Dow Jones futures fell slightly overnight, along with the S&P 500 and Nasdaq futures, with the job report expiring on Friday morning. The stock market fell on Thursday, erasing big gains on Wednesday after 10-year government bond yields rose more than 3% in response to the second day of the Fed meeting.
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The Dow Jones fell more than 1,000 points as the Nasdaq fell to its lowest level since 2020, ending its short-lived rally experience. Attempts at a rally were still alive, only for the S&P 500 and Dow.
Investors who are on their toes in the new stock market rally experience may want to cut back.
Vertex Pharmaceuticals (VRTX) reported mixed profits late Thursday. Shares of VRTX closed on the edge of the buying zone after testing maintenance on its 50-day line earlier in the week. Boise Cascade (BCC) is worth watching, trading near a point of purchase with winnings due on Friday morning.
Northrop Grumman (NOC), Pioneer Natural Resources (PXD), Merck (MRK) and Albemarle (ALB), all with excluded profits, are also close to buying points in relatively strong sectors.
Shares of Tesla and Vertex are on IBD Leaderboard and IBD 50. Shares of Merck are on SwingTrader and IBD Big Cap 20.
Dow Jones futures today
Dow Jones futures fell 0.35% to fair value. S&P 500 futures fell 0.4%. Nasdaq 100 futures fell 0.5%.
The yield on 10-year bonds increased by 1 basis point to 3.08%.
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.
Job report
The Ministry of Labor will publish the report on jobs in April at 8:30 am ET. Economists expect non-agricultural wages to rise by 400,000, with the unemployment rate remaining at 3.6%. Wages are expected to jump 5.5% from a year earlier, slightly below March’s pace and not keep pace with inflation.
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Stock market rally
The stock market rally sold out throughout the session, closing with huge losses after an encouraging increase on Wednesday.
The Dow Jones industrial average fell 1,063 points, or 3.1 percent, in stock trading on Thursday. The S&P 500 fell 3.6%. The Nasdaq index fell 5%. Russell 2000 with a small capitalization lost 4%.
Shares of Apple fell 5.6% to 156.77, back below its 50-day and 200-day lines. Shares of AAPL showed an early buy signal on Wednesday when they rebounded their 50-day line and crossed a short trend line.
Shares of Tesla fell 8.3% to 873.28, also below its 50-day and 200-day lines. CEO Elon Musk has sorted out some funding to help with the takeover of Twitter, but he will also be the interim CEO of Twitter (TWTR) when he takes office. These are mixed messages for Tesla, and for the shares of TSLA the market sale was a real engine on Thursday.
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Government bond yields are rising
The yield on 10-year bonds rose by 15 basis points to 3.07%, the highest point since the end of 2018. The yield is approaching an 11-year high of 3.25%.
On Wednesday, 10-year yields fell moderately as Fed chief Jerome Powell said politicians were not actively considering increases of 75 basis points at the June and July meeting. But the Fed is still aggressive. The Fed raised interest rates by half a point on Wednesday and will likely do so in the next two meetings.
Crude oil prices in the United States rose 0.4 percent to $ 108.26 a barrel, cooling off from intra-day traffic above $ 110 after the stock market sold out. OPEC + agreed to another small increase in production.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 3.2%, while the Innovator IBD Breakout Opportunities ETF (BOUT) dropped 3%. The IShares Expanded Tech-Software Sector ETF (IGV) sold 5.75%. VanEck Vectors Semiconductor ETF (SMH) fell 5.75%.
The SPDR S&P Metals & Mining ETF (XME) withdrew 5.3% and the Global X US Infrastructure Development ETF (PAVE) withdrew 4%. The US Global Jets ETF (JETS) was down 3.5%. The SPDR S&P Homebuilders ETF (XHB) fell 4.9%. The Energy Select SPDR ETF (XLE) fell 1.5% and the Financial Select SPDR ETF (XLF) fell 2.9%. The Health Care Select Sector SPDR Fund (XLV) lost 1.9%, with MRK shares playing a key role.
Reflecting the more speculative stock history, the ARK Innovation ETF (ARKK) fell 8.9% and the ARK Genomics ETF (ARKG) by 7.85%. Tesla shares are the largest holding company in Ark Invest’s ETFs.
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Vertex Stock
Vertex’s profits fell less than views, although sales narrowly outpaced them. Shares of VRTX fell 2% overnight. Shares fell 2.7% to 266.37, simply returning to a range of 255.03 points, according to MarketSmith analysis. Shares of Vertex had tested this buying point on the 50-day line on Monday.
Boise Cascade Stock
Shares of Boise Cascade sank 4% to 81.67 on Thursday, back below the buy point of 82.20. The line of relative strength, the blue line in the graphs provided, is already at a new peak. The timber company reports its profits on Friday morning. The Louisiana-Pacific (LPX) rose on Tuesday-Wednesday with strong gains, surpassing the entry of the trend line. Weyerhaeuser (WY) had huge daily fluctuations near the point of purchase, but recent weekly action has been tense.
Albemarle Foundation
Shares of Albemarle rose 9.8 percent on Thursday to 236.50, restoring its 200-day gaining line and sharp gains. This came a day after rising 9.3% due to similar news from the competing lithium game Livent (LTHM). Ideally, ALB shares will consolidate for a few days over the 200-day line and form a handle, after which they will break above the resistance near 248. The RS line is recovering, reaching a peak in 2022.
LTHM shares also show a similar effect on the chart, while Piedmont Lithium (PLL) is worth watching.
Northrop Stock
Shares of Northop rose 0.9% to 466.66 on Thursday, continuing to recover from the 50-day moving average and test the trend line. They suggested early bookings. NOC shares have an official buying point of 477.36 per base with a cup with a handle. The RS line is at a 23-month high on the weekly chart.
PXD availability
Pioneer Natural Resources reported rising profits and sales growth on Wednesday night. Shares of PXD rose 1.5% to 256.48 on Thursday, its fourth consecutive gain. Shares almost overshadowed the March 30 high of 260. If it manages to stay in its current range, PXD shares will have a suitable base after Friday with a buy-in point of 260.10. Investors can buy PXD stocks outside the 50-day line now. The RS line is already at a new peak.
Merck Stock
On April 28, shares of Merck jumped nearly 5% of earnings, indicating an early entry into the base with a cup with a handle. The next day, MRK shares flirted with the official buying point of 89.58 before retreating. Drug giant Dow Jones backed away, but only slightly.
Shares of Merck fell 0.6% to 88.01 on Thursday. The RS line for MRK shares is exactly at 52-week highs.
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Market rally analysis
Attempts to rally in the stock market suffered staggering losses on Thursday. Major indexes erased big gains on Wednesday, and then some, as the Nasdaq fell again to its worst levels since 2020.
Government bond yields fell on Wednesday after the Fed raised interest rates and guidelines, after which they jumped sharply on Thursday in a slow reaction.
The bond market is pushing for Wall Street. Growing government bond yields are a major obstacle to equities, especially growth. As the Fed moves aggressively and is not interested in maintaining stock prices, the stock market may struggle until there are clear signs that inflation is falling sharply. This may take some time.
Don’t worry too much if government bond yields fall in a day or two. This has happened several times in the last few months, but the 10-year yield has still almost doubled in the last two months.
The market rally experience is over for the Nasdaq, but is still ongoing for the S&P 500 and the Dow Jones for now. So there may be a next day on Friday.
Sectors to watch
Energy and other commodities, such as fertilizers, are doing relatively well, although many fell modestly to sharply on Thursday. Lithium and wood products companies such as ALB stock and Boise Cascade also look interesting. Shares of Northrop and other defense stocks are holding up well. Vertex, Merck and Eli Lilly (LLY) are around the purchase zones, while health insurers continue to do well.
The stocks of growth, which had such good movements on Wednesday, gave up all this and much more on Thursday. Although this article highlights the shares of Apple and Tesla, they still look better than other megacaps and stocks in general.
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What should we do now
If you bought stocks or ETFs in the big rebound on Wednesday, you probably should have left those new positions on Thursday.
Technically, the market can still organize the next day. But the Nasdaq bear market seems to be starting another step down.
Money is still the leading position in 2022.
Keep working on these watch lists. Viewing screens and updating watch lists is not the most exciting part of investing, but it is one of the most important. You do not know when the market will be ready. But if you are ready to act when the market rally is gaining momentum, you can join the best stocks at the beginning of the big series.
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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