The Dow Jones Industrial Average was lower as House Speaker Kevin McCarthy made a debt ceiling pledge. Palantir (PLTR) soared after CEO Alex Carp made an AI claim, while PayPal (PYPL) plunged following its quarterly report.
Things were relatively quiet on the breakout front. But MongoDB (MDB) managed to move above a buy point.
Stocks were lower after New York Federal Reserve President John Williams said interest rates could increase if inflation fails to come down. He also said the “FOMC’s actions to restore balance to the economy” will take time to take full effect.
The 10-year Treasury yield was flat at 3.52% while the two-year yield rose 2 basis points to 4.03%, making the yield curve more inverted.
Speaker McCarthy Makes Debt Ceiling Pledge
An ongoing worry for investors is the current battle over raising the federal debt ceiling.
McCarthy rejected the idea of a short-term deal ahead of a meeting with President Joe Biden and other congressional leaders today to discuss the issue.
“No, no, no. We shouldn’t kick (negotiations) out. Let’s just get this done now,” McCarthy, R-Calif., told NBC News Tuesday.
This means any White House effort to secure a three-month debt ceiling extension looks dead on arrival. Republicans are keen to secure spending cuts as part as any deal to raise the Federal debt limit.
But President Biden, a Democrat, has been firm on seeking an increase in the debt ceiling without spending cuts. However, he has said he is open to speaking about cuts as a separate issue.
The U.S. is in danger of defaulting on bonds if politicians cannot resolve the issue.
Nasdaq Lags As Small Caps Shine
The Nasdaq lagged the other major indexes as it tumbled 0.5%. EV stock Lucid (LCID) fell nearly 7%.
The benchmark S&P 500 dipped 0.3%. Dish Network (DISH) was struggling here as it fell more than 10%, extending a long slump. It emerged Monday it is losing pay-TV subscribers faster than expected.
The S&P 500 sectors were mainly negative. Only energy and industrials were in the green. Technology and materials were the worst performers.
Small caps fared better, with the Russell 2000 slightly positive. Growth stocks were struggling, with the Innovator IBD 50 ETF (FFTY) roughly flat.
Dow Jones Today: Goldman Sachs Settles Discrimination Suit
The Dow Jones index was faring better than the other major indexes, but was still slightly negative.
Goldman Sachs stock was slightly negative. The firm has agreed to pay $215 million to settle a gender discrimination lawsuit. As part of the settlement the bank will hire an independent expert to “conduct additional pay equity studies.”
Palantir Stock Soars Amid AI Claims
Palantir stock was one of the best performers on the stock market today following its earnings report.
It rocketed after the firm’s CEO Alex Karp boasted about the firm’s ability to take advantage of the current artificial intelligence craze.
“The depth of engagement with and demand for our new Artificial Intelligence Platform (AIP) is without precedent,” he said. “We are currently mobilizing our company and sales teams in order to convert this organic and inbound interest into an expansion of our reach within the market.”
Karp said the firm’s AI platform will be made available to “select customers” this month.
The firm also posted Q1 EPS of 5 cents while revenue rose 18% to $525 million. This was better than analyst forecasts.
PLTR stock gapped up through its moving averages as it soared nearly 23%. It remains shy of an entry of 10.41, MarketSmith analysis shows.
PayPal Stock Sinks After Report
PayPal stock plummeted in open trading following the firm’s earnings late Monday.
A 33% EPS pop to $1.17 and a 9% climb in revenue to $7.04 billion bested analysts views for EPS of $1.10 a share on revenue of $6.98 billion.
Total payment volume processed from merchant customers climbed 10% to $354.5 billion, also above Wall Street projections. But while the firm raised its predicted adjusted earnings growth to about 20% to $4.95 a share, margin outlook was lowered.
PayPal stock gapped down and lost ground on its major moving averages. It was down nearly 12% heading into the close.
Outside Dow Jones: MongoDB Stock Tests Entry
In a tough day for breakouts, MongoDB stock stood out by climbing above an entry.
The database software play is trading in a buy zone after clearing a buy point of 248.25.
This is a first-stage pattern, which is a positive. IBD research has found such early stage patterns are more likely to net big gains.
On the other hand, volume was lower than normal on the breakout. This is not ideal.
Overall performance is excellent, with the stock boasting an IBD Composite Rating of 95 out of 99. Big Money has also been a net buyer of late, netting MDB an Accumulation/Distribution Rating of B.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
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