Dow Jones futures fell slightly overnight, along with S&P 500 and Nasdaq futures. The stock market rally fell back from a key resistance on Monday as inflation and recession fears head into key economic data, along with renewed concerns about China. Country.
Nasdaq, which led last week’s gains across major indexes, suffered its biggest losses on Monday. Treasury yields remain inverted, a recession warning.
Li Auto, Hershey and AZN shares are available on IBD 50. Hershey is Monday IBD shares of the day. Video embedded in the article highlights market action and analysis of BABA, AstraZeneca and Hershey stocks.
Dow Jones Futures Today
Dow Jones futures contract lost 0.4% from fair value. S&P 500 futures fell 0.4% and Nasdaq 100 futures fell 0.5%.
Crude oil prices fell 1%.
The yield on the 10-year Treasury note fell 2 basis points to 2.97%.
Rally stock market
The stock market recovered losses on Monday, with the major indexes closing near session lows.
The Dow Jones Industrial Average fell 0.5% on Monday stock market trading. The S&P 500 index fell 1.15%. The Nasdaq composite fell 2.3%. The small-cap Russell 2000 fell 2%.
U.S. crude oil prices fell 0.7% to $104.90 a barrel, pretty low from the morning low.
The yield on the 10-year Treasury note fell 11 basis points to 2.99%. The two-year yield fell 5 basis points to 3.07% once again inverting along a major part of the yield curve. The yield on the one-year Treasury note rose 4 basis points to 2.99%, matching the 10-year yield.
Among the Best ETFsThe Innovator IBD 50 ETF (FFTY) lost 1.3%, while the Innovator IBD Breakthrough Opportunity ETF (BOUT) decreased by 0.7%. iShares Expanded Technology-Software Sector ETF (IGV) back 1.7%. VanEck Vectors Semiconductor ETF (SMH) accounted for 2.4%.
SPDR S&P Metals & Mining ETF (XME) fell 1.65% and the US Global Infrastructure Development ETF X (SAVE) decreased by 0.4%. US Global Jets ETF (JETS) gradually decreased by 2.3%. SPDR S&P Homebuilders ETF (XHB) decreased by 0.5%. SPDR Select Energy ETF (XLE) and the financial SPDR ETF (XLF) dropped 0.8%. SPDR Fund for the Healthcare Sector (XLV) inclined lower than 0.25%.
Over the weekend, regulators fined Alibaba, Tencent (TCEHY) and several other tech companies for not disclosing some past takeovers. The 500,000 yuan fine is relatively small, but raises concerns that Beijing’s crackdown on the tech giants isn’t over yet.
Macau closed casinos and most businesses for a week, raising concerns about China Covid restrictions.
Alibaba shares fell 9.4% 109.57, closing below the 21-day moving average for the first time since late May. Last Thursday, BABA stock moved above the 200-day line and broke through some resistance above the 121 level, providing a positive entry. Shares fell below those key levels on Friday.
While a strong move above last week’s high is actionable, BABA stock would ideally form a consolidation above its 200-day line.
Li Auto Stock
Li Auto shares fell 4% to 37.33. just under 37.55 buy points. Stocks are still heavily extended from their 50-day limit. It is possible that LI stock could form a shallow foundation on top of a deep and long consolidation. The past few weeks can be viewed as a base to return to late 2020.
AstraZeneca shares fell 0.3% to 66.75 after flirting with 67.50 double bottom buy points, follow MarketSmith Analysis. AZN stock’s relative strength line, the blue line in the chart provided, is just below the high.
HSY stock rose 0.4% to 220.65, just below 222.75 cup with handle buy points. While defense stocks are popular right now, that doesn’t mean they’re safe. Many food and beverage conglomerates, including Hershey stock, plunged on May 18. However, shares have rebounded since late June.
Musk Vs. Twitter Saga
Faced with buyer remorse, Musk said late Friday that he no longer wants to buy Twitter, something he has strongly signaled over the past few months. Twitter said a deal was a deal, the move to force Musk forward with a takeover of $44 billion, $54 billion a share. Twitter has hired a merger law authority to represent it. Legal experts say Musk has a weak case.
Twitter shares fell 11.3% in regular trading Monday to 32.65, their lowest level since mid-March. TWTR stock hit a two-year low of 31:30 on Feb. 24.
After closing, Twitter, through lawyers, said Musk’s attempt to end the takeover was “invalid and wrong.”
Tesla shares, up slightly at the open, fell 6.55% to 701.99. It is likely that some or even most of Monday’s losses reflect market weakness driven by growth and concerns about China. TSLA stock fell back below the 50-day line after closing above it on Friday for the first time in two months. Shares also fell slightly below the 21-day mark.
Market aggregation analysis
With last week’s market gains at a critical level, Monday’s pullback is not surprising, especially given the negative China news and so much key data.
Nasdaq has fallen back against the 50-day and 10-week moving averages. was once major resistance in 2022. That doesn’t mean this test has failed. The index may stop around these levels for a few days or weeks before breaking out.
Nasdaq closed slightly below the 21-day moving average. The S&P 500, Dow Jones and Russell 2000 also cut that short-term level.
Outside of China news, it’s hard to be brave at the current level with important news accessible.
Wednesday’s consumer price index is expected to show inflation picking up slightly from May’s 40-year high of 8.6%. Core inflation will decrease slightly. With gasoline prices falling significantly since their June 14 peak and commodity prices plummeting over the past several weeks, key inflation should ease. So it is not clear how the markets will react to the June inflation data.
A 75 basis point rate hike by the Fed at the end of July appears to have been stalled, with the chances of a full one percentage point hit being slim. The real impact will be on future Fed rate hikes. But policymakers will have two more CPI and employment reports ahead of the September meeting, along with a host of other data ahead of the Fed’s November meeting.
Guidance will be key in a rapidly changing economy.
What to do now
With the market hitting resistance in the face of big business and economic news, investors may not want to add modest near-term exposure. Several sectors are active, notably defensive or defensive growth names HSY stock and AbbVie. But if the market recovers strongly, defensive players can sell off or fall behind. So don’t get too focused on one particular area or topic.
Investors may want to take a partial profit on any recent winners.
Read Big picture every day to stay in sync with market trends and top stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
YOU MIGHT ALSO LIKE: