Dow Jones Futures: Nasdaq falls as bond yields rise; Apple, Qualcomm, JB Hunt Hold Key Levels
Dow Jones futures rose slightly early Wednesday, along with S&P 500 futures and Nasdaq futures, with crude oil prices and bond yields continuing to rise. The stock market again suffered heavy losses on Tuesday, when the 10-year government yield jumped to a new two-year high.
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The Nasdaq, Russell 2000 and Dow Jones broke below the recent lows, while the S&P 500 suffered heavy losses in broad market sales.
Apple stock, Qualcomm (QCOM), CF Industries (CF), Builders FirstSource (BLDR) and Advanced car parts (AAP) are five stocks trying to find support on their 50-day or 10-week line. apple (AAPL) retreated to its 10-week line, while QCOM stock and Builders FirstSource found support on their 50-day lines. CF Industries and, to a lesser extent, AAP stocks jumped off these key levels.
None of these stocks are capable of action, given the current market environment, even if the CF stock flashes with some positive signals. But everyone is worth following closely. The relative strengths are strong for all five names.
Key income
JB Hunt transportation services (JBHT) reported earnings after closing. The trucking company beat the views comfortably, with EPS up 58% and revenue up 28%. The JBHT stock changed little overnight. The shares fell on Tuesday, but have found support on the 50-day line in recent sessions, unlike many other truck shares. The RS line for JB Hunt is at new heights.
UnitedHealth Group (UNH) peaked in the fourth quarter early Wednesday. The shares of the Dow Jones Health Insurance Company were little changed in actions before the market. The UNH share was a strong performance at the end of 2021, but has withdrawn this year, and fell below the 50-day limit.
ASML (ASML) reported better-than-expected earnings for the fourth quarter, but revenues were weak. The Dutch chip equipment giant sees a turnover of 20% in 2022, and says that demand is well above capacity. The ASML stock rose modestly before opening. The shares have fallen below their 50-day and 200-day lines, after a long, powerful run.
Bank of America (BAC) earnings topped the impressions, but earnings fell short. Shares fell slightly before opening. Money center banks have struggled during the earnings season.
The JBHT stock and the BLDR stock are on IBD 50. The ASML stock is on IBD Long-Term Leaders.
The video embedded in this article analyzes the market action as well as the Apple stock, Builders FirstSource and CF Industries.
Dow Jones Futures today
Dow Jones futures rose 0.15% relative to fair value. S&P 500 futures rose 0.2% and Nasdaq 100 futures rose 0.4%.
In overnight trading, the 10-year government bond yield rose to 1.88%. The US crude oil price rose above 86 dollars a barrel when an explosion took a pipeline between Iraq and Turkey offline.
Keep in mind that overnight trading in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
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Stock exchange Tuesday
The stock market started weak and remained so. The Dow Jones Industrial Average fell 1.5% in Tuesday’s trading session. The S&P 500 index fell 1.8 percent. The Nasdaq composite plunged 2.6%. Small-cap Russell 2000 plunged 3.1 percent.
The 10-year government interest rate increased by more than 9 basis points to 1.865%, reaching a two-year high. The US crude oil price rose by 1.9% to $ 85.43 per barrel, the highest close since 2014.
ETFs
Among the best ETFs, Innovator IBD 50 ETF (FFTY) fell 4%, while Innovator IBD Breakout Opportunities ETF (BOUT) fell 2.5%. iShares Expanded Tech-Software Sector ETF (IGV) fell 1.8%. VanEck Vectors Semiconductor ETF (SMH) gave up 4.5%, with the QCOM stock a remarkable stake.
The SPDR S&P Metals & Mining ETF (XME) lost 1.6%, and the Global X US Infrastructure Development ETF (PAVE) fell 2.1%. The US Global Jets ETF (JETS) fell 1.8%. SPDR S&P Homebuilders (XHB) withdrew 2.85%. Energy Select SPDR ETF (XLE) increased by 0.4%, and Financial Select SPDR ETF (XLF) fell 2.2%. Health Care Select Sector SPDR Fund (XLV) declined 1.4%
ARK Innovation ETF (ARKK) reflected stocks with more speculative stories, retreated 4.15% and ARK Genomics (ARKG) lost 5.6%. Both are trading at the lowest level of 18 months.
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Market analysis
The stock market suffered another punitive loss on Tuesday, and easily wiped out Friday’s rise from the lowest level, when sky-high government interest rates shook Wall Street again.
The Nasdaq composite closed below its 200-day moving average for the first time since April 2020, reaching its lowest levels during January 10. The next obvious support area would be the low point in early October.
The S&P 500, already below its 50-day line, also fell below last week’s lowest level. The Dow Jones gaped below its 50-day low and last low. Russell 2000 fell to its lowest levels since March, close to a year-long consolidation.
The losses were large and deep. Losers crushed winners, with growth stocks left.
Many energy stocks turned lower on Tuesday, even when crude oil and natural gas prices rose again.
Finances fell, despite soaring government interest rates. A lot of it had to do with Goldman Sachs (GS) sells off on its earnings miss. But rising government interest rates are a mixed blessing for finance. First, the spread between short-term and long-term returns does not increase. This is not good for the banks’ net interest margins and may indicate concern about economic growth, which is not great for the banks either.
All in all, Friday’s setback from the lowest levels during the day now seems like a failure. The major indices have been selling hard from the January 12 intraday highs, and more generally since January 3. Nasdaq has been trending lower since before Thanksgiving.
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What to do now
The stock market continues to deteriorate. Technology and small company stocks led the declines, as usual. But there were few safe havens in Tuesday’s sale – apart from cash.
Can the market bounce on Wednesday? Sure, the market has had a ton of bounces, some lasting for a few days, over the last few weeks. But they have not endured.
Investors should wait for clear evidence of a sustained upward trend. You must preserve your capital – and your mental capital.
Relative strength remains important, in addition to equities finding key support, such as Apple shares and Builders FirstSource. Remember that many stocks that had held up well have begun to break down. So keep your lists up to date.
Patience is the key. Do not jump on the gun, but do not walk away. Stay engaged so that you are ready to take advantage of the next bullish market move. It may come in a few days or a few weeks or months.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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