The stock market weakened at midday on Tuesday, sending the main indexes near the lows of the day. An apparent easing of Covid restrictions in China could not offset the stock market’s apprehension over the upcoming data and Jerome Powell’s speech.
The Nasdaq composite slipped 0.6% and the S&P 500 fell 0.4%. The Dow Jones Industrial Average was down 0.3%. Apple (AAPL) continued to weaken, falling deeper below its 50-day moving average.
Small caps defied the major indices, with the Russell 2000 rising 0.3%. Volume jumped on the NYSE and Nasdaq from the same time on Monday.
Today’s declines compound Monday’s losses by about 1.5% in major indices. The S&P 500 fell back below 4,000 in Monday’s selloff and remained below that level.
hibett (HIBB) slid more than 11% in heavy volume, although it pared losses after bouncing off its 50-day line. The sporting goods retailer missed October quarter sales and earnings, according to FactSet.
Chinese stock market rally
Beijing has signaled it will ease some of the Covid lockdowns that have sparked protests in several Chinese cities.
China’s national health regulator has downplayed the risks of the Covid Omicron variant and announced it will increase vaccinations for the elderly. In addition, Chinese regulators have eased restrictions on real estate companies seeking to raise equity domestically.
The Shanghai Composite jumped 2.3%, hitting its highest close since Sept. 15, according to Dow Jones Market Data. The Hang Seng Index climbed 5.2%, its best day since Nov. 11. Hong Kong’s benchmark is up 24% for the month so far.
The iShares Hong Kong ETF (EWH) gained almost 3%. The ETF has maintained its support at the 50-day moving average since breaking it on November 11.
A handful of Chinese stocks rallied after the earnings releases. Streaming video service bilibili (BILI) jumped over 22%, rising above the 50-day moving average. Social media platform Square (YY) increased by nearly 8% and Kanzhun (BZ) gained 13.5%. software company Baozun (BZUN) missed the rally, losing 2.2% by midday.
All of these stocks are in deep corrections.
E-commerce portal Pinduo-duo (PDD) came off a cutting base on Monday after a strong earnings report and added 6% in midday trading. It is now extended beyond its 5% buy zone.
The Innovator IBD 50 ETF (FFTY) was flat, but it outperformed major equity indices. The same energy stocks that hurt the index on Monday are giving the IBD 50 a boost today.
The price of crude oil pared its gains to 0.2% at $77.33 a barrel. Previously, oil had risen around 2% in hopes of easing Chinese lockdowns.
The housing market extended a period of weakness.
The S&P CoreLogic Case-Shiller home price index slowed to a 10.9% rise in September from 13.1% a year earlier. Economists had forecast an increase of 10.9%, 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 encounters resistance at the 200-day moving average.
Investors await Powell’s comments
On the economic front, Federal Reserve Chairman Jerome Powell will deliver a speech Wednesday at the Brookings Institution that will grab the attention of stock market investors. Powell will also answer questions from attendees.
In other economic events, the November jobs report comes out on Friday. On Thursday, the latest report on jobless claims and manufacturing data is due out.
The Conference Board’s consumer confidence survey for November fell to 100.2 from 102.2 the previous month. The survey hit a four-month low and it was the second consecutive monthly decline.
In an analysis of the survey, BMO Capital Markets economist Priscilla Thiagamoorthy said consumers have scaled back plans for major purchases over the next six months.
“This is good news for the Fed as it tries to rein in 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 hamper consumer confidence and spending plans.”
Also in the survey, 45.8% of respondents said jobs remain plentiful, up from 44.8% in October. Those who believe jobs are hard to come by remain at 13%.
The yield on the 10-year Treasury note rose 2 basis points to 3.72%.
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