The stock market turned weak in the afternoon on Tuesday, with major indices trading near the day’s lows. The apparent easing of COVID restrictions in China did not allay stock market apprehensions about upcoming data and Jerome Powell’s speech.
The Nasdaq Composite fell 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 well below its 50-day moving average.
Small caps challenged the major indices as the Russell 2000 climbed 0.3%. Volume jumped on the NYSE and Nasdaq compared to the same time on Monday.
Today’s fall followed Monday’s decline of about 1.5% in the major indices. The S&P 500 fell below 4,000 in Monday’s selloff and has remained below that level.
hibbett (HIBB) slumped more than 11% on heavy volume, though it trimmed losses after bouncing off the 50-day line. The sporting goods retailer missed October-quarter sales and profit expectations, according to FactSet.
Rally in China’s stock markets
Beijing signaled it would ease some of the COVID lockdown, leading to 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 level since Sept. 15, according to Dow Jones market data. The Hang Seng index rose 5.2%, its best day since Nov. 11. Hong Kong’s benchmark index is up 24% so far this month.
The iShares Hong Kong ETF (EWH) gained nearly 3%. The ETF has maintained support at the 50-day moving average since gapping above on November 11.
A handful of Chinese stocks gained after the earnings report. streaming video service bilibili (BILI) soared over 22%, rising above the 50-day moving average. social media platform Joy (YY) up about 8% Kanjhun (BZ) rose 13.5%. software company baozun (BZUN) missed the rally, dumping 2.2% in the afternoon.
All those stocks are in deep corrections.
e-commerce portal pinduoduo (PDD) dropped off a cup base on Monday after a strong earnings report and added 6% in afternoon trading. It has now moved beyond 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 on Monday are lifting the IBD 50 today.
Crude oil rose 0.2% to $77.33 a barrel. Earlier, crude oil had risen about 2 per cent on the expectation of relaxation in Chinese lockdown.
The housing market extended a weak spell.
The S&P CoreLogic Case-Shiller Home Price Index declined to 10.9% in September from 13.1% a year earlier. According to Econoday, economists had forecast a growth of 10.9%. The index fell 1.5% in September from the previous month — its third straight monthly decline.
The SPDR S&P Homebuilders ETF (XHB) rose 0.2% and is facing resistance at the 200-day moving average.
Investors await Powell’s comments
On the economic front, Federal Reserve Chairman Jerome Powell will deliver a speech at the Brookings Institution on Wednesday that will have the full attention of stock market investors. Powell will also take some questions from the participants.
In other economic developments, the November jobs report comes out on Friday. The latest jobless claims report and manufacturing-sector data are due on Thursday.
The Conference Board’s consumer confidence survey for November fell to 100.2 from 102.2 the previous month. The survey marked a four-month low and was a second-straight monthly decline.
In an analysis of the survey, BMO Capital Markets economist Priscilla Thiagamurthy said consumers have reduced plans to make major purchases in the next six months.
“It is good news for the Fed that it is trying to reduce demand and restore price stability,” he said. “While households have, so far, proved more resilient than expected amid a strong job market and excess savings, inflationary pressures will continue to be major constraints to consumer sentiment and spending plans.”
Also in the survey, 45.8% respondents said that there remains an abundance of jobs, compared to 44.8% in October. Those who believe it is difficult to keep jobs stable at 13%.
The yield on the 10-year Treasury note rose 2 basis points to 3.72%.
You may also like:
GET THE FREE IBD NEWSLETTERS: Market Prep | Tech Report | how to invest
What is Cane Slim? If You Want to Find Winning Stocks, Better Know This
IBD Live: Learn & Analyze Growth Stocks with the Pros
MarketSmith’s Tools Can Help the Individual Investor