Dow Jones futures were down slightly in overnight trading, along with futures for the S&P 500 and futures for the Nasdaq. Software giant Adobe rose late on earnings pace while Cathie Wood’s big share exact Sciences (EXA) shot up in a rival clinical trial.
The stock market rally suffered damaging losses on Thursday, with major indices breaking below key levels to 1-month lows.
Blame the second-day reaction to the Fed’s hawkish rate hike outlook, weak US and Chinese economic data, various corporate news for Netflix (nflx) Y Nucor (NEW) and a bearish analyst ask nvidia (NVDA).
Leading stocks, including those in the industrial, infrastructure, chip and solar sectors, fell modestly and sometimes sharply.
But the dark clouds contain a silver lining: the market is no longer tempting investors to take new positions.
Apple (AAPL) suffered its worst one-day loss since late September, while amazon.com (AMZN) is reaching its lowest point in the bear market. Microsoft (MSFT) pulled back, but to a key support area. Nvidia shares fell below their 200-day line again on a gloomy day for chip stocks.
tesla (TSLA) hit a new bear market low on Thursday, but closed slightly higher. Elon Musk revealed another round of Tesla stock sales on Wednesday night.
Earnings, Other News
Adobe (ADBE) reported better-than-expected fourth-quarter 2022 earnings Thursday night on online revenue growth. The enterprise software giant was oriented slightly lower in revenue for the fiscal first quarter, but rose in profit. ADBE shares were up more than 4% after hours. The shares closed down 3.3% at 328.71. Adobe shares have recovered from the lows in late September, but are still well below their 200-day line.
guardian of health (GH) key reported results of your blood test for colorectal cancer in medium-risk adults. While Guardant Health noted the results were high enough to get reimbursement from Medicare, GH shares plunged 35%. Meanwhile, EXAS shares soared more than 20%. Exact Sciences manufactures Cologuard, a stool-based DNA test for colorectal cancer.
Global IT and consulting giant Accent (ACN) reports early Friday morning. ACN shares closed down 3.4% but found support at its 50-day line, one day after falling below its 200-day line.
Darden Restaurants (RDI) earnings are also due Friday morning. DRI shares fell 0.7% to 142.95 on Thursday but rallied near their 50-day line. Olive Garden’s father has a 149.90 point of purchase from one cup base with handle.
Dow Jones Futures Today
Dow Jones futures lost 0.1% vs. fair value. S&P 500 futures sank 0.15% and Nasdaq 100 futures fell 0.2%.
The 10-year Treasury yield rose 2 basis points to 3.47%.
Remember that overnight action in dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock Exchange session.
Join IBD experts as they discuss actionable actions in the stock market rally on IBD Live
The stock market rally was sold off sharply on Thursday.
Before opening, November retail sales showed an unexpected drop of 0.6%. Regional surveys for the Philadelphia Fed and New York Fed for December also pointed to contraction. But jobless claims dropped significantly, exactly what the Fed doesn’t want to see.
All of that followed weaker-than-expected Chinese industrial production and retail sales figures. Quickly easing Covid restrictions may offer a boost, but China is likely starting a massive wave of infections that could deter activity.
The Dow Jones Industrial Average sank 2.3% on Thursday stock trading, his worst performance in three months. The S&P 500 index fell 3.2%. The Nasdaq Composite fell 3.5%. The small-cap Russell 2000 fell 2.5%.
US crude prices fell 1.5% to $76.11 a barrel. Gasoline futures fell 3.5%. Natural gas prices rose 8.4%.
The 10-year Treasury yield fell 5 basis points to 3.45%, just slightly from last week’s three-month low of 3.4%. But that probably reflects recession fears more than inflation relief. The two-year Treasury yield, more closely tied to Fed policy, was little changed on Thursday. The two-year yield is down considerably since early November.
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Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) plunged 3.5%, with MSFT shares a major holding. The VanEck Vector Semiconductor ETF (HMS) fell 3.8%, back below its 200-day line. NVDA actions are a large component of SMH.
Mirroring more speculative historical stocks, the ARK Innovation ETF (ARKK) sold 4.9%, just above November’s five-year low. ARK Genomics ETFARKG) fell 3.5% to a closing six-month low. Tesla shares are a major holding in the Ark Invest ETFS. Cathie Wood added to Ark’s overall TSLA turnout on Wednesday. EXAS stocks are also among the top 10 stocks on Ark Invest.
SPDR S&P Metals and Mining ETF (XME) yielded almost 4%. US Global Jets ETF (JETS) decreased by 2.55%. SPDR S&P Home Builders ETF (XHB) was down 0.6%, with some strong results. The Energy Select SPDR ETFXLE) submerged 0.6%. The SPDR Select Healthcare Sector Fund (XLV) yielded 1.8%
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Apple shares fell 4.7% to 136.60, their worst one-day loss since September 1. 29. Stocks are near their October-November lows, with the June bear market low of 129.04 not much further.
AMZN shares sank 3.4% to 88.45. That’s coming up to November 1st. 9 bear market low of 85.87.
Microsoft shares fell 3.2% to 249.01, but found support at its 21-day line. The stock had tested the 200-day line in the previous two sessions.
Nvidia shares fell 4.1% to 169.52, dipping below its 200-day line after retaking that key level on Monday. HSBC initiated for Nvidia shares with a reduced rating and a 136 price target. The Nvidia sell-off, as well as a digital west (WDC) lower, helped lead a chip sell-off.
Tesla shares fell to a fresh two-year low of 153.28 on Thursday morning before recovering to close 0.5% higher at 157.67. Shares are still down 12% this week. On Wednesday night, CEO Elon Musk revealed the sale of 22 million shares of TSLA on December 1. 12-14 for $3.6 billion, adding to the frustrations of Tesla investors. But that probably means Musk’s latest sale is over.
Meanwhile, Tesla is offering 10,000 free Supercharger miles to anyone who buys a Model 3 or Y in the US before the end of the year, plus a $3,750 discount. Tesla is encouraging people to take delivery now, boosting fourth-quarter numbers, rather than waiting until January 1. 1 for new EV tax credits.
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Market recovery analysis
The stock market rally had a clear bad day. The Nasdaq Composite and the Russell 2000 fell below their 50-day moving averages for the first time in a little over a month. The S&P 500, which had been hitting resistance at the 200-day line, gapped below the 21-day line. The Dow is also well below its 21 days, heading towards its 50 and 200 day lines.
All the major indices are at their lowest levels since November 1. on October 10, when they raised the October consumer price index. The Nasdaq is more or less where it was on October 1. twenty-one go through the day.
Most of the leading stocks came under pressure, some found support and some did not. There were some winners, like lennar (LENGTH) Y nordson (ndsn) on earnings, but those are the exception.
Megacap stocks like Apple, Amazon and Tesla are in deep trouble. Microsoft’s 200-day line resistance is not a good sign. Nvidia stock and the VanEck Semiconductors ETF falling below the 200-day line is definitely bleak.
Is the market uptrend, since October 1? 13 down to Dec. 13 high, just a bear market rally coming to an end? It’s too soon to say that. It is also possible that the market could rally or trade sideways now.
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What to do now
A choppy market rally is dangerous because it draws investors into stocks that are showing buy signals and immediately reverses lower.
But let’s assume you bought due to relative market weakness, such as pullbacks to the 21-day line, in recent weeks. Well, all the indices are chipping away at their recent lows. So even those trades are likely to struggle unless you make quick profits.
Investors should probably reduce exposure, if only because individual stocks aren’t performing.
The positive side? Few stocks are showing signs of buying, while the market is clearly weakening. It’s easier to stay outside in that environment.
But stay engaged. A couple of good days could revive the market rally and send stocks back to buy areas. So run your screens and update your watch lists. Look for stocks that have key support levels, such as the 21 or 50 day lines. Some recent big winners are now returning to the 50 day/10 week lines.
read The panorama daily to stay in sync with market direction and major stocks and sectors.
Follow Ed Carson on Twitter @IBD_ECarson for stock market updates and more.
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