Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures. Even with a solid close in Friday’s whip session, the stock market rally took a significant hit last week and key indexes were tipped with hawkish comments from Fed chairman Jerome Powell.
The Nasdaq had its worst week since January as mega caps fell and cloud software crashed.
Apple (AAPL), amazon.com (AMZN) and Google parent Alphabet (GOOGLE) all with Facebook parent lost more than 10% during the week Meta Platforms (META), Tesla stock and Microsoft stock are not far behind. Google stock, Meta, amazon.com (AMZN) and Microsoft (MSFT) all hit bear market lows. apple stock and tesla (TSLA) didn’t, but they’re close.
Meanwhile, Twilio (two) and Atlassian (SET) crashed on Friday with disappointing results and guidance, losing more than 40% over the week. A number of other software names, lucrative or unprofitable, rolled.
A market rally trying to fight the Fed’s decline in the big tech sector? This is a tall order. Therefore, while there are some stocks and sectors showing strength, investors need to be extremely cautious in the current environment.
On the other hand, Warren Buffett’s Berkshire Hathaway (BRKB) reported on Saturday 20% increase in operating profit. The holding suffered a net loss as the ongoing bear market hit investments.
Dow Jones Futures Today
Dow Jones futures open at 6pm ET along with S&P 500 futures and Nasdaq 100 futures.
Goldman Sachs now expects S&P 500 earnings to remain steady below the previous target of 3% in 2023.
Remember that overnight action Dow futures and elsewhere it doesn’t necessarily turn into real trade on the next regular trade Exchange session.
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The stock market rally started the week well but was sold out Wednesday afternoon after Fed chair Jerome Powell’s hawkish comments. Major indexes left more ground on Thursday. Stocks rose sharply on Friday after a mixed employment report, but ultimately closed the day solidly higher.
Dow Jones Industrial Average still down 1.4% last week stock market trading. The S&P 500 index fell 3.3 percent. The Nasdaq Composite Index lost 5.7 percent, its biggest loss since the week ended January. 21. The small-scale Russell 2000 fell 2.4%.
The 10-year Treasury rate rose by 15 basis points to 4.16%. The 10-year yield continued to rise after closing a 12-week winning streak and briefly returning around 4%.
The dollar was up 0.2% this week, but fell 1.9% on Friday, the biggest one-day drop in years. This likely contributed to Friday’s stock market surge.
Markets now see a 61.5% probability of a 50 basis point increase at the December Fed meeting. The October consumer price index will be released on Thursday. November jobs and CPI reports will be released before December. 14 Fed’s decision to increase interest rates.
US crude futures rose 5.4% last week to $92.61 a barrel. Natural gas rose about 13%.
Apple shares, which rose to the 200-day mark last week, fell 11.15% to 138.38 this week. AAPL stock came in within a penny of October’s low, although it’s still a little further from June’s bear market lows. Shares of Microsoft 6.1%, Google 10.1%, Amazon 12% and META shares fell to multi-year lows of 8.5%. Tesla stock fell 9.2% over the week, closing in on October. 24th intraday low on Friday. This hit 237.40 intraday on Tuesday after starting the week strong.
Meanwhile, dark days for cloud software. Here are just a few examples: Atlassian stock fell 29% on Friday and 38% for the week. Twilio stock fell nearly 35% on Friday and 43.5% for the week. Snowflake (SNOW), will not report for several weeks, dipped 17% during the week.
Meanwhile, Fortinet (FTNT) fell 17.5% for the week after weak bill guidance offset strong gains and bullish revenue outlook. paycom (PAYMENT) fell 10.3% despite strong results and guidance.
Businesses looking to cut costs can reduce their software spending when setting a budget for 2023.
Between best ETFsInnovative IBD 50 ETF (FFTY) fell 1.2% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) lost 2%. iShares Extended Technology-Software Industry ETF (IGV) MSFT stock fell 10.2% as it held a key. VanEck Vectors Semiconductor ETF (SMH) fell just 0.7% after rising 4.65% on Friday, closing high in the weekly range.
SPDR S&P Metals & Mining ETF (XME) climbed 2% last week. Global X US Infrastructure Development ETF (OPEN) decreased by 0.1%. US Global Jets ETF (JETS) rose 0.3%. SPDR S&P Homebuilders ETF (XHB) fell 5%. Energy Select SPDR ETF (XLE) climbed 2.4%, just below its eight-year high. Financial Select SPDR ETF (XLF) fell 0.9%. Select Healthcare Sector SPDR Fund (XLV) 1.5% gave up.
Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKK) fell 9.4% last week and the ARK Genomics ETF (ARKG) retracted 4.65%. Tesla stock is a major holding in Ark Invest’s ETFs.
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Market Rally Analysis
It’s had a bad week as the stock market rally, a hawkish Fed and generally weak earnings weighed on major indices. Leading the market’s uptrend, the Dow Jones recorded the slightest decline but retraced below the 200-day moving average. Russell 2000 offered resistance near the 200-day line but recovered on Friday to close above the 50-day line. The S&P 500 has left 50 days behind.
The Nasdaq composite, which never reached the 50-day moving average, fell the most, closing below the low. follow up day On Wednesday, bearish signal.
Major indexes extended losses on Thursday, then flogged in a mixed jobs report on Friday.
Negative market action and large returns in many stocks triggered the transition to a “market under pressure”.
The major market driver was Fed chairman Powell, who pulled the rug out of the market rally by signaling a move to smaller hikes but a higher peak fed funds rate.
Meanwhile, megacap technologies including Apple, Tesla and Amazon have suffered huge losses. Cloud software names like Atlassian and Twilio have been melted down by recent gains and guidance on key factors.
Chips haven’t had a relatively bad week, but just to name a few are trading near the highs.
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There are several flexible marketplaces. The health sector looks strong overall. Energy names are doing well, including a wide variety of oil stocks, LNG games, and coal miners, as well as a few solar stocks.
Lithium and some steel games go well. Infrastructure firms for the energy, utilities and telecom sectors are a bright area. Networking firms in general are a leading rare technology space. Some restaurants and discount retailers are showing strength. Various financial institutions, especially brokers and brokerage houses, made strong gains.
Still, it’s hard to see a strong market rally with such large tech sectors shaken. With the delay of Apple, Google, Tesla and cloud software names, it would be difficult enough for major indexes to progress. But are these areas for trying to move forward in areas that are plunging or collapsing?
If the inflation reports show a clear and meaningful drop, causing the Fed to downshift in rate hikes, then perhaps megacaps and cloud software may hit rock bottom. However, some avenues to return to technology leadership may be closed. On the flip side, the October CPI report is in November. 10 shows inflation still hot, tech stocks could pull leading sectors down to end market rally.
Tuesday is Election Day. The stock market tends to do better with a divided government, and Republicans are poised to take back control of the House and perhaps the Senate. But political forecasters predict at least one House GOP win each year, so it’s unclear whether Tuesday’s actual results will be a major catalyst.
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what to do now
The stock market rally is under pressure. The Fed is going from fast and furious to slow and long, but still hawkish. The tech industry is a train wreck. Major indices underlined some key levels. Indices and leading stocks are subject to large intraday and daily fluctuations.
This is not a good environment to buy stocks. Investors should seek to mitigate risks by explicitly or simply reducing losses on various positions.
Investors may start adding risk if the market rally shows renewed strength as the S&P 500 and possibly the Nasdaq rise above its 50-day moving averages. However, this will likely require the technology to stabilize and the data to show some cooling.
If conditions improve, you’ll want to be ready. Numerous stocks are set up not too far away. So create your watchlists, be patient and stay busy.
To read big picture every day to stay in sync with market direction and leading stocks and industries.
Please follow Ed Carson on Twitter at: @IBD_ECarson for stock market updates and more.
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