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Stock futures reduced some losses on Wednesday as September hiring data beat expectations and oil prices held near their highest level in seven years ahead of inventory data. Acuity marks (AYI) won after a strong fourth quarter tax report. Steel and airline stocks fell on analyst downgrades. And Boeing (BA) and Apple (GS) led the Dow Jones declines today.
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Futures on the Dow Jones Industrial Average reduced losses to 0.7% early in action, which should erase much of Tuesday’s 0.9% rebound. S&P 500 futures fell 0.9% below fair value, but were above early lows. Nasdaq 100 futures traded down 1% in the stock market today, Russell 2000 small cap futures were down 0.9%.
American Airlines (AAL) fell 4% and JetBlue (JBLU) fell 3%, after Goldman Sachs downgrades. Steelmakers have also secured downgrades from Goldman, with American steel (X) tumble 4.6% and Nucor (NUE) by 2.9%.
Data privacy service provider Palantir (PLTR) jumped more than 8% after signing an $ 823 million contract with the U.S. military.
Manufacturer of commercial lighting products Acuity marks (AYI) was up 4.9% after reporting strong growth in fiscal fourth quarter profits. Revenue was also on target, and the company said price increases offset rising costs. Acuity stock is in a 22 week consolidation attempting to regain support.
Dow Jones Today: Goldman, Microsoft
Goldman Sachs and Microsoft are stocks to watch on the Dow Jones today, after leading yesterday’s rebound among industrials.
Microsoft stock, an IBD ranking list, has now been consolidated for seven weeks. The result is a flat base 8% deep with an entry at 305.94. Microsoft is up 10% from a breakout in June.
Goldman’s six week consolidation is also considered a flat base. Its withdrawal seems more severe than that of Microsoft, but is only 11% deep. He underestimated an earlier point of purchase, but stopped long before the automatic sell rule. Stocks have gained over 46% year-to-date.
Stockpile of Europe; September hires rebound
European markets trimmed some losses in afternoon trading, hit early in trading by weak manufacturing data and as a key UK inflation forecast, they hit a 13-year high. The Frankfurt DAX lost 1.6%. The CAC-40 in Paris fell 1.6%, while the FTSE 100 in London fell 1.1%. In Japan, Tokyo’s Nikkei 225 closed down 1.1%. Hong Kong’s Hang Seng Index slipped 0.6%. The Shanghai Stock Exchange remains closed on the last day of its national holiday.
In economic news, an initial report from the Mortgage Bankers Association showed a 7% drop in mortgage applications last week. Refinancing activity fell 10%, to its lowest level in three months.
ADP’s jobs report estimated that private payrolls increased by 568,000 in September from estimates of 428,000. It is also up from the revised 340,000 in August. The leisure and hospitality sector hired the most, adding 226,000 workers. Manufacturing added 49,000 new employees, while commerce, transportation and utilities increased payrolls by 54,000 jobs.
The Energy Information Administration’s weekly oil inventory data is due for release at 10:30 a.m. ET.
Vital signs: oil, natural gas, bond yields, Bitcoin
West Texas Intermediate crude futures fell 0.9% early Wednesday to trade just below $ 78.25 a barrel. U.S. oil prices are now working on the seventh week of a rally that took them to their highest level since November 2014.
Natural gas futures reversed the initial gains and fell 2.9% to $ 6.13 per 1million UK thermal units. Shortages leading to price spikes in Europe drove U.S. natural gas into the seventh month of its rally, up 148% through Tuesday since December 31 and to its highest level since December 2008.
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Bond yields rose as the 10-year Treasury yield rose one basis point to 1.54%. Yields hit their lowest at just under 1.13% in July. They hit this year’s high, above 1.76%, in March.
Bitcoin rebounded more than 5% to trade just below $ 52,800. The cryptocurrency has reached $ 52,797 and as low as $ 49,624 in the past 24 hours.
IBD 50: Western Alliance, Diamondback, Stifel
Among the IBD 50 actions, Western Alliance Bancorp (WAL) hovers near an entry of 109.94 in a 22 week cut base. Diamondback Energy (FANG) remains in a buy range above a base entry of 102.63 cups. Stifel Financial (SF) was less than 1% below a buy point of 71 in a 22 week handle cup base.
Poached (TASK) tests the 10-week moving average. datadog (DDOG), which was mentioned in a previous Stock Market Today update, is already bouncing off the 10 week line. Datadog is an IBD ranking list.
In addition, the research manager Gartner (IT) rebounds from its 50 day line. Vendor of medical devices and supplies Avantor (AVTR) is also positioned for possible support rebound.
With the market correcting, these stocks are all watchlist candidates. Until the market hits a low and confirms a new uptrend with a day of tracking, investors should avoid further buying.
Nasdaq, S&P 500, Dow Jones today
The Dow Jones is now holding above a low sketched on Friday and looks set to continue an up-and-down trend. Tuesday’s rally briefly exceeded the index’s 10-day short-term moving average.
The index has traded for short periods above its 10-day moving average in every session since September 28. But he was unable to record a daily close above that level. A move above this indicator could suggest a change in market mood.
In terms of longer-term support, the Dow Jones now has four weekly close below its 50-day moving average. This is its longest pullback below that support level since March and April 2020.
For a more detailed analysis of the current stock market and its state, study the big picture.
The S&P 500 is also holding just below its 10-day line, after hitting a new low on Monday. Monday’s lows for the Nasdaq composite and the S&P 500 could be the start of a low for the current market pullback. Troughs can eventually lead to further uptrends, but this process takes at least several days to take shape.
A resilient element of the recent market downturn has been small caps. The S&P Smallcap 600 continues to trade above its 50-day moving average, after rebounding after testing its 200-day line on September 22. and averages over 200 days. And the Russell is only trading 3.5% from its early September highs, down from 4.4% for the S&P 500 and down 6.2% for the Nasdaq.
Please follow Alan R. Elliott on Twitter @IBD_Aelliott
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