The Dow Jones Industrial Average slipped lower, while the Nasdaq suffered a late reversal. World Wrestling Entertainment (WWE) stock flew above a buy point amid meme stock mania, even as AMC Entertainment (AMC) and Clover Health Investments (CLOV) got slammed. Microsoft (MSFT) and Merck (MRK) were among the leading blue chips.
Nasdaq Gains As S&P 500 Struggles
The Nasdaq was the leading major index, but it saw gains fade away as it closed down 0.1%. Drug stock Regeneron Pharmaceuticals (REGN) was the top gainer, rising 3%, with Biogen (BIIB) following closely behind.
The S&P sectors closed mixed, with health and utilities leading. Financials and industrials were the biggest laggards.
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Small caps struggled after recent gains, with the Russell 2000 falling 0.6%. Growth stocks were also slapped lower by the bears, with the Innovator IBD 50 ETF (FFTY) falling 0.3%.
Microsoft Stock Not Enough For Dow Jones
The Dow Jones Industrial Average was struggling for momentum, and was the worst performing major index, slipping 0.4%.
Microsoft was among the best performing components, but pared gains to close up 0.4%.
Merck was the top performer for Wednesday, rising 2.3%. Caterpillar (CAT) was the worst laggard, dipping more than 2%.
WWE Stock Soars Amid Meme-Mania; AMC Gets Pinned
WWE stock exploded past a buy point in massive volume as it became the latest name to get a boost from the meme stock craze.
The infamous WallStreetBets subreddit touted the stock, which led to premarket gains that snowballed after the open. Live events returning in July and rumors of an acquisition were given as reasons for investing in the stock.
At one point the stock was up as much as 22%, and it closed up almost 11%. Volume was running around nine times its usual pace.
The stock saw it’s relative strength line hit a new high as it soared out of a consolidation pattern, MarketSmith analysis shows. The ideal buy point was 61.42, and it finished in its buy zone. WWE stock actually has solid earnings, which is reflected in its EPS Rating of 77.
Other meme stocks were not having as fruitful a session, however. AMC stock fell more than 10%, while Clover Health stock, which closed up almost 70% Tuesday, plummeted around 24% in massive volume.
WWE stock’s jump is just the latest example of a so-called meme stocks rally. The exact identities of the traders pushing prices higher are not clear. But the Reddit board WallStreetBets has largely been credited with launching an effort to upend short sellers who had bet those stocks would fall.
MarketSmith data shows that headed into Wednesday’s action, it would take 11.5 times the stock’s average daily volume for short sellers to cover their positions in WWE stock. In other words, short interest is elevated in the midcap growth stock.
Papa John’s Stock Serves Up Break Out
Pizza stock Papa John’s moved above a cup with handle with a buy point of 102.59. However volume was light, and it ended up closing beneath its buy point.
The stock’s relative strength line has started to make progress, however earnings and stock market performance are not idea.
The stock is a turnaround play, with activist fund Starboard Value CEO Jeffrey Smith taking the reins as Papa John’s new chairman in 2019.
Software stock DoubleVerify clambered above a cuplike consolidation pattern and its buy point of 38.38. However it slipped back below it, which is a bad sign. It closed up 1.9%
The relative strength line for the April 2021 IPO stock hit a new high, and it clear of its offering price of 27. The firm is also profitable.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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