Dow Jones futures rose slightly on Sunday night, along with the S&P 500 and Nasdaq futures, amid some ups and downs. Warren Buffett reduced the buyout of Berkshire Hathaway (BRKB) in the first quarter as he condemned investing in a “gambling salon”. Nio (NIO), Xpeng (XPEV) and Li Auto (LI) said deliveries fell in April. But all eyes are on the Fed’s meeting this week.
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The correction in the stock market intensified last week, as the main indices sold out again, sinking on Friday at closing. Two attempts at a market rally failed almost as soon as they started. Investors need to stay almost or completely on the sidelines until the market offers clear signals of a steady upward trend.
Nutrien (NTR) starts fertilizer gains on Monday morning. Mosaic (MOS) announced late Monday and CF Industries (CF) on Wednesday.
Shares of NTR fell 5.4% to 98.25 last week, but found support around the 50-day line after a big rise. Shares of MOS fell 6.5% last week, but also closed about their 50-day line. Shares of CF recovered by just 0.2% by the end of the week, slightly above its rising 50-day line.
EV giant BYD (BYDDF) will soon announce sales in April. Tesla’s (TSLA) production and sales in China will be launched later in May.
Tesla shares are on the IBD Leaderboard. CF stocks are on IBD 50. All CF, Mosaic and NTR stocks are on IBD Big Cap 20.
The video embedded in this article discusses changing market actions and analyzes the shares of BRKB, Exxon Mobil (XOM) and Nutrien.
Fed meeting
The big event this week for investors is the Federal Reserve meeting on May 3-4. Politicians are almost certain to raise interest rates by 50 basis points and are expected to agree to start cutting the central bank’s huge balance sheet. Wall Street will join the Fed’s statement and Fed chief Jerome Powell’s press conference for evidence of future interest rate hikes.
Markets have estimated at least two more increases in the Fed’s interest rates by 50 points, but there is a chance that politicians will continue to increase by 75 basis points in the near future. Politicians are worried that inflation will strengthen, even if the increase on an annual basis may reach its peak. But aggressive interest rates could derail the economy, especially with Covid’s suspension in China and the ongoing war between Russia and Ukraine.
Warren Buffett shares: What’s in Berkshire Hathaway’s portfolio?
Dow Jones futures today
Dow Jones futures rose 0.1% to fair value, ranging from modest gains to small losses. S&P 500 futures rose 0.1% and Nasdaq 100 futures rose 0.3%.
Yields on 10-year bonds rose 5 basis points to 2.94%, just below the three-year high.
Remember that the action at night in Dow futures and elsewhere does not necessarily turn into actual trading in the next regular session of the stock market.
Join the IBD experts as they analyze the actions that can be taken in the stock market rally on IBD Live
Stock market last week
The stock market suffered a week of great ups and downs, but sold out hard for the week. Friday’s losses include all major index losses and then some.
The Dow Jones industrial index sank 2.5% in stock trading last week. The S&P 500 index fell 3.3%. The Nasdaq index fell 3.9%. Russell 2000 with a small capitalization also fell 3.9%.
The yield on 10-year bonds fell by 2 basis points to 2.89%, but after falling to 2.72% during the week.
US crude futures rose 2.6 percent to $ 104.69 a barrel last week.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 5.4% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) lost 2.5%. The ETF of the iShares Expanded Tech-Software Sector ETF (IGV) fell 1.9%. The VanEck Vectors Semiconductor ETF (SMH) fell 2.1%.
The SPDR S&P Metals & Mining ETF (XME) was down 3.8% last week. The Global X US Infrastructure Development ETF (PAVE) fell 2.8%. The US Global Jets ETF (JETS) was down 3.9%. The SPDR S&P Homebuilders ETF (XHB) was down 0.1%. The Energy Select SPDR ETF (XLE) was down 1.35% and the Financial Select SPDR ETF (XLF) was down 4.4%. The Health Care Fund for a selected sector SPDR (XLV) lost 2.5%.
Reflecting the more speculative stock history, the ARK Innovation ETF (ARKK) fell 10% last week and the ARK Genomics ETF (ARKG) down 11.15%, both to two-year lows. Tesla shares are still number 1 in Ark Invest’s ETFs. Katie Wood also has stakes in Nio, Xpeng and BYD.
BYD shares are also owned by Berkshire’s Buffett.
Five best Chinese stocks to watch now
EV sales in China
On Sunday, Nio, Xpeng and Li Auto reported a sharp drop in deliveries in April.
Nio delivered 5,074 vehicles in April, down 49% from 9,985 in March and up 29% from a year earlier. Nio’s production was suspended for part of the month as Covid’s shutdowns affected suppliers’ production and deliveries.
Xpeng delivered 9,002 vehicles, down 42% from 15,414 in March and up 75% from a year earlier.
Li Auto delivered 4,167 hybrid Li One SUVs, which is 62% less than in March 11,034 and 25% less a year earlier. Many suppliers are closed, which seriously affects Lee’s production.
BYD, which produces its own batteries and chips, appears to be less affected. The EV giant will certainly report huge growth compared to the previous year, but will it match or surpass the record sales for March of 104,878 cars?
In the last week, BYD reported that net profit for the first quarter rose 241% from a year earlier.
Shares of Nio fell 2.8% last week to 16.70. Chinese stocks initially rose on Friday due to regulatory hopes, but gave up gains. China signaled on Friday that it could end technological repression. It is also reported that Chinese and US regulators are close to an audit deal that will eliminate the risk that Chinese shares registered in the US will be removed.
Shares of Xpeng rose 3.1% last week. Shares of Li rose 0.45%.
Shares of BYD, which are traded off the US stock, fell 0.85% for the week. Unlike its smaller counterparts, BYD shares are above their 50-day line.
Tesla vs. BYD: Chinese EV giant ready to take the crown of EV
Tesla sales in China
Tesla’s sales in China in April will be published later in May as part of the overall data on trade in the industry. Tesla’s plant in Shanghai was closed from March 28 to about April 21. He now works with limited staff living on site. It is not clear when the output may return to normal.
Tesla’s production in Shanghai is expected to fall by more than 50% compared to March.
Tesla is likely to lose its crown from EV sales in the second quarter of BYD, although the Chinese company will do so with EV and plug-in hybrids.
Shares of Tesla fell 13.4% to 870.76 last week. CEO Elon Musk sold 9.6 million shares on Tuesday-Thursday worth about $ 8 billion, tweeting late Thursday that it is ready for now. This came after he pledged many shares of TSLA as part of his $ 44 billion Twitter purchase deal (TWTR). Shares of Tesla tried to bounce back on Friday, but hit resistance on the 50-day line and closed lower, staying below the 200-day line.
Tesla shares have a base with a cup with a handle with a buying point of 1152.97, according to MarketSmith analysis, but the chart has flaws.
Profit at Berkshire
Berkshire’s operating profit rose slightly to $ 7.04 billion. Net income fell 53% to $ 5.46 billion. Berkshire’s profits from the insurance business fell 94%. Profits from rail transport and utilities rose slightly. Berkshire’s revenue from manufacturing, services and retail sales rose 15.5% to $ 3.03 billion.
Berkshire lost $ 1.58 billion in investment in the first quarter amid a broad stock market sell-off.
Buffett Curbs Berkshire Buybacks
Buffett spent $ 3.2 billion on Berkshire shares in the first quarter, down $ 6.9 billion in the fourth quarter. The conglomerate has spent heavily on its shares in recent quarters, as Buffett saw few promising opportunities elsewhere. But in the first quarter, Berkshire agreed to buy insurer Alleghany Corp. (Y) for $ 11.6 billion. He also took a large stake in Occidental Petroleum (OXY).
Berkshire revealed on Saturday that its stake in Chevron (CVX) had jumped to $ 25.9 billion from $ 4.5 billion late last year. CVX shares are now Berkshire’s fourth-largest after Apple (AAPL) ($ 159 billion), Bank of America (BAC) ($ 42.6 billion) and American Express (AXP) ($ 28.6 billion).
Buffett condemns stock market Gambling Salon
At Berkshire’s annual shareholders’ meeting, Buffett said the stock market had become a “gambling salon” and American companies had become “poker chips.” Vice President Charlie Munger also condemned Wall Street’s “mania”. He praised Robinhood (HOOD) for his “disgusting” practices, saying the “unraveling” of the investment application was well deserved.
Availability of BRKB
Shares of BRKB cleared an even consolidation in early March with a buying point of around 325, rising to 362.10 on March 29. But the shares retreated. Last week, shares of Berkshire fell 4.1% to 321.90, breaking below the 50-day line and breaking the break in March.
The line of relative strength remains perennial peaks, as BRKB shares fell in line with the S&P 500 index. So Berkshire shares are still worth watching.
Market rally analysis
There were some big daily fluctuations last week, including some positive sessions. But in the end, the main indexes sold out again, extending their weekly series of losses.
After a big jump on Thursday, the Nasdaq index, the S&P 500 and finally the Dow Jones undermined intraday lows on Wednesday, ending their short-lived rally attempts.
Nasdaq is at its worst since late 2020. The S&P 500 is still above its bottom since February, but had its worst close since last June.
The market reach is anemic, with losers ahead of winners and new lows suppressing new highs.
The market correction may be on the verge of a new leg. Nasdaq is in a full-fledged bear market.
Fear indicators, such as the CBOE S&P 500’s volatility index, are higher, but have not yet peaked earlier this year. The CBOE Nasdaq Volatility Index, or VXN, is approaching.
Energy and fertilizer stocks are still looking good, but with many earnings reports for both sectors next week. Defense giants are not far from buying points, and profits are largely off the road. Some stocks of drugs show strength, but others are struggling.
Some tourist promotions are doing well, but like most groups they need a positive market wind to make serious …
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