StockStock Market Weakens At Midday As It Awaits Powell Speech; This IBD Index Outperforms

By midday on Tuesday, the stock market had weakened, sending the major indexes to intraday lows. The easing of covid restrictions in China failed to offset the stock market’s concerns about upcoming data and Jerome Powell’s speech.




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The Nasdaq composite slid 0.6% and the S&P 500 declined 0.4%. The Dow Jones Industrial Average was down 0.3 percent. Apple ( AAPL ) continues to weaken, falling below its 50-day moving average.

Small caps defied the major indexes as the Russell 2000 rose 0.3%. Volume jumped on the NYSE and Nasdaq compared to the same period on Monday.

Today’s decline pared Monday’s losses in the major indexes to about 1.5 percent. The S&P 500 fell below 4,000 in Monday’s trading and stayed below that level.

Hibet ( HIBB ) slipped more than 11% on heavy volume, although it pared losses after breaking below its 50-day line. The sporting goods retailer missed October-quarter sales and profit expectations, according to FactSet.

China’s stock markets rally

Beijing has announced it will relax some of the Covid-19 lockdowns that have sparked protests in several Chinese cities.

China’s national health regulator has announced that it will increase vaccinations for the elderly to reduce the risk of a new version of the Covid-19 virus. In addition, Chinese regulators have loosened restrictions on property companies seeking to raise domestic equity capital.

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The Shanghai Composite jumped 2.3% to near its highest since Sept. 15, according to Dow Jones market data. The Hang Seng index rose 5.2%, its best day since Nov. 11. Hong Kong’s benchmark index is up 24% so far this month.

The iShares Hong Kong ETF ( EWH ) showed a gap of nearly 3 percent. Since the gap above on November 11, the ETF has held support at its 50-day moving average.

A handful of Chinese stocks rallied after the earnings reports. Streaming video service Bilibili ( BILI ) rose more than 22%, rising above its 50-day moving average. Social media platform Joey (BC) grew by about 8 percent. Kanzu (BZ) gained 13.5%. Software company Baozu (BZUN) missed the rally, shedding 2.2% at midday.

All these stocks are in deep corrections.

E-commerce portal Pinduoduo ( PDD ) broke out of a cup base Monday after a strong earnings report and was up 6% in midday trading. It is now above the 5% buy zone.

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The Innovator IBD 50 ETF ( FFTY ) was flat but outperformed the major stock indexes. The same energy stocks that hurt the index on Monday are giving the IBD 50 a boost today.

Crude oil prices rose 0.2 percent to $77.33 a barrel. Oil rose about 2% earlier to ease China’s lockdowns.

The housing market has extended a weak period.

The S&P CoreLogic Case-Shiller home price index fell to 10.9% from 13.1% in September. Economists had forecast a 10.9 percent increase, Econoday reported. The index fell 1.5% from the previous month in September – its third straight monthly decline.

The SPDR S&P Homebuilders ETF (XHB) rose 0.2% and is meeting resistance at its 200-day moving average.

Investors are awaiting Powell’s comments.

On the economic front, Federal Reserve Chairman Jerome Powell will deliver a keynote address to stock market investors at the Brookings Institution on Wednesday. Powell will take some questions from the participants.

In other economic events, the November jobs report will be released on Friday. On Thursday, the latest jobless claims report and manufacturing-sector data are due.

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The Conference Board’s consumer confidence survey fell to 100.2 from 100.2 last month. The survey marked a four-month low, the second-straight monthly decline.

In the survey, BMO Capital Markets economist Priscilla Thiagamurthy said consumers have cut back on plans to make big purchases in the next six months.

“This is good news for the Fed as it tries to moderate interest and restore price stability,” she said. “While households have proven to be stronger than expected so far amid a strong labor market and excess savings, inflation will be a major headwind to consumer sentiment and spending plans.”

In the survey, 45.8% of respondents said jobs are still plentiful, up from 44.8% in October. 13% believe that it is difficult to stay in work.

The yield on the 10-year Treasury note rose 2 basis points to 3.72 percent.

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