Tech stocks led futures lower Tuesday as oil prices and bond yields continued to rally, and as lawmakers in Washington faced a federal shutdown deadline. Chipmakers and equipment suppliers took hard early hits, while earnings news and rising energy issues softened some early losses. Ford Motor rallied on an $11.4 billion EV plan. Also, on the Dow Jones today, Chevron and JPMorgan staked out early leads.
Losses for Dow Jones futures deepened to 0.4% just before the open. S&P 500 futures held steady at 0.7% below fair value. The early modest losses among small caps worsened, with Russell 2000 futures off 0.35%.
Meanwhile, Nasdaq 100 futures trimmed their decline to 1.3% on the stock market today, with ASML Holding (ASML), Moderna (MRNA) and Applied Materials (AMAT) remained at the bottom of the list. Applied Materials and Moderna also led the S&P 500’s decliners. The iShares Semiconductor ETF (SOXX) down 1.7% in early trade.
Oil stocks and earnings news helped prop the S&P 500. United Natural Foods (UNFI) surged 4.8% after a mixed fiscal fourth-quarter report. Shares are trading below a 42.50 buy point in a 17-week consolidation.
Also on the S&P 500, recreational vehicle maker Thor Industries (THO) bounded 3.3% higher after topping analysts’ fiscal fourth-quarter earnings and revenue targets. The stock has been consolidating since May.
Ford Motor (F) jumped almost 4%, after announcing an $11.4 billion joint venture with South Korean partner SK Innovation to build two electric vehicle production campuses in Kentucky and Tennessee. The company expects the facilities to employ nearly 11,000 workers. Ford stock is attempting to climb the right side of a 17-week consolidation.
Security software developer Okta (OKTA) led the few early advancers among Nasdaq 100 stocks. Shares rose 0.5% after an upgrade to overweight, from equal weight, by Morgan Stanley. The note lifted the stock’s price target to 315, from 275.
Dow Jones Today: AmEx Buy Point; JPMorgan Buy Range
On the Dow, Apple (AAPL) slumped 1.6% in early trade, after snapping a four-day rebound with a 1.1% drop on Monday.
Rising oil prices boosted Chevron (CVX) 1% early Tuesday, moving to add to a five-day rally that has lifted the stock 8.6%. But the Dow’s biggest mover over the past five sessions has been American Express (AXP). AmEx has rallied 10.1% as bond yields rebounded following the Federal Reserve’s stimulus tapering update last week.
The result left AXP stock up more than 46% since the start of the year, and less than 2% below a 179.77 buy point in what IBD MarketSmith analysis plots as a 10-week cup base. AXP shares slipped 0.3% early Tuesday.
JPMorgan (JPM) also rallied following the Fed update, rising 9.2% in the five days through Monday and giving it a year-to-date gain of 31.4%. JPMorgan stock broke out Monday past a 163.93 entry in a 16-week cup-with-handle base. Shares ended the session in a buy zone, which extends to 172.13.
Federal Shutdown, Infrastructure Spending Deadlines
A week of cutthroat political maneuvering in Washington has the Democrats straining to maintain their broad coalition ahead of a critical Thursday night deadline. A Monday vote by Senate Republicans shifted entirely onto Democrats the responsibility to adopt a measure to fund the government and prevent federal shutdowns otherwise set to begin on Friday. In addition, Democrats must find now a legal, single-party path to raising the debt ceiling, or face the risk of a first-ever U.S. default on debt in mid-October.
On Sunday, House Speaker Nancy Pelosi set a vote on Thursday for a $1 trillion infrastructure bill, ending attempts to link that measure to a much broader, larger social services spending effort being pushed by progressive Democrats. That is a positive for portions of the market linked to the $550 billion in new spending represented by the bipartisan infrastructure plan.
IBD 50: Diamondback’s Buy Point, Atkore’s Buy Range
Diamondback Energy led the IBD 50 list, rallying 1.4% as oil price continued to gain ground. DiamondBack has gained 23.4% so far in September, placing it a bit more than 7% below a 102.63 buy point in a 13-week cup base.
Among leaders near buy points, IBD 50 stock Atkore finished Monday in a buy range, above a flat base buy point at 98.10. The building products supplier traded down 1.1% early Tuesday.
IBD Leaderboard listings ASML Holdings and InMode (INMD) were under heavy early pressure, down 5.5% and 3.7% in early action. New Street research downgraded ASML to neutral, from buy.
Vital Signs: Oil, NatGas, Bond Yields, Bitcoin
U.S. crude oil prices pared early gains, while natural gas spiked almost 7% in early trade. West Texas Intermediate crude gained 0.7% to $75.98 a barrel, reaching toward July’s seven-year high at $76.98. Europe’s Brent crude benchmark topped $80 a barrel for the first time in three years. Energy competition between recovering economies in Europe and China is being cited as the impetus for the upward pressure in oil.
Natural gas prices up nearly 500% in Europe over the past 12 months are bleeding over into U.S. trade, compounded by low natural gas inventories ahead of the winter heating season. U.S. natural gas futures were up 6.8% Tuesday to $6.09 per million British Thermal Units.
Bond yields surged to their highest level since late June, with the 10-year Treasury yield up six basis points to above 1.54%. The yield remains well below the year’s high mark above 1.76%, struck in April.
Bitcoin dropped 4%, dipping below $41,800, according to CoinDesk. The cryptocurrency traded as high as $44,041 and as low as $41,547 over the prior 24 hours.
Nasdaq, S&P 500, Dow Jones Today: 50-Day Tests
A four-day rally leaves the Dow Jones today just a fraction below its 50-day moving average. The 5.6% retreat from an August high stopped just short of a test of the index’s 200-day moving average. The sharp rebound from the consolidation’s lows petered out when the Dow hits its 50-day level in Monday’s intraday trade. A break above that level would send a bullish signal. Further retreat could signal solidifying resistance and further consolidation.
For more detailed analysis of the current stock market and its status, study the Big Picture.
The Nasdaq and S&P 500 both lost ground on Monday. But the Nasdaq pullback rebounded from support at its 50-day line, while the S&P 500 ended perched neatly above support. The confirmed uptrend that resumed on Thursday remains in place. But breakdowns back below 50-day support by either or both indexes would raise a serious caution flag for investors.
Please follow Alan R. Elliott on Twitter @IBD_Aelliott
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