Dow futures: stock market sells off on rising inflation; This should worry investors

Dow Jones futures declined overnight, along with S&P 500 futures and Nasdaq futures, with Disney and Rivian earnings in focus. The stock market fell on hotter-than-expected CPI inflation data, with the S&P 500 and Nasdaq breaking recent lows.




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The market correction and the Nasdaq bear market are showing no signs of slowing down. Recoil attempts tepid and quickly crushed. And despite the measures of fear of a market crash, which is a conflicting indicator, it still isn’t rising.

after closing, Walt Disney (DIS) and Tesla (TSLA) Competitor Rivian (RIVN) reported weaker-than-expected quarterly results. But investors focused on Disney + subscription numbers after the amazing Netflix (NFLX) Decline. Rivian shareholders have entered into an EV startup statement as accelerating delivery truck shipments to key customers Amazon.com (AMZN).

Tesla stock is approaching recent lows in its broad and loose consolidation. Tesla faces a number of challenges in the short and medium term.

while, merck (MRK) broke out briefly, while Eli Lilly (LLY), National anthem (ANTM), chevron (CVX) and dollar tree (DLTR) is trading around 50 day lines. They all show relative strength.

Tesla, Anthem, and LLY stocks are on the IBD Leaderboard, while DLTR stock has joined the Leaderboard’s watchlist. MRK Stock and Dollar Tree are available on SwingTrader. Merck and CVX stocks are listed on IBD Big Cap 20. Eli Lilly was IBD’s stock today Wednesday.

Dow jones futures contracts today

Dow futures were down 0.1% against fair value. S&P 500 futures were down and Nasdaq 100 futures were down 0.1%. The DIS stock is a component of the Dow Jones and Standard & Poor’s 500.

The 10-year Treasury yield fell 3 basis points to 2.89%.

Remember that overnight action in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.


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stock market Wednesday

The stock market was volatile at the open on Wednesday following the April CPI. Inflation eased to 8.3% from a 40-year high in March of 8.5%, but that was higher than expected. Core consumer prices rose 0.6% compared to March.

Trading up and down has become decisively negative, especially in the Nasdaq. Major indexes fell to 52-week lows, closing near their worst lows today.

The Dow Jones Industrial Average was down 1% in stock market trading on Wednesday. The S&P 500 lost 1.6%. The Nasdaq Composite tumbled 3.2%. Small-scale Russell 2000 slipped 2.5%.

The 10-year Treasury yield fell 7 basis points to 2.92%, the third consecutive decline. That’s after it initially jumped to 3.04% – and even higher before the opening on CPI data. Meanwhile, the two-year yield rose 1 basis point to 2.63%. The two-year yield is closely related to the Fed’s price movements, while the 10-year Treasury is feeling the effects of slower growth expectations.

US crude oil prices jumped 6% to 105.71 barrels. With coronavirus cases in Shanghai and China dropping sharply over the past few weeks, expectations are growing that the Chinese government will ease the devastating shutdown of the economy, boosting demand for crude oil and other commodities. But this has not happened yet.

ETFs

Among the top ETFs, the Innovator IBD 50 ETF (FFTY) is down 1.4%, while the Innovator IBD Breakout Opportunities ETF (BOUT) is up 0.15%. The iShares Expanded Tech-Software ETF (IGV) index was down 3.3%. The VanEck Vectors Semiconductor Index (SMH) slipped 3.1%.

The SPDR S&P Metals & Mining ETF (XME) is down 0.7%, and the US ETF Global X Infrastructure Development (PAVE) is down 1.4%. The US Global Jets ETF (JETS) fell 2.4%. The SPDR S&P Homebuilders ETF (XHB) was down 3.6%. The Energy Select SPDR ETF (XLE) advanced 1.3%, with CVX stock a major component. The Financial Select SPDR ETF (XLF) is down 0.9%. Health Care Sector SPDR Fund (XLV) is down 0.7%, with all notable holdings Merck, Eli Lilly and ANTM.

Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) is down 10.1%, with major holdings unit programs (U) and Queen Piece (COIN) stumbles on poor results and directives. ARK Genomics ETF (ARKG) slipped 7.8%. Both ETFs are at two-year lows. TSLA stock remains the #1 holding across Ark Invest’s ETF.


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stock to watch

Merck stock rose 1.6% to 89.20, to close below 89.58 cups with a point-of-buy handle after the earlier breakout. The shares have traded tightly over the previous several sessions. MRK stock’s relative strength line was rising to new highs ahead of Wednesday’s move.

LLY stock rose 0.35% to 286.69, paring gains after trying to move away from the 50-day moving average. Technically, Eli Lilly’s stock is still in the 284-cup buying range from the base buying point that initially cleared nearly two months ago. But investors may want to wait for LLY stock to break a short downtrend, possibly using the May 6 high of 298.25 as a trigger. After this week, Eli Lilly should have a flat base – part of the base formation on the base – with 314.10 buy points. The RS line of LLY stock has already reached a new high.

ANTM stock fell 0.4% to 487.36, reversing modest gains near the 50-day line, technically returning to its previous buying territory. Shares of the health insurance giant have fallen sharply over the past few weeks. Anthem stock can be actionable from the 50 day line, especially if it breaks above a short trend line. ANTM stock’s RS line reached a new high.

DLTR stock is down 1.15% to 156.07, just below the 50-day line, inside former buy territory like Anthem. A 50 day line rebound above the 21 day line would also break a short, downward sloping trendline, providing a solid entry. Dollar Tree’s RS line has reached new heights.

CVX stock advanced 1.5% to 163.16, just below the 50-day line after moving above that level intraday. According to MarketSmith analysis, Chevron stock is at a flat base at 174.96 buying points. Investors can buy CVX stock if it bounces back from 50 days and breaks above the May 6 high of 170.97. Chevron’s stock RS line hit a new high.

Disney earnings

Disney’s earnings and revenue did not exceed estimates for the second quarter of the fiscal year. Disney+ subscribers increased by 8 million during the quarter to 137.7 million, surpassing the number of views of 134.4 million.

But ESPN+ and Hulu’s subscriber levels are a bit missed, while Disney is seeing more content spending for its own streaming services.

Last month, Netflix reported its first-ever drop in live subscribers in the first quarter. It expects a bigger loss in the second quarter

DIS stock fell 3% overnight after initially rallying strongly. Shares sank 2.3% in Wednesday’s regular session to 105.21, the lowest level in two years.

Netflix stock fell late, after closing down 6.35%.


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Rivian Profits

Rivian reported a larger-than-expected loss, while first-quarter revenue was well below consensus. However, the EV startup said it is ramping up production and delivery of the EDV 700 delivery truck to Amazon, a major customer and investor.

Rivian previously announced that it produced 2,553 vehicles in the first quarter. This was mostly a Rivian R1T pickup truck but also some R1S SUVs and commercial trucks for its main customer, Amazon.com (AMZN). Rivian delivered 1,227 vehicles in the quarter.

Rivian said Tuesday it is on track to meet its 2022 production target of 25,000 EV, but that’s half of its initial target of 50,000.

RIVN stock jumped 6% overnight in active trading. Shares fell 9.6 percent to 20.45 on Wednesday after that stronghold (F) confirmed that it has sold 8 million shares of Rivian stock. Early reports of a Ford sale sent RIVN stock crashing 21% on Monday. Shares are hitting record lows, well below their $78 initial public offering price last November.

Tesla Stock

Tesla stock fell 8.25% to 734 on Wednesday. That’s still above the February 24th low of 700, but the lowest close since last September. The increasingly ugly handle is now too deep to be valid. TSLA stock’s RS line, at or near the consolidation tops in early April, is now approaching recent lows. Tesla’s stock chart, like many other growth names, will need a lot of repair work.

Obviously, the stock market correction including the Nasdaq bear market is the biggest negative correction for TSLA stock. But Tesla’s business faces a number of challenges.

The Tesla Shanghai plant is making barely any vehicles at the moment after a major supplier suspended production earlier this week. The Shanghai plant was closed from March 28 to April 19, and its production has been limited since then.

Meanwhile, competition is heating up in China, with BYD (BYDDF) and several Chinese automakers are about to launch Tesla Model 3 competitors in the coming months. The chip shortage is expected to recede later this year. While that would allow Tesla to make more of the same electric vehicles, competitors would be able to significantly boost EVs and overall vehicle production, ultimately reducing Tesla’s pricing power and the industry.


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market analysis

After some choppy action Tuesday and Wednesday morning, the major indicators turned decisively lower after the hotter-than-expected CPI inflation report. The S&P 500 and Nasdaq cut their recent lows in 2022, killing their one-day “rallies”. The Dow, which fell on Tuesday, also hit a 52-week low on Wednesday.

The market correction continues to head lower, with the Nasdaq bear market now deepening by 30%. The S&P 500 is down 18.3% from its January high, close to the 20% bear market threshold.

Losers crush winners, with new lows obliterating new highs.

So far, there are no real indications that the market is approaching the bottom. While indicators of market fears circulate on recent gains, the CBOE Volatility Index, or VIX, fell 1.3% to 32.60 on Wednesday even as the S&P 500 hit new lows.

But there is another, well, contradictory indicator as the recent reading of the bulls to the investment newsletter writers turned increasingly bearish.


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What are you doing now

Staying abroad is still the best move. Yes, there are pockets of market power. But the leading sectors are not immune to selling pressure either. It is better to wait for a follow-up day to confirm a new rally in the market. Even so, investors should be careful.

At the moment, there is not even an attempt to go up in the market.

Stay engaged with the market, but don’t obsess over every minute of movement during the day. Keep working on your watchlists.

Read the big picture every day to stay in sync with market trend, stocks and leading sectors.

Please follow Ed Carson on Twitter at Tweet embed For stock market updates and more.

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