Dow futures fell overnight, along with S&P 500 futures and Nasdaq futures FedEx (FDX) fell overnight on weak earnings and guidance. The stock market rally continued to weaken, as major indicators wiped out the small to modest bounce on Wednesday, while Treasury yields approached long-term highs.
The market is still dealing with Tuesday’s hot CPI inflation report, which changed the case for interest rate hikes from the Fed soon.
Adobe ADBE collapsed with mixed results and a $20 billion takeover. Oil and natural gas stocks have fallen along with energy prices, but solar and lithium stocks have also incurred huge losses.
Neurobiological Sciences (NBIX) and Vertex Pharmaceuticals (VRTX) continues to do well, although it hasn’t been easy to trade either.
Meanwhile, megacap technologies continue to weaken. apple (AAPL), which on Monday flashed an early buy signal, undermined Thursday’s short-term lows. Microsoft (MSFT) is approaching its lowest levels in June while the parent company of Google the alphabet (GOOGL) Set the lowest closing level in 19 months.
NBIX stock is on the IBD Leaderboard. Microsoft and Google are on the list of long-term IBD leaders. The VRTX stock is located in the IBD Big Cap 20.
After the close, FedEx reported that fiscal first-quarter earnings were down 21% year-over-year versus views that posted an 18% profit. Revenue increased modestly but slightly below expectations. The shipping giant also withdrew its fiscal year 2023 guidance and announced sweeping cost-cutting measures as it faces declining freight volumes. FedEx was due to announce first-quarter results on September 22.
FDX stock is down 16% in overnight trading. archival UBS (UPS) sank nearly 6%. Amazon.com (AMZN) fell 2%. Amazon has downgraded its ties with FedEx, but the warning could be bad news for e-commerce in general.
separately , General Electric GE said continuing supply chain problems are putting pressure on cash flow. General Electric stock fell 4% overnight.
Dow jones futures contracts today
Dow futures are down 0.45% against fair value. S&P 500 futures were down 0.7%. Nasdaq 100 futures were down 0.8%.
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 higher on Thursday but that didn’t last, as the selling quickly took hold.
Jobless claims fell again to a three-month low, but other data, including retail sales in August, generally pointed to a weaker-than-expected economy, but with price pressures easing. The Atlanta Federal Reserve’s GDPNow tool estimates third-quarter GDP growth of just 0.5% versus its forecast of 2.5% in August.
The Dow Jones Industrial Average was down 0.6% in stock market trading on Thursday. The S&P 500 lost 1.1%. The Nasdaq Composite lost 1.4%. Small cap Russell 2000 lost 0.7%.
Apple stock fell 1.9% to 152.37, paring its already huge handle drop. After rising above the 50-day and 200-day lines on Monday, stocks fell back below those key levels in the market crash on Tuesday.
Microsoft’s stock fell 2.7 percent to 245.38 Thursday, its lowest point since its mid-June low. Google’s stock fell 2% to 102.91, without trimming its intraday low on May 24, but its worst close since April 2022.
US crude oil prices fell 3.8 percent to $85.10 a barrel. Natural gas prices are down 8.7% as the averted rail strike will keep coal shipments going. Natgas rose on Wednesday.
The 10-year Treasury yield rose 5 basis points to 3.46%, despite the lackluster economic data. That’s just below the 11-year high of 3.48% set on June 14. One year return exceeded 4%.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) shed 2.1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) lost 1%. Shares of iShares Expanded Tech-Software Sector ETF (IGV) fell 3.2%, with major components being Adobe and MSFT shares. The VanEck Vectors Semiconductor Index (SMH) fell 1.8%.
The SPDR S&P Metals & Mining ETF (XME) is down 2.75%. The Energy Select SPDR ETF (XLE) is down 2.6% and the Financial Select SPDR ETF (XLF) is down 0.3%. The SPDR Healthcare Sector Selection Fund (XLV) jumped 0.6%.
Reflecting speculative stories stocks, the ARK Innovation ETF (ARKK) rose 2.2% and the ARK Genomics ETF (ARKG) rose 1.8%.
Top 5 Chinese stocks to watch right now
NBIX stock rose 2.5% to 106.93 Thursday. Neurocrine Biosciences now has a flat base with 109.36 buying points, according to MarketSmith analysis. Stocks have flashed some early entries in the past two weeks, but they have fallen quickly. Shortly after Wednesday’s opening, NBIX stock slipped to 100.46, testing the 50-day line and the previous base top. In theory, a trader would have bought Neurocrine while bouncing off the 50 day line, but it takes a brave soul to place that bet in light of market conditions.
The relative strength line reached a new high, reflecting the strong outperformance of NBIX stock in a weak market.
VRTX stock rose 1% to 287.67, just below the 50-day line. Vertex Pharmaceuticals flashed some early buying signals late last week, but was down 4.4% on Tuesday, down from the 50-day mark.
In a few days, Vertex stock may have its flat bottom.
Market Rise Analysis
The stock market rally shows no desire to recover. After Wednesday’s lackluster initial bounce from Tuesday’s heavy selling, these gains were easily wiped out by major indicators.
The Nasdaq 100, with the major weights of Apple, Microsoft and Google stocks, fell to its lowest level on Sept. 6 during the day. The Nasdaq and Standard & Poor’s 500 Index has yet to lower after its September 6 lows. But both put in their worst shutdowns since July.
A close of the Nasdaq below the September 6 low is likely to bring the market’s long-stalled rally to an end.
On a technical basis, the major indicators need to come back above the 50 day moving averages. 21-day streaks are now under 50-day streaks.
The looming Fed meeting adds to the risks over the next few days. More broadly, the market will likely struggle to make lasting progress until there is a strong feeling that the Fed will slow down and stop raising interest rates soon. That was the hope heading for Tuesday’s CPI inflation report. But no longer.
Meanwhile, not only is inflation higher than thought a few days ago, but economic activity is weaker. So the Fed will impose more “pain” amid the faltering economy.
A recession – or a zero-growing economy with tight labor markets – will be difficult for business.
Time to Market with IBD’s ETF Market Strategy
What are you doing now
Once again, the market rally was barely on hold. Several interesting stocks will flash a buy signal and then reverse lower the next day. It is a very challenging environment to invest in.
Until the major indices return above their 50-day moving averages, investors should have modest exposure, at most, and be extremely cautious about any new buying. Clarity on the Fed rate hike end game would be nice, but that may not come for several weeks or more.
Market conditions can improve or deteriorate rapidly. If it is the former, you will need to have an updated watchlist. If it’s the latter, you’ll be glad you worked on your watchlists versus buying new shares.
Read the big picture every day to stay in sync with market trend, stocks and leading sectors.
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