Dow futures: Market sells off on Yellen’s default warning; Growth stocks on track for worst week since coronavirus crash
Tuesday night Dow Jones futures rose slightly, along with S&P 500 and Nasdaq futures. The stock market rally suffered sharp losses amid soaring Treasury yields as Treasury Secretary Janet Yellen warned of an imminent government default next month. Micron’s earnings were in the spotlight overnight.
The S&P 500 and Nasdaq Composite both fell below the 50-day moving averages in significant volume, indicating a change in the nature of the stock market’s rally.
Leading stocks looked worse, with the Innovator IBD 50 ETF (fifty) is on track to record its worst weekly loss since the coronavirus crash.
Tech giants, growth leaders are plunging
Tech giants like Microsoft (MSFT), a parent of Google the alphabet (The Google), An apple (AAPL) Facebook social networking site (FB) and Amazon.com pulled back from recent lows or set recent closing lows, as it did nvidia (NVDA), ASML (ASML), Applied materials (AMAT) And Service now (currently).
Cloud Flare (Clear), which fell to the 50-day line on Monday, by 7.9% on Tuesday, decisively breaking the 50-day line. NET stock is now down 17% over the past four sessions, as software names have come under heavy pressure. Medical product stocks — from biotech companies to testing companies to system makers — continued to struggle. even in InMode (INMD), which ignored recent market weakness, fell 13%.
Energy stocks performed well, holding on to recent gains even as crude oil retreated from multi-year highs to close slightly lower. Public finances also performed well, with higher Treasury yields providing support.
ASML, Microsoft, Google, ServiceNow and Nvidia are all available IBD Leaderboard. Microsoft, ServiceNow, ASML and Google Stock are all Long-term leaders of IBD, along with many other people who have also undergone rigorous sessions.
The video included in this article highlights Microsoft stock, ASML, and .NET.
Janet Yellen default US warning
Treasury Secretary Yellen told the Senate Banking Committee that a US default is likely without an increase in the debt limit by October 18, giving a specific date for the first time. Meanwhile, the government faces a partial shutdown with no new funding after September 30. Senate Republicans prevented from raising the debt limit and raising short-term funding late Monday, saying they wanted Democrats to raise the debt limit themselves.
It all comes as House Speaker Nancy Pelosi plans to vote Thursday on a bipartisan infrastructure bill. It’s unclear whether a small number of GOP supporters will make up for defections from left-wing Democrats, who want the infrastructure bill to be linked to a massive tax and spending reconciliation package that’s not over yet.
Meanwhile, Federal Reserve Chairman Jerome Powell, testifying at the same Senate banking hearing with Treasury Secretary Yellen, said that inflation will remain higher for longer than previously expected.
The Federal Reserve and the European Central Bank are gradually moving towards reducing asset purchases, although the possibility of raising effective interest rates after a year at the earliest.
All of this helps raise Treasury yields. The 10-year Treasury yield rose five basis points to 1.53%. On the day, the 10-year yield was nearly 1.57%, the highest since June.
Micron’s stock sank 4% overnight. Shares fell 2.8% to 73.10 on Tuesday, back below the 50-day line. MU stock has been in a downtrend since mid-April.
Micron’s outlook isn’t a good sign of a semi-finished market or a rising market in general, but it’s particularly important for memory-exposed chip device makers such as Applied Materials and L research (LRCX). AMAT and Lam Research shares were little changed in extended trading. AMAT stock fell 6.9% Tuesday, back below the 50-day line. LRCX stock gave up 5%, closing below the 50-day and 200-day lines.
Dow jones futures contracts today
Dow futures rose 0.3% against fair value. S&P 500 futures rose 0.2%. Nasdaq 100 futures rose 0.1%.
Crude oil prices, which fell slightly on Tuesday, fell overnight after the American Petroleum Institute reported a sudden increase in US inventories last week. The Energy Information Administration will release its official crude and gasoline supply and production figures on Wednesday morning.
Tuesday’s stock market rally
The stock market rally started weak and closed weaker, in a broad sell-off.
The Dow Jones Industrial Average fell 1.6% on Tuesday stock market trading. The S&P 500 fell 2%. The Nasdaq Composite Index sank 2.8%, its worst loss since March. Small cap Russell 2000 fell 2.25%.
Apple stock fell 2.4%, not below last week’s low but posting its worst close since July 2. That’s when the AAPL stock came off the base of a teacup.
Microsoft stock fell 3.6% and Google stock fell 3.7%, both of which broke below 50-day streaks and last week’s lows.
Shares of FB, which cut the 50-day streak on Sept. 20 and continue to slide, fell 3.7% on Tuesday, below last week’s lows.
AMZN stock, still trying to recover from its disappointing second-quarter earnings report, fell 2.6%, returning to its 200-day streak.
NVDA stock is off the 50-day streak and last week’s low, down 4.4%.
ASML stock, which was a big semiconductor star in 2021, fell 6.6%. It marks ASML’s first decisive 50-day cut since March.
NOW stock fell 5.7%, closing just below the 50-day line for the first time since early June.
iShares Expanded Technology and Software Fund (ETF)IGV) fell 3.6%, falling below the 50-day line to its worst level since the August 19 rebound. MSFT Inventory and ServiceNow are key components of the IGV; Net equity is also ownership. VanEck Vectors Semiconductor Corporation (SMH) declined by 4%. ASML, AMAT, and LRCX are prominent components of Nvidia’s stock and chip gear makers.
Sector ETFs were lower overall, but losses were lower.
SPDR S&P Metals & Mining ETF (XME(Down 0.5%, Global X US Infrastructure Development ETF)cradle) gave up 1.5%. US Global Gates Foundation (ETF)Planes) down 1.3%. SPDR S&P Homebuilders ETF (XHB) waiver of 2.5%. SPDR Specific Energy Fund (SPDR ETF)XLE) rose 0.3%. SPDR Financial Choice Fund (SPDR)XLF) slipped 1.65%.
Stocks reflect more speculative stories, the ARK Innovation ETF (see you) gave up 3.8% and the ARK Genomics ETF (ARKG) lost 4.2%. ARKK was at its lowest level since early June, while ARKG closed at its lowest level in May.
Market Rise Analysis
The stock market rebound looked buoyant late last week, but is now showing real damage to major indices and blue-chip stocks. The S&P 500, which found support at the 50-day line for several months, now appears to be hitting resistance at the key level. The Nasdaq didn’t cut last week’s low – big capital Nasdaq 100 did – but finished near session lows with its worst close since August 19.
Despite the energy and money components, the small-cap Dow Jones and Russell 2000 are still falling sharply. The Dow Jones is moving away from the 50-day line while the Russell 2000 closed a small part of this key level.
FFTY hasn’t fallen below the 50-day line, but is down 7.6% so far this week. That’s right, it’s only Tuesday, and FFTY is suffering its worst weekly loss since the coronavirus crash in March 2020. From iconic personalities to powerful institutions, growth names are coming up. And even those who used to find major support — NET stock, ASML, Microsoft, and Google — don’t do so now.
Energy, fertilizer, financial and travel stocks did relatively well. We may be in the midst of the sector rotating out of growth stocks, although there is a big difference between rotating in the overall uptrend versus rotating in a market down. Also, the dip in energy prices and Treasury yields wouldn’t be surprising, even if only in the short term.
What are you doing now
If you own stocks that operate – especially in health sectors like energy and banking – you probably don’t need to take any action. But as stocks grow and with your portfolio in general, you need to take a defensive approach. The recent breakouts or 50-day line bounces failed. Big gainers cut back on gains. It’s time to cut back on your exposure and wait for the healthy market rally to return.
The stock market rally is likely to rebound very quickly, with major indexes rising above the 50-day line. However, investors should gradually pull back in this scenario.
For now, focus on defense. But you must always be ready to face the attack. Rework your watch lists again.
is reading The Big Picture Every day to keep up with the trend of the market, stocks and leading sectors.
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