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Stock market reversed lower ahead of inflation report; Bed Bath & Beyond Rally 31%; Boeing is downgraded


Stock market indexes beat buyers and sellers in the first hour of trading on Tuesday, following Monday’s bearish reversal. Mixed action signals caution ahead of Thursday’s closely watched inflation report. Outdoor shower bed (BBBY) lost a lot of money last quarter but recovered 31% in the first hour. Dow Jones component Boeing airplanes (father) fell less than 1% after Morgan Stanley downgraded.




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Fed Chairman Jerome Powell made the comments to a Swedish audience of central bank officials ahead of the opening bell. Stock markets bounced after the speech, making no new policy statements.

The S&P 500 recovered above its 50-day moving average on Monday and reversed course, closing at the lows of the day. Other major indexes also reversed course, suggesting continued rejection at key resistance levels.

This price action is typical of a bear market, but it’s been three months since the S&P hit a new low. Good deals can happen in two-way market conditions but a high cash level should be maintained, between 60% and 80%.

The Dow Jones Industrial Average, Nasdaq and S&P 500 fell 0.1% in the first hour. The Russell 2000 small-cap index fell 0.3%.

Nasdaq and NYSE volumes were down from the first hour of trading on Monday.

The yield on the 10-year Treasury note rose more than 2%, or 8 basis points, to 3.6%.

Crude oil added less than a dollar to $75 a barrel. European exchanges all dropped points, recording a loss of less than 1%, while Asian markets traded quietly.

In the crypto world, Bitcoin hit a three-week high near $17,300 while Coinbase (COIN) rises to tough resistance around 40.

Stock market: Next week

The economic calendar is light this week until the December consumer price index (CPI) report on Thursday.

November’s 0.1% reading shocked market watchers and prompted short sellers to pack up, but the stock market couldn’t hold onto its subsequent gains. Estimates fell last month, with many analysts looking for another 0.1% figure. The bulls can regain control of the band if the number hits that low.

However, the underlying CPI estimate is much higher for December, at 0.4%. The divergence between the two indicators could highlight structural inflation that is deeply rooted and will take longer to bring under control.

Bed Bath & Beyond On Fire; Boeing is downgraded

Bed Bath & Beyond reported a loss of $3.65 per share for the quarter ended November, while revenue fell 33% year-on-year to $1.26 billion.

President and CEO Sue Gove dodged the bankruptcy question, offering a diplomatic but somewhat selfish response, emphasizing that “we are rapidly implementing our plan while managing the situation.” We are making an active commitment in the second half of the year of $250 million in SG&A optimization (sales, general and administrative expenses), or 500 million dollars saved every year.”

BBBY shares rose 31% to 2.10 despite the weak report and they are still 93% below their August peak of 30.

Dow Jones Boeing Components Fall Later Morgan Stanley analyst Kristine Liwag downgraded the aerospace giant to balance the weight, raising price target to 220. BA stock climbed above 200 last week for the first time since March 2022. It hit 173.95 buy points of the 60-day cup base in November and reached Take profit zone 20%-25% on Friday.

Movers and Shakers stock market

Innovator IBD 50 ETF (FFTY) outperformed with a gain of 0.3%.

50 . IBD Components eagle (GFF) charge over 5% buy zone Monday, after two months flat sole, and is approaching the 20%-25% profit-taking zone. GFF stock traded 0.6% lower on Tuesday but remained near all-time highs.

The building builder has posted double- or triple-digit earnings growth over the past four quarters.

Also in IBD 50, axon enterprise (SWITCH) edged higher on Monday, breaking above the 21-day line for the first time since the sell gap on Dec.

The company formerly known as Taser is now showing well-developed consolidation with prices about 8% below the 193.95 buy point. That level is close to three peaks and reversals are expected in 2021. AXON stock traded 1.3% higher Tuesday morning.

Profits at the law enforcement equipment maker are expected to grow 33% this year.

Follow Alan Farley on Twitter at @msttrader.

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