Dow Jones futures fell overnight, along with S&P 500 futures and Nasdaq futures, with FedEx (FDX) plunged overnight due to weak earnings and guidance. The stock market rally continued to weaken, with the major indexes wiping out Wednesday’s thin-to-modest gains, while Treasury yields near long-term highs.
Markets are still catching up on Tuesday’s sizzling CPI inflation report, which pushed back the case for a slowdown in interest rate hikes by the Federal Reserve.
Meanwhile, megacap technologies continue to wane. Apple (AAPL), on Monday issued an early buy signal, cutting the short-term low on Thursday. Microsoft (MSFT) is nearing a June low while Google’s parent company Alphabet (GOOGLE) set the lowest close in 19 months.
After closing, FedEx reported a 21% drop in first-quarter financial earnings from a year earlier compared with an 18% increase in views. Revenue grew modestly, but slightly below forecasts. The shipping giant also withdrew its guidance for fiscal 2023 and announced sweeping cost-cutting measures in the face of falling shipping volumes. FedEx was scheduled to release Q1 results on September 22.
Individual, General Electric (GE) said ongoing problems in the supply chain are putting pressure on cash flow. GE stock fell 4% overnight.
Dow Jones Futures Today
Dow Jones futures are down 0.5% from fair value. S&P 500 futures fell 0.7%. Nasdaq 100 futures fell 0.8%.
China’s economy showed signs of improvement last month amid new economic stimulus measures. Industrial production in August rose 4.2% from a year earlier, topping the view with 3.8%. Retail sales rose 5.4%, beating forecasts of 3.5%.
Rally stock market
The stock market rally opened higher on Thursday but that didn’t last, as selling soon took hold.
The unemployment rate again fell to a three-month low, but other data, including retail sales for August, generally showed a weaker-than-expected economy, but with price pressures has decreased. The Atlanta Fed’s GDPNow tool estimates third-quarter GDP growth of just 0.5% versus a 2.5% outlook in August.
The Dow Jones Industrial Average fell 0.6% on Thursday stock market trading. The S&P 500 index lost 1.1%. The Nasdaq Composite Index rose 1.4%. The small-cap Russell 2000 lost 0.7%.
Shares of Apple fell 1.9% to 152.37, breaking through the already very expensive handle’s low. After soaring above the 50-day and 200-day levels on Monday, the stock fell below those key levels during Tuesday’s market crash.
Shares of Microsoft fell 2.7% to 245.58 on Thursday, its lowest level since its mid-June low. Google stock fell 2% to 102.91, not less than its May 24 low but its worst close since April 2022.
US crude oil prices fell 3.8% to $85.10 per barrel. Natural gas prices fell 8.7% as the rail strike averted would help coal shipments resume. Natgas spiked on Wednesday.
The yield on the 10-year Treasury note rose 5 basis points to 3.46%, despite lackluster economic data. This is just below the 11-year high of 3.48% set on June 14. One-year yields have topped 4%.
Among the Best ETFsThe Innovator IBD 50 ETF (FFTY) fell 2.1%, while the Innovators IBD Breakthrough Opportunity ETF (BOUT) lost 1%. iShares Expanded Software-Technology Sector ETF (IGV) rose 3.2%, with the main components of Adobe and MSFT shares. VanEck Vectors Semiconductor ETF (SMH) back 1.8%.
SPDR S&P Metals & Mining ETF (XME) decreased by 2.75%. The Energy Select SPDR ETF (XLE) fell 2.6% and the financial SPDR ETF (XLF) increased by 0.3%. SPDR Fund for the Healthcare Sector (XLV) increased by 0.6%.
NBIX shares rose 2.5% to 106.93 on Thursday. Existing Neurocriminal Biosciences flat base with 109.36 buy points, follow MarketSmith Analysis. The stock made some early entries over the past few weeks, but quickly fell back. Shortly after Wednesday’s open, NBIX stock slid to 100.46, testing its 50-day line and being the top of an earlier base. In theory, a trader could have bought Neurocrine when it recovered from the 50-day threshold, but it would take a brave soul to make that bet given market conditions.
The relative strength line is at new highs, reflecting the strong upside in NBIX stock in a weak market.
VRTX stock rose 1% to 287.67, just below the 50-day line. Vertex Pharmaceuticals flashed some early buy signals late last week, but fell 4.4% on Tuesday, to less than 50 days.
Over the next few days, Vertex stock could be flat.
Market aggregation analysis
The stock market rally does not indicate a desire to bounce back. After Wednesday’s expected, lackluster recovery from Tuesday’s sell-off, the major indexes wiped those gains off easily.
The Nasdaq 100, with a weighted share of Apple, Microsoft and Google, fell to a September 6 low. Nasdaq and S&P 500 have yet to cut a September 6 low, but both closed. worst since July.
A Nasdaq close below the September 6 low would likely mark the end of a protracted ailing market rally.
On a technical basis, the major indexes need to return above their 50-day moving averages. Their 21-day line is now 50-day lower.
The upcoming Fed meeting adds to the risk over the next few days. More broadly, the market will likely struggle to make lasting progress until it becomes clear that the Fed will slow down and pause on rate hikes soon. That’s the hope included in Tuesday’s CPI inflation report. But not anymore.
Meanwhile, not only was inflation higher than believed just a few days ago, economic activity was weaker. Therefore, the Federal Reserve will suffer more “pain” in the context of the struggling economy.
A recession – or a sluggish economy with a tight labor market – will be difficult for businesses to navigate.
What to do now
The market rally once again barely continued. Too many attractive stocks will show buy signals then reverse down the next day. It’s just an extremely difficult environment to invest in.
Until the major indexes return above their 50-day moving averages, investors should have modest exposure, and be extremely cautious of any fresh buying. Clarity about a Fed rate hike ending the game would be nice, but that may not come for weeks or more.
Market conditions can rapidly improve or deteriorate. If it’s an old list, you’ll want an up-to-date watchlist. If it’s the latter, you’ll be happier working on the watchlist than buying new stock.
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