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The Dow Jones industrial average capped a dismal week with sharp losses in the stock market today, losing 2% to post its worst close since May 3. At 24,100, the Dow also sank nearly 1.2% for the week, following a 4.5% shellacking in the prior week.
More evidence of slowing growth in retail sales and industrial production last month in China and fresh signs of a softening manufacturing picture in Europe spurred broad selling across the board on Wall Street. Fewer than a dozen of 197 IBD industry groups posted a gain on Friday.
Apple (AAPL) helped lead the broad decline, dropping more than 5 points, or 3%, to 165.48. The iPhone and digital services titan is now trading nearly 30% below a 233.47 peak. Analysts continue to shave their ratings for Apple on concerns over iPhone sales.With the current DJIA divisor at 0.14748071991788, JNJ's $14.84 decline shaved 100.62 off the Down Jones's but even worse, to have what is usually regarded as among the bluest of blue chip defensive stocks get hit like that is a little disconcerting.
It's not uncommon for stock market leaders to form a base, such as the cup with handle, and shed 30% to 33% of their market value in the process. Given that Apple has been in correction mode for more than 10 weeks, it's guaranteed that the Dow Jones industrial component will need months to recover and properly form the right side of a complete new base.
The S&P 500 slid 1.9% lower while sellers beat the Nasdaq composite down by more than 2.2%. The Russell 2000 fell 1.5%.
Volume came in a touch higher vs. Thursday on the Nasdaq, according to early data. NYSE turnover was roughly flat. The current outlook remains under severe selling pressure. Read IBD's The Big Picture column for a daily assessment of the outlook. The Dec. 4 Big Picture story noted a key downgrade in the current outlook for growth stocks.
Dow Jones Leader Gets Whacked
Johnson & Johnson (JNJ) led the downside among the 30 components of the Dow Jones industrials. The medical products giant, which according to a Reuters report had known for decades that its baby powder product contained asbestos, plunged 15 points, or 10%, to 132.80 in volume that jumped seven times its 50-day average....MORE
In olden times when a trader was going short against the box he was shorting against the speculative stuff at the top of his box of certificates. Something like Johnson & Johnson would be at the bottom of the pile and and wouldn't get sold until things got very dire. And even then the preference would be to offer it up as collateral to your friendly neighborhood Shylock rather than sell.
Bluest of blue chip defensive issues down 10% is, in technical terms, suckey wuckey, not so lucky.
