.1%. It trades in a buy zone above a 346.20 entry point.

Amazon stock turned in a more modest gain of 0.8%. It remains actionable above a double-bottom base buy point of 134.48. AMZN is an IBD Leaderboard stock.

Google parent Alphabet (GOOGL) and Meta Platforms (META) were also positive, rising 0.9% and 0.4% respectively.

There was only one laggard among the Magnificent Seven today — Tesla. It closed well off lows, though, as it dipped 0.3%. TSLA stock is trading just below the 200-day moving average.

Outside The Dow Jones: Leaderboard Stock Among Breakouts

DraftKings ended the session in a buy zone above a consolidation entry of 34.49. The relative strength line has shot to fresh heights.

It made strong gains following earnings and now is a member of the IBD Leaderboard list of top stocks.

Meanwhile, Dell Technologies saw its relative strength line hit new heights as it cleared a double-bottom entry of 70.77. Overall solid performance for Dell stock is reflected in its IBD Composite Rating of 85 out of a best-possible 99.

And Consolidated Water tested a flat-base buy point of 31.85, finishing just above the entry. The water utility play is among the top 1% of issues in terms of price performance over the past 12 months.

Please follow Michael Larkin on X, formerly known as Twitter, at @IBD_MLarkin for more analysis of growth stocks.


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