The stock market weakened at midday on Tuesday, sending the main indexes near their lows of the day. An apparent easing of Covid restrictions in China could not offset the stock market’s worries about upcoming data and Jerome Powell’s speech.
The Nasdaq composite fell 0.6% and the S&P 500 fell 0.4%. The Dow Jones Industrial Average fell 0.3 percent. apple ( AAPL ) continued to weaken, falling deeper below its 50-day moving average.
Small caps defied the major indexes, as the Russell 2000 climbed 0.3%. Volume jumped on the NYSE and Nasdaq compared to the same time on Monday.
Today’s decline exacerbates Monday’s loss of around 1.5% in the major indexes. The S&P 500 fell back below 4,000 in Monday’s selloff and remained below that level.
Hibbett ( HIBB ) tumbled more than 11% on heavy volume, though it trimmed losses after bouncing off its 50-day line. The sporting goods retailer missed sales and earnings expectations for the October quarter, according to FactSet.
China’s stock market rally
Beijing has signaled that it will ease some of the Covid lockdowns that sparked protests in several Chinese cities.
China’s national health regulator downplayed the risks of the Covid Omicron variant and announced it would increase vaccinations for the elderly. In addition, Chinese regulators loosened restrictions on real estate companies seeking to raise equity financing domestically.
The Shanghai Composite jumped 2.3%, to its highest close since Sept. 15, according to Dow Jones Market Data. The Hang Seng Index rose 5.2%, its best day since November 11. Hong Kong’s benchmark index is up 24% for the month so far.
The iShares Hong Kong ETF ( EWH ) rose nearly 3%. The ETF has held support at the 50-day moving average since crossing it on November 11.
A handful of Chinese stocks rose after earnings reports. Streaming video service Bilibili ( BILI ) rose more than 22%, retracing above its 50-day moving average. Social media platform Place (YY) rose almost 8% and Kanzhun (BZ) gained 13.5%. Software company Baozun ( BZUN ) missed the rally, dumping 2.2% by midday.
All these stocks are in deep corrections.
E-commerce portal Pinduo duo ( PDD ) broke out of a cup base Monday after a strong earnings report and added 6% in midday trade. It has now extended beyond the 5% buy zone.
The Innovator IBD 50 ETF (FFTY) was flat, but it outperformed the major stock indexes. The same energy stocks that hurt the index on Monday are giving the IBD 50 a boost today.
The price of crude oil reduced the gain to 0.2%, to 77.33 dollars per barrel. Earlier, oil rose by around 2 percent on hopes of loosening Chinese blockades.
The housing market extended a weak period.
The S&P CoreLogic Case-Shiller home price index slowed to a 10.9% gain in September, from 13.1% a year earlier. Economists had predicted a 10.9% increase, according to Econoday. The index fell 1.5% in September from the previous month – the third consecutive monthly decline.
The SPDR S&P Homebuilders ETF ( XHB ) rose 0.2% and faces resistance at its 200-day moving average.
Investors await Powell’s comments
On the economic front, central bank governor Jerome Powell will give a speech on Wednesday at the Brookings Institution that will have the full attention of stock market investors. Powell will also take some questions from the participants.
In other economic events, the November jobs report is due Friday. On Thursday comes the latest report on unemployment claims and data from the manufacturing sector.
The Conference Board’s consumer confidence survey for November fell to 100.2 from 102.2 the previous month. The survey marked a four-month low, and it was the second monthly drop in a row.
In an analysis of the survey, BMO Capital Markets economist Priscilla Thiagamoorthy said consumers have lowered plans to make large purchases in the next six months.
“That’s good news for the Fed trying to curb demand and restore price stability,” she noted. “While households have so far proved more resilient than expected amid a strong labor market and excess savings, inflationary pressures will continue to pose a major headwind to consumer sentiment and spending plans.”
Also in the survey, 45.8% of respondents said there are still plenty of jobs, up from 44.8% in October. Those who believe that work is difficult to maintain at 13%.
The interest rate on the 10-year government bond rose 2 basis points to 3.72%.
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