Stock Market Weakens At Midday As It Awaits Powell Speech; This IBD Index Outperforms
The stock market weakened at midday Tuesday, sending the main indexes near the day’s lows. An apparent easing of Covid restrictions in China could not offset the stock market’s apprehension about upcoming data and Jerome Powell’s speech.
The Nasdaq composite slid 0.6% and the S&P 500 fell 0.4%. The Dow Jones Industrial Average was off 0.3%. Apple (AAPL) continued to weaken, falling deeper below its 50-day moving average.
Small caps defied the main indexes, as the Russell 2000 climbed 0.3%. Volume jumped on the NYSE and Nasdaq compared with the same time on Monday.
Today’s declines compound Monday’s losses of about 1.5% in the major indexes. The S&P 500 dipped back below 4,000 in Monday’s sell-off and remained below that level.
Hibbett (HIBB) slid more than 11% in heavy volume, although it trimmed losses after bouncing off its 50-day line. The sporting goods retailer missed October-quarter sales and profit expectations, according to FactSet.
China Stock Markets Rally
Beijing signaled it will relax some of the Covid lockdowns that sparked protests in several Chinese cities.
China’s national health regulator downplayed the risks of the Covid Omicron variant and announced it would increase vaccinations for the elderly. In addition, Chinese regulators loosened restrictions on property companies looking to raise equity funding domestically.
The Shanghai Composite jumped 2.3%, to its highest close since Sept. 15, according to Dow Jones Market Data. The Hang Seng Index soared 5.2%, its best day since Nov. 11. Hong Kong’s benchmark index is up 24% for the month so far.
The iShares Hong Kong ETF (EWH) gapped up nearly 3%. The ETF has held support at the 50-day moving average since gapping above it Nov. 11.
A handful of Chinese stocks rallied after earnings reports. Streaming video service Bilibili (BILI) surged more than 22%, rising back above the 50-day moving average. Social media platform Joyy (YY) rose nearly 8% and Kanzhun (BZ) gained 13.5%. Software company Baozun (BZUN) missed the rally, dumping 2.2% at midday.
All those stocks are in deep corrections.
E-commerce portal Pinduoduo (PDD) broke out of a cup base Monday after a strong earnings report and added 6% in midday trading. It is now extended past its 5% buy zone.
The Innovator IBD 50 ETF (FFTY) was flat, yet it outperformed the major stock indexes. The same energy stocks that hurt the index Monday are giving the IBD 50 a lift today.
The price of crude oil pared gains to 0.2%, to $77.33 a barrel. Earlier, oil rose about 2% on hopes for loosening of Chinese lockdowns.
The housing market extended a weak spell.
The S&P CoreLogic Case-Shiller home price index slowed to a 10.9% increase in September, from 13.1% a year earlier. Economists had forecast a 10.9% increase, according to Econoday. The index fell 1.5% in September from the previous month — the third straight monthly decline.
The SPDR S&P Homebuilders ETF (XHB) rose 0.2% and is meeting resistance at the 200-day moving average.
Investors Await Powell Comments
On the economic front, Federal Reserve Chair Jerome Powell will deliver a speech Wednesday at the Brookings Institution that will have the full attention of stock market investors. Powell will also take some questions from participants.
In other economic events, the November jobs report comes out Friday. On Thursday, the latest jobless claims report and manufacturing-sector data are due out.
The Conference Board’s consumer confidence survey for November fell to 100.2 from 102.2 in the previous month. The survey marked a four-month low and it was the second-straight monthly drop.
In an analysis of the survey, BMO Capital Markets economist Priscilla Thiagamoorthy said consumers have lowered plans to make large purchases in the next six months.
“That’s good news for the Fed trying to dampen demand and restore price stability,” she noted. “While households have, so far, proven to be more resilient than expected amid a strong job market and excess savings, inflationary pressures will continue to pose major headwinds to consumer sentiment and spending plans.”
Also in the survey, 45.8% of respondents said jobs remain plentiful, up from 44.8% in October. Those who believe jobs are hard to get held steady at 13%.
The yield on the 10-year Treasury note rose 2 basis points to 3.72%.
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