Futures: S&P 500 breaks key level; Due Inflation Report

Dow futures rose slightly on Thursday, along with S&P 500 and Nasdaq futures, after a tough day for the S&P 500 and a stock market rebound. All eyes will be on the October CPI inflation report.




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The stock market rally lost steam on Wednesday, with the S&P 500 index back below its 50-day moving average. Mixed election results, ongoing Bitcoin troubles, renewed lockdowns in China – and a looming consumer price index – were potential contributing factors.

Bitcoin plunged to a two-year low as Binance, the world’s largest cryptocurrency exchange, said Wednesday afternoon that it would not buy rival FTX.

Megacaps did not help. Tesla (TSLA) fell below key levels to a two-year low on Wednesday, with a longtime bull on Thursday denouncing the impact of the “Twitter Circus” on the Tesla brand. Amazon.com (AMZN) also identified new lows for the bear market. apple (AAPL) had its worst shutdown since June, while Microsoft (MSFT) and the father of Google the alphabet (GOOGL) It’s down a bit.

Facebook Parent meta pads (META) was the exception, rebounding after job and spending cuts were announced. But major suppliers are down.

Main earnings

Catalyst Pharmaceuticals (CPRX), energy superiority (EE), Centennial collectibles (CELH) and Rivian (countryside).

CPRX stock rose slightly in pre-market activity as Catalyst Pharma outperformed EPS and revenue perspectives. Biotech also included fourth-quarter sales in line with the consensus. Catalyst stock is down 5.35% on Wednesday, returning to near an early entry.

CELH stock jumped overnight on solid percentage growth in revenue after the energy drink maker fell on Wednesday to its lowest level since July. Rivian stock rebounded on mixed results for the third quarter after falling to a four-month low Lucid Results (LCID). EE stock fell modestly in limited trading after Excelerate earnings exceeded views. Excelerate stock slipped on Wednesday, testing the 50-day line.

early thursday, New (NIO) reported a larger-than-expected loss early Thursday, but revenue topped. Tesla rival China EV also provided conservative guidance for the fourth quarter on deliveries amid recent production issues related to Covid. Nio’s stock rose modestly in pre-market trading. Shares slumped to a two-year closing low on Wednesday as southern manufacturing hub Guangzhou announced a Covid shutdown, drawing criticism from many Chinese stocks.

Meanwhile, the networking company Digi International (DGII) Also on tap this morning. On Wednesday, DGII stock fell towards the 50-day line as it acts on a bullish fundamental buy point.

CPI Inflation Report

October CPI will be released at 8:30 AM ET on Thursday. Economists expect the CPI inflation report to show prices rising 0.7% compared to September. Core CPI, which excludes food and energy, should rise 0.5%.

Annual CPI inflation should fall to 8% from 8.2% in September. Core inflation is expected to remain steady at 6.6%.

The Fed wants to see clear and convincing evidence of slowing inflation before ending interest rate hikes. Markets are leaning slightly towards a 50bp rate hike in December, but there is still a strong chance of a fifth straight move of 75bp. Employment data and CPI report for November will be released before the Fed meeting and announcement.

Dow jones futures contracts today

Dow futures rose 0.1% against fair value. S&P 500 futures rose 0.2% and Nasdaq 100 futures rose 0.4%.

The 10-year Treasury yield fell 6 basis points to 4.09%.

Bitcoin traded above $16,000, well off two-year lows on Wednesday afternoon.

Crude oil prices fell slightly while natural gas rose.

Remember that overnight action in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.


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stock market rise

The stock market opened mixed higher on Wednesday but then pulled back, especially in the afternoon, to close at session lows.

The Dow Jones Industrial Average is down nearly 2% in the stock trading session on Wednesday. The S&P 500 fell 2.1%. The Nasdaq slipped 2.5%. Small cap Russell 2000 fell 2.7%.

The 10-year Treasury yield rose 2 basis points to 4.15%.

The dollar saw a strong trading session, after a massive three-day decline.

US crude oil prices fell 3.5 percent to $85.83 a barrel. Weekly US crude inventories rose by the most in a month. Meanwhile, lockdowns in China have raised concerns about crude oil demand there. US natural gas futures fell 4.5%.

Bitcoin

Bitcoin plunged again as Binance’s initial deal to buy FTX collapsed on Tuesday, with Binance withdrawing after perusing its rival’s books. “Our hope was to be able to support FTX clients to provide liquidity, but the issues are beyond our control or ability to help,” Binance said in a statement on Wednesday afternoon.

FTX, which earlier this year appeared to be a potential savior for struggling crypto firms, is now in danger of collapse.

Bitcoin dropped as low as $1,554.48, its worst in two years. The leading cryptocurrency broke below $20,000 on Monday alone. Other major cryptocurrencies such as Ethereum also continue to sell, along with crypto-related stocks.

ETFs

Among the top ETFs, the Innovator IBD 50 ETF (FFTY) shed 4.2%, while the Innovator IBD Breakout Opportunities ETF (BOUT) shed 1.8%. The ETF (IGV) in the iShares Expanded Tech-Software Sector (IGV) fell 2.2%, with Microsoft stock being a major component. The VanEck Vectors Semiconductor Index (SMH) fell 2.7%.

Reflecting speculative story stocks, the ARK Innovation ETF (ARKK) is down 6.5% and the ARK Genomics ETF (ARKG) is down 4.3%. Tesla stock is a major ownership across Ark Invest ETFs.

The SPDR S&P Metals & Mining ETF (XME) slipped 5.4% and the US Global X Infrastructure Development Fund (PAVE) lost 2.1%. The US Global Jets ETF (JETS) is down about 1%. The SPDR S&P Homebuilders ETF (XHB) was down 1.75%. The Energy Select SPDR ETF (XLE) sold 4.9% and the Financial Select SPDR ETF (XLF) fell 1.7%. The SPDR Fund (XLV) in the selected healthcare sector fell 1.1%.


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Tesla Stock

Tesla stock fell 7.2% to 177.59, breaking its 2021 lows. Late Tuesday, Elon Musk revealed that he sold nearly $4 billion of TSLA stock on November 4, 7, and 8, possibly to help fund his acquisition of Twitter. It could raise the disclosure of TSLA shares, though Musk has yet to say he’s finished his last batch of stock sales.

Elon Musk’s acquisition of Twitter has a broader impact. It takes up a lot of his time and there are concerns that his moves and tweets on Twitter will harm the Elon Musk brand, and possibly Tesla as well. At a Twitter Spaces event on Wednesday, Musk talked about subscriptions and added savings and payments features, but he didn’t do much to win back wary advertisers.

Also, Tesla could fall along with other stocks exposed to China in the wake of the escalating shutdowns there. Moreover, several US and Chinese electric car stocks suffered double-digit losses on Wednesday, including shares of Nio, Lucid and RIVN.

Finally, Tesla still owns some Bitcoin.

Late Wednesday, President Biden, when asked if Musk posed a national security risk, said “it’s worth looking into,” adding that there are “many ways” to do so.

TSLA stock pared its modest gains early in the market as Wedbush analyst Dan Ives cut its price target to 250 from 300 and pulled Tesla off its “best ideas” list. “The circus show on Twitter is slowly starting to affect the original electric brand of Tesla cars and this may affect demand in the future,” he said.


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Other Megacap Stock

Meta Platforms will cut 11,000 jobs, or 13% of its workforce. Facebook’s parent company will also limit infrastructure spending as investors have refrained from incurring huge costs. META stock rose 5.2%, but spending restrictions affected Arista Networks (Network), nvidia (NVDA) and other suppliers are taking advantage of metaverse’s boasts.

Apple stock fell 3.3% to 134.87. While the iPhone maker didn’t cut its October lows or the June 16 bear market bottom, AAPL stock closed at its worst level since June 17. Earlier this week, Apple warned that China Covid restrictions would hurt iPhone 14 Pro production.

Amazon stock lost 4.3%, falling to its lowest point since March 2020. MSFT stock fell 1.9%. Google stock fell 1.8%. But both are still slightly higher during the week.

Market Rise Analysis

Just when the stock market rally seemed to regain momentum, the selling returned on Wednesday. The Dow Jones fell just below the 200-day line. The S&P 500 has once again fallen below its 50-day moving average. Russell 2000 also broke below the 50-day streak.

The sluggish Nasdaq retreated after hitting resistance at the 21-day line on Tuesday.

Treasury yields rose, but not by much. The dollar has rebounded, but it is in a recent downtrend. Unconfirmed election results, which indicate a smaller-than-expected GOP wave, may have played a role. The decline in bitcoin, the shutdown of China and negative reactions often contributed to the earnings.

In the end, the market rally was under pressure last week. The S&P 500 above the 50-day line is the minimum strength for the market. A move by the Nasdaq above this key level would be a stronger signal.

The October CPI report could set the tone for Fed rate hike expectations, and possibly market direction, for at least a few weeks.


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What are you doing now

The market rally is limited in scope, although the Dow Jones is near recent highs and Nasdaq is near bear market lows. A choppy sideways market is very dangerous for investors.

A strong bull market generally lifts all boats. The bear market floods them, pushing everyone to dry land. But volatile market waters will do enough to lure investors with small indices buying and solid gains for individual stocks. But after buying near the short-term top, investors find themselves stuck in the shadow of the stock slump. This can go on constantly, with investors incurring a bunch of small losses or some very large ones.

It’s okay to make some test buys and hold positions if it works, although you might consider making at least partial profits quickly in this environment. But investors should wait for the market rally to show sustained strength before taking a major exposure.

But it is important to remain involved. Investors should have a game plan in place and implement it if the market or individual holdings fall to a lower or higher level. Update your watchlists so you are ready to take advantage of the next real bull market rally.

Read the big picture every day to stay in sync with market trend, stocks and leading sectors.

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