Dow futures were little changed early Monday, along with S&P 500 futures and Nasdaq futures. Berkshire Hathaway (BRKB) Earnings, Apple iPhone 14 Pro production problems and reports meta pads (META) Layoffs made headlines this weekend.
Even with a strong close to Friday’s session, the stock market rally took a hit last week, as major indices slipped on hawkish comments from Federal Reserve Chairman Jerome Powell.
The Nasdaq had its worst week since January as giant brands slumped and cloud software crashed.
apple (AAPL), Amazon.com (AMZN) and father of Google the alphabet (GOOGL) They all lost more than 10% during the week, with a parent on Facebook meta pads (META), Tesla shares and Microsoft shares are not far behind. Google Stock, Meta, Amazon.com (AMZN) and Microsoft (MSFT) all hit bear market lows. Apple stock and Tesla (TSLA) They haven’t, but they are close.
while, Twilio (TWLO) and Atlassian (TEAM) collapsed on Friday on disappointing results and guidance, losing more than 40% for the week. A large number of other software names have fallen off, with or without profits.
Market rally trying to fight Fed as key tech sector slumps? This is a long request. So while some stocks and sectors are showing strength, investors should be very careful in the current environment.
Dow jones futures contracts today
Dow Jones futures contracts were fixed to fair value. S&P 500 futures were little changed and Nasdaq 100 futures were down 0.1%. Futures contracts were in good shape from their lows on Sunday evening.
China’s exports unexpectedly fell in October, while Covid cases in the country hit their highest level in six months. Hong Kong’s Hang Seng rose strongly overnight, extending recent gains. Investors are still hopeful that the Chinese government will ease its non-proliferation policy, as speculated on social media.
Crude oil fell more than 1% while natural gas futures rose 9%.
The dollar, which fell on Friday, rose slightly.
Remember that overnight action in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
The Wall Street Journal reported on Sunday that Meta platforms will cut thousands of jobs. The Wall Street Journal said an announcement could come as early as Wednesday. Meta had more than 87,000 employees at the end of September. On October 26, Meta reported a 49% drop in earnings per share in the third quarter and cut guidance amid worsening reverse spending. META stock fell 25% the next day, with shares continuing to fall.
Late last week, Twitter’s new owner, Elon Musk, cut half of its 7,500 social media workforce.
Apple said Sunday that we “now expect iPhone 14 Pro and iPhone 14 Pro Max shipments to be lower than we previously expected.” This is due to Covid restrictions at the Foxconn factory in Zhengzhou, China. Apple’s revelation is not a shocker given Foxconn’s reported problems. Foxconn warned Monday that disruptions from the Covid virus will hurt fourth-quarter earnings.
Apple said the 14 Pro and Pro Max are still going strong, but that shipments will take longer.
Warren Buffett’s Berkshire Hathaway on Saturday reported a 20% increase in operating profit. The conglomerate suffered a net loss as a persistent bear market hit investments.
Goldman Sachs now expects S&P 500 earnings to stabilize in 2023, down from its previous target of 3%.
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stock market rise
The stock market rally started the week in decent fashion but sold off on Wednesday afternoon after Fed Chairman Jerome Powell’s hawkish comments. Leading indicators shed more ground on Thursday. Stocks tumbled Friday after the mixed jobs report, but eventually closed with a solid rise that day.
The Dow Jones Industrial Average is still down 1.4% in stock trading last week. The S&P 500 fell 3.3%. The Nasdaq Composite Index is down 5.7%, posting its worst loss since the week ending Jan. 21. The Russell 2000 Small Capital Index is down 2.4%.
The 10-year Treasury yield jumped 15 basis points to 4.16%. The 10-year yield resumed its advance after cutting a 12-week winning streak and briefly retracing around 4%.
The dollar rose 0.2 percent during the week, but fell 1.9 percent on Friday, the largest one-day decline in years. This likely contributed to the stock market’s advance on Friday.
Markets now see a 61.5% probability of a 50 basis point hike at the Federal Reserve’s December meeting. The October CPI is due on Thursday. The November jobs and CPI reports will be released ahead of the Federal Reserve’s December 14th rate hike.
US crude oil futures jumped 5.4% last week to $92.61 a barrel. Natural gas is up about 13%.
Apple stock, which climbed to the 200-day streak, fell 11.15% to 138.38 in the past. AAPL stock came in within a penny of its October low, although it is still far from its June bear market low. Microsoft slid 6.1%, Google 10.1%, Amazon 12%, and META 8.5%, all to multi-year lows. Tesla stock fell 9.2%, approaching its lowest level on October 24 on Friday. That’s after the TSLA kicked off the week on a strong note, posting 237.40 through Tuesday.
Meanwhile, it’s dark days for cloud software. Atlassian stock is down 29% on Friday and 38% over the week. Twilio stock collapsed about 35% on Friday and 43.5% for the week. snowflake Snow, which has not reported for a few weeks, is down 17% for the week.
while, fortinet (FTNT) collapsed 17.5% for the week as weak billing guidance offset strong earnings and bullish revenue expectations. Paycom (PAYC) down 10.3% despite strong results and guidance.
Companies looking to cut costs may limit spending on programs as they set budgets for 2023.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) fell 1.2% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) lost 2%. The ETF (IGV) in the iShares Expanded Tech-Software Sector (IGV) was down 10.2%, with MSFT stock holding the key. The VanEck Vectors Semiconductor ETF (SMH) was down just 0.7%, after jumping 4.65% on Friday, to close higher in the weekly range.
The SPDR S&P Metals & Mining ETF (XME) is up 2%. The index of the Global Infrastructure Development Fund (PAVE) of the US company Global X fell 0.1%. The US Global Jets ETF (JETS) was up 0.3%. The SPDR S&P Homebuilders ETF (XHB) is down 5%. The Energy Select SPDR ETF (XLE) is up 2.4%, just below an eight-year high. The Financial Select SPDR ETF (XLF) was down 0.9%. SPDR Fund (XLV) for the healthcare sector fell 1.5%.
Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKK) fell 9.4% last week and the ARK Genomics ETF (ARKG) slid 4.65%. Tesla stock is a major ownership across Ark Invest ETFs.
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Market Rise Analysis
The stock market rally had a bad week, with the Fed being hawkish and often weak earnings weighing on major indices. The Dow Jones index, which led the market upside, saw the lowest decline, but fell below the 200-day moving average. Russell 2000 hit resistance near the 200-day line but recovered on Friday to close above the 50-day level. The S&P 500 was stabbed in 50 days.
The Nasdaq, which never reached the 50-day moving average, fell below its follow-up day low on Wednesday, a bearish sign.
Major indices extended losses on Thursday, then rose on Friday on the back of a mixed jobs report.
Negative market movement and significant reversals in many stocks led to a “market under pressure” shift.
The biggest driver was Fed Chair Powell, who pulled the rug out of the market’s rally by pointing to a shift to smaller but higher price hikes on the fed funds.
Meanwhile, tech giants, including Apple, Tesla, Amazon and Meta stock, have suffered huge losses. Cloud software names like Atlassian and Twilio have faded, with significant factors in earnings and recent trends.
The chips haven’t had a relatively bad week, but there are a few names trading near the highs.
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There are many flexible market areas. The healthcare sector appears to be strong overall. Energy names, including a wide range of oil, liquefied natural gas, and coal miners, as well as a few solar stocks, are doing well.
Lithium and some steel plays work well. Infrastructure companies for the energy, utilities and telecom industries are a luminous area. Networking companies in general are a rare leading technology field. Some restaurants and retailers are emerging that offer strong discounts. Many financial institutions, particularly brokers and brokerages, have made solid gains.
However, it is difficult to see a strong recovery in the market with such huge technology sectors reeling. It would be hard enough for the major indexes to advance as Apple, Google, Tesla, and Cloud software names lag. But are you trying to advance with those areas that are sinking or collapsing?
If the inflation reports show a clear and meaningful decline, resulting in a downward shift in the Fed rate increases, then perhaps massive cloud software and cloud software could decline. However, a return to technical leadership may prove elusive. On the flip side, if the October CPI report released on November 10 shows inflation remains hot, tech stocks may pull key sectors lower to end the market rally.
Tuesday is election day. The stock market tends to do better with a divided government, and Republicans are set to claim control of the House and possibly the Senate. But political forecasters have been expecting the Republican Party to win the House of Representatives at least all year, so it’s not clear whether Tuesday’s actual results will be much of a catalyst.
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What are you doing now
The stock market is rising under pressure. The Fed is going from fast and furious to slow and long, but it’s still hawkish. The technology sector is a train wreck. Key indexes undermined some key levels. Leading indices and stocks are subject to significant intra-day and daily fluctuations.
This is not a good environment to buy stocks. Investors should look to reduce exposure, either explicitly or simply by cutting losses on various positions.
If the market rally shows renewed strength, with the S&P 500 and possibly the Nasdaq moving above the 50-day moving averages, investors may start adding exposure. But that will likely require technology to stabilize and inflation data to show some coolness.
If conditions improve, you’ll want to be ready. There are a number of stocks being created, and many of them are not too far behind. So build your own watch lists, be patient and stay engaged.
Read the big picture every day to stay in sync with market trend, stocks and leading sectors.
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