Dow Jones Gives Back Gains, Nasdaq In The Red; Apple Stock Tests Key

The Dow Jones Industrial Average and key averages gave back strong gains in today’s stock market in late-afternoon trading. The Nasdaq composite and S&P 500, meanwhile, turned decidedly into the red. The indexes appear to be continuing a recent pattern of strong opens followed by weak closes.

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Stock Market Today

At around 3:15 p.m. ET, the Dow Jones industrials traded flat, gutting gains of over 1%. The Nasdaq composite and the S&P 500 both fell 0.3%, while the Russell 2000 small-cap index sank 0.7%. Volume was running higher on the Nasdaq and lower on the NYSE vs. the same time on Wednesday.

The indexes attempted to rebound on Thursday after this week’s heavy sell-off. Wednesday’s session pushed the Nasdaq composite down more than 10% off its highs. A drop of this size generally qualifies as an intermediate-term correction. IBD changed the market outlook to in correction earlier in the week.

Additionally, the market is showing signs of distribution, including trading higher at the open, then selling off into the close. Given the current market conditions, investors should be taking a defensive position and raising cash. Now is not the time to be aggressively buying stocks, but market engagement is still key. Be sure to watch the indexes daily for signs of support and accumulation.

According to Wednesday’s The Big Picture column, “After breaching multiple support levels, it’s difficult to determine where the stock market indexes could find a bottom. The Nasdaq might test its October low near 14,180. The S&P might test its November and December lows around 4500. The Dow is nearing the 200-day moving average, where it found support twice in December.”

Stocks may have been hindered by initial jobless claims, which rose for the second straight week to 286,000 early Thursday. This was well above Econoday’s forecast for 207,000 claims and follows the 52-year low of 188,000 made in December.

Dow Jones Today

The Dow Jones was boosted by strong gains in Travelers (TRV) and Goldman Sachs (GS), up 4.7% and 1.6% at one point, respectively. Insurance giant Travelers reported earnings ahead of the market open and easily beat EPS and sales estimates. The stock retook a 163.39 buy point in strong volume Thursday and remains above support at the 21-day and 50-day lines.

Goldman Sachs has had a difficult week, trading down around 7.5%, despite Thursday’s gain. The firm was one of many major banks reporting earnings this week. The investment bank missed fourth-quarter profit expectations but exceeded sales estimates. Shares undercut the 200-day moving average on Tuesday and reached the lowest price since June.

Microsoft (MSFT) was also…