Dow Jones futures fell early Thursday, along with the S&P 500 and Nasdaq futures, with some important job and inflation data to be expected before the market opens.
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The stock market rally sought direction on Wednesday. The main indices closed closely mixed. But the details showed additional weakness, with the losers easily outnumbering the winners.
With the upward trend under pressure, it’s not a good time to make new purchases or hold more than exposing symbols.
The medical sector continues to lead, bouncing off losses on Tuesday. UnitedHealth (UNH) rose in the buying zone after it just exploded on Wednesday. Vertex Pharmaceuticals (VRTX) regained its early entry after retreating on Tuesday. McKesson (MCK) holds key support at its shallow base, not far from an aggressive entrance. Lantheus (LNTH) is trading around its 50-day line, consolidating after a huge increase earlier this year. All have relative lines of force close to record highs.
The elite furniture retailer RH (RH) lowered its forecasts for the whole year, citing weaker demand and a deteriorating economic environment. Shares of RH fell solidly overnight, signaling a new two-year low. Shares have already fallen 11% so far this week.
Simply Good Foods (SMPL), which makes low-carb snacks and shakes, reported earnings early Thursday. Shares of SMPL rose 2% to 41.20 on Wednesday, close to early entry at 42.01 as part of consolidation.
Some other food and beverage stocks are doing well, reflecting the protective mindset of the market. Cereals giant General Mills (GIS) jumped 6.35% on Wednesday to 74.72, a breakout in profits and an increase in dividends. Post Holdings (POST) is right at the point of purchase while Kellogg (K) is set.
Shares of Tesla fell 1.8% to 685.47, down 7% so far this week. Shares continue to withdraw from their 10-week moving average and return to the last lows. Shares of LI rose 2.7% to 38.08, back above the buy point, but remain strongly expanded by key moving averages. Tesla (TSLA) and Chinese electric car startup Li Auto (LI) will report sales for the second quarter later this week.
UNH shares are on the IBD Leaderboard. LNTH shares are on the watch list. Shares of Simply Good Foods, UnitedHealth and VRTX are on IBD 50. Shares of Vertex and MCK are on IBD Big Cap 20. Lantheus was shares of IBD on Wednesday.
The video embedded in this article analyzes Wednesday’s market action and discusses the shares of GIS, McKesson and Neurocrine Biosciences (NBIX).
Dow Jones futures today
Dow Jones futures fell 0.7% to fair value. S&P 500 futures lost 0.8% and Nasdaq 100 futures fell 0.9%.
The yield on 10-year bonds increased by 1 basis point to 3.1%.
China’s manufacturing index for China rose 0.6 points in June to 50.2, returning above the level of profitability of 50 for the first time in four months as the country recovers from the blockade of Covid. But it was a little below the 50.5 views. The services index jumped to 54.7 from 47.8 in May.
The US ISM manufacturing index for June is expected on Friday morning, after several negative regional factory reports.
At 8:30 a.m. ET on Thursday, investors will receive key data on U.S. jobs and inflation. The Ministry of Labor will publish weekly unemployment applications. The Department of Commerce will issue a revenue and expenditure statement in May that includes the Federal Reserve’s favorite inflation indicator.
Remember that overnight trading 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 rally
The stock market rally was trading in a narrow range on Wednesday.
The Dow Jones industrial average fell less than 0.1% on the stock market on Wednesday. The S&P 500 index lost a small part. The Nasdaq index rose 0.3%. Russell 2000 with a small capitalization lost 1%.
Crude oil prices in the United States fell 1.8 percent to $ 109.78 a barrel, reversing from stable morning gains. Gasoline futures fell 2.8%.
The yield on 10-year government bonds fell 12 basis points to 3.09%. The two-year yield fell to 3.06%. The yield spread from two to 10 years is reduced to 3 basis points, highlighting fears of a recession.
Fed chief Jerome Powell reiterated on Wednesday that the central bank’s priority is to fight inflation, even at risk of recession.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 1.25%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 0.75%. The iShares Expanded Tech-Software Sector ETF (IGV) ETF rose 0.2%. VanEck Vectors Semiconductor ETF (SMH) sank 1.8%.
The SPDR S&P Metals & Mining ETF (XME) was down 2.8% and the Global X US Infrastructure Development ETF (PAVE) was down 1.3%. The US Global Jets ETF (JETS) fell 1.5%. The SPDR S&P Homebuilders ETF (XHB) was down 0.4%. The Energy Select SPDR ETF (XLE) fell 3.5% and the Financial Select SPDR ETF (XLF) fell 0.6%. The health care fund for a selected sector SPDR (XLV) increased by 0.9%, with shares of UNH, Vertex and McKesson all in the ETF.
Reflecting more speculative stocks, the ARK Innovation ETF (ARKK) fell 1.6% and the ARK Genomics ETF (ARKG) lost 0.6%. TSLA shares remain the leading ETKs in Ark Invest.
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Market rally analysis
The stock market rally did not show an upward effect, but only managed a mixed session after the big losses on Tuesday.
The details were less impressive, with the declines outpacing the stock rise by almost 2 to 1 on both the NYSE and the Nasdaq.
The market moved to an “upward trend under pressure” on Tuesday after the Nasdaq composite and S&P 500 closed below their Friday’s lowest levels.
Research by Eric Krul, co-author of The Lifecycle Trade, shows that there is a 90% chance that the rally will eventually fail when the index closes below its lowest level since the next day.
The rally did not officially end until the indices undercut their last low levels.
The Dow Jones did not close below its lowest level for the day, but it is not far.
Russell 2000, for its part, closed below the bottom on Friday Wednesday.
The medics recovered while the protective food supplies did well. But energy reserves, which bounced back earlier in the week, fell sharply on Wednesday.
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What should we do now
The stock market rally is not over, but the prospects are not great. The odds are just not in your favor right now. Investors need to focus on maintaining their mental and physical capital and prepare for a sustainable upward market.
Read the Big Picture every day to stay in line with market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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