Dow Jones futures open Sunday night, along with S&P 500 futures and Nasdaq futures.
X
The stock market rally suffered heavy damage this week due to a hawkish Fed outlook and weak economic data that raised concerns that the Federal Reserve will lead the economy into a recession. The Nasdaq and S&P 500 indexes closed the week below their 50-day moving averages.
Megacap stocks remain a drag on major indexes, in particular Apple (AAPL) and Tesla (TSLA), with TSLA stock falling to fresh bear market lows. Amazon.com (AMZN) and Google parent Alphabet (GOOGL) are not far off their lows. Microsoft did not lose much for the week but fell from the 200-day line. Nvidia (NVDA), which has been part of a chip rebound, turned lower, back below key support.
But megacaps don’t hide underlying strength. Most stocks that have flashed buy signals in recent days and weeks have turned south. Leading sectors are also suffering.
Insult (PODD), Commercial Metals (CMC), Elf Beauty (ELF), Peabody Energy (BTU) and Dow Jones giant larvae (CAT) holds up relatively well. However, nothing can be done now.
Investors should be cautious in making any purchases in the current market, but focus on cutting exposure and building watchlists.
The video embedded in this article reviews the market action in depth, while also analyzing Insulet, Elf Beauty and CAT stock.
Dow Jones Futures Today
Dow Jones futures open at 6 pm ET, along with S&P 500 futures and Nasdaq 100 futures.
Remember that overnight action in the Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
Join IBD’s experts as they analyze stock market rally action on IBD Live
Stock Market Rally
The stock market rallied on Tuesday morning, but sold off sharply, ending the week with heavy losses.
The Dow Jones Industrial Average fell 1.7% in stock market trading last week. The S&P 500 index was down 2.1%. The Nasdaq composite fell 2.7%. The small-cap Russell 2000 yielded 2.4%.
The 10-year Treasury yield fell 9 basis points to 3.48%. Despite the hawkish Fed talk, markets expect a quarter-point hike in February and in March, but with an increasing chance of no move in March.
US crude oil futures rose nearly 5% to $74.29 a barrel last week.
Dow Giant Leads 5 Strongest Stocks
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) erased big early gains to end the week up 0.5%, with MSFT stock a major holding. The VanEck Vectors Semiconductor ETF (SMH) staged its own outside, downside reversal week, losing 2.9%. Nvidia stock is a key component of SMH.
Reflecting more speculative stocks in the story, the ARK Innovation ETF (ARKK) skidded 4% last week, more than a five-year low. The ARK Genomics ETF (ARKG) fell 0.4%. Tesla stock remains a major holding in Ark Invest’s ETFs.
The SPDR S&P Metals & Mining ETF (XME) fell 2.6% last week. The Global X US Infrastructure Development ETF (PAVE) lost 2.6%. The US Global Jets ETF (JETS) fell 3.6%. The SPDR S&P Homebuilders ETF (XHB) rose 0.4%, but closed near a weekly low. The Energy Select SPDR ETF (XLE) returned 2% and the Financial Select SPDR ETF (XLF) returned 2.5%. The Health Care Select Sector SPDR Fund ( XLV ) shed 1.8% after nearing a record high on Tuesday.
Five Best Chinese Stocks To Watch Right Now
Megacap Stocks: From Meocre to Meltdown
Dow Jones tech titan Apple stock traded up 5.4% for the week, to 134.51. AAPL is off October-November lows, with a June bear market low of 129.04 next. Fellow Dow component Microsoft fell 0.3% to 244.69, but after pulling back from 263.92 Tuesday morning as it ran toward its 200-day line. Amazon stock fell just 1.4% to 87.66, but fell from a weekly high of 96.25 to close near a November 9 bear market low of 85.87. Google stock fell 2.8%, turning down from Tuesday’s high. Nvidia moved above its 50-day line earlier in the week, but ended up 2.5%.
Tesla stock was the big loser, falling 16.1% to 150.23, the lowest since November 2020. It was the worst weekly decline since the Covid crash in March 2020. China concerns demand , Elon Musk’s latest TSLA stock sales and Musk’s Twitter focus is heavy. in parts.
Tesla will build a new car plant in northeastern Mexico, Bloomberg reported Friday night, with an announcement likely in the coming days. It is not clear which vehicles the factory may produce. A plant in Mexico would offer relatively low costs compared to Tesla’s Fremont, Austin and Berlin factories, while still being close to the US
Tesla vs. BYD: Which EV Giant is the Better Buy?
Market Rally Analysis
In a few days, the stock market rally suddenly moved from moving above a trading range to falling below. The weekly percentage loss of the major indexes is large, but the damage is worse.
Shortly after Tuesday’s open, the major indexes all hit rally highs on a good inflation report, with the S&P 500 back above its 200-day line and the Dow Jones at its most good level for almost eight months. But indexes pared gains, with the S&P 500 closing at a 200-day low. On Wednesday, key indexes turned lower as the Federal Reserve and Fed chief Jerome Powell signaled more rate hikes ahead.
On Thursday, selling intensified amid weak economic data that fueled recession fears. The Nasdaq and Russell 2000 fell below their 50-day lines, while the S&P 500 and Dow Jones broke below their 21-day lines. All sank to their worst levels in more than a month, capping weeks of sideways trading.
On Friday, the S&P 500 fell below its 50-day line. The Dow is almost there.
It was a big, negative outside week for all the major indexes, with the highs and lows exceeding the range of the previous four weeks.
The leading stocks were beaten, with few exceptions. Industrial, solar, medical, travel and miscellaneous chip and network names are all under moderate to severe pressure.
Megacap stocks remain clear laggards overall. Tesla stock continues to slide to fresh two-year lows. Amazon stock is just above bear-market lows while Google is moving in that direction. AAPL stock fell to its lowest level in nearly six months, with bearish downgrades in sight.
Microsoft stock and Nvidia may not be laggards, but they’re not leaders either. Both are below their 200 day lines.
Perhaps this uptrend is a bear market rally that has run its course, with indices returning to their October lows. Perhaps the S&P 500 will rebound quickly or become rangebound for the long term.
The only thing that is clear is that the market is not moving well right now.
Time The Market With IBD’s ETF Market Strategy
What To Do Now
Investors should reduce exposure due to the deterioration of the overall market and the performance of most individual stocks.
While under pressure, this is still a market rally. A few good days can boost confidence in the move and bring many stocks back to buy positions. Of course, even in that scenario, investors should be cautious of new purchases, given the rally’s pattern of withdrawal and elimination of strong gains.
So stay engaged. Keep working on the watchlists. Focus on stocks that hold key moving averages and support levels and generally show strong relative strength, such as Caterpillar, Insulet and ELF stocks.
Read the Big Picture every day to stay in tune with market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
YOU MAY ALSO LIKE:
Why This IBD Tool Simplifies The Search For Top Stocks
Get The Next Big Winning Stock With MarketSmith
Want To Earn Quick Profits And Avoid Huge Losses? Try SwingTrader
Best Growth Stocks To Buy And Watch
IBD Digital: Unlock IBD’s Premium Stock Lists, Tools And Analysis Today
