The stock market fell sharply starting at 1 pm ET, although indexes held above the session’s lows. The day’s action is driven as much by technical factors as by macro and political considerations.
The Dow Jones Industrial Average gave up 0.8% while the Nasdaq was off 0.3% around 1:40 pm ET. The S&P 500 erased modest gains and was down 0.3%. But small caps outperformed as the Russell 2000 rose 0.6%. The Innovator IBD 50 ETF also outperformed with a 0.9% increase.
Crude oil rose over 2% to $96.30 a barrel. Volume was higher on both the Nasdaq and the NYSE compared with the same time on Monday. Attention is shifting to the mounting tensions in US-China relations. House Speaker Nancy Pelosi landed in Taiwan for a visit that has angered Chinese officials.
Mixed Signs For Stock Market
The 10-year Treasury yield is at 2.73%, up 13 basis points, and the curve is inverted. Historically, the inverted yield curve has been the canary in the coal mine. Monday’s ISM manufacturing index, which measures the monthly change in production, showed that growth in July continued at 52.8 although at the lowest rate since June 2020.
As the summer unwinds, investors are left trying to read an assortment of forward indicators. The seasonally slow summer housing market continues to decelerate, although it has been buoyed by a strong labor market. The decline is led by single-family homes.
Today’s job openings report saw a decline in June from May. According to the head of portfolio management at Commonwealth Financial Network, Peter Essele, more voluntary job quits in smaller firms and a decline in job openings in larger firms may result in wage growth as smaller firms compete for talent.
US Stock Market Today Overview
Last Update: 1:50 PM ET 8/2/2022
Jeffrey Roach, Chief Economist for LPL Financial, however, sees a gradual tapering off in job quits as fewer openings lead to a normalization of quit rates. In June, there were 1.8 openings for every unemployed person, a number that is likely to move closer to parity in the coming months.
Tomorrow’s core capital equipment orders and factory orders numbers will tell us more about what is going on in manufacturing. Both rose slightly, by 0.5% and 1.6% in June. Also on watch will be this week’s employment numbers.
Resilient corporate earnings
Shares of Pinterest (PINS) shot up nearly 12% on strong sales from promoted pins reported in Monday’s earnings report, proving that ad revenue continues to be robust for some companies.
Last week, Alphabet (GOOGL), Google’s parent company, also spiked on strong ad sales. Investors may surmise that Facebook parent Meta Platforms‘ (META) lower ad revenue numbers announced last week may have to do with the company losing access to data on Apple’s user behavior rather than to a broader slowdown in the ad business.
Pinterest also shares rose on news that Elliott Investment has become the company’s largest investor. Susquehanna International Group upgraded Pinterest to positive from neutral. Shares have broken above their 50-day moving average.
Uber (UBER) also beat expectations with revenue of $8.1 billion, a 105% increase from last year, and earnings of $1.33 per share.
Solar panels and systems maker SunPower (SPWR) also rose 14% after beating estimates today with revenue of $414 million and earnings of $.03 a share. It climbed back above the 200-day moving average.
Cummins, Caterpillar Among Stock Market Movers
Cummins (CMI), which makes diesel and natural gas engines, also beat estimates with earnings of $4.94 a share. Shares rose nearly 2%.
In the finance sector, shares of Cowen Group (COWN) duck Toronto-Dominion (TD) have also spiked, by 7% and 1% respectively, after TD confirmed its plans to acquire Cowen in an all-cash transaction of $1.3 billion.
On the downside, Caterpillar (CAT), JetBlue (JBLU) duck Woodward (WWD) are down after missing earnings expectations.
For investors searching for growth stories in uncertain markets, the energy sector continues to offer some pickings, although folks should tread cautiously and have a stop loss strategy in place. IBD Leaderboard stock Cheniere Energy (LNG) may be an opportunistic play as Europe weans off its dependence on Russian oil. The stock is near a 146.45 entry.
Exxon (XOM) duck Chevron (CVX) both delivered a mighty second quarter in terms of earnings numbers. Their increasing institutional ownership augurs well, based on the I in the CAN SLIM stock picking strategy. Both stocks are above the 50-day moving average and are forming cup bases — a bullish sign.
Stocks Making Big Moves Today
Shares of Gardener (IT) are up 6.8% at 287.40 following its earnings report, and it’s the best S&P 500 stock so far today.
SolarEdge (SEDG) is announcing earnings at market close today. Watch for Aris Water Solutions (ARIS) Wednesday. The stock broke out of cup base with a 22.10 buy point. Keep in mind it’s risky to buy a stock before its earnings report.
AMN Healthcare (AMN), Funko (FNKO) duck New Fortress Energy (NFE) report on Thursday. AMN is trading close to a buy point of 125.04 in a double bottom base with a handle.
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