Stock Market Weakens Afternoon, Awaits Powell Speech; This IBD index is superior

The stock market was weak at midday on Tuesday, with major indexes nearing their lows for the day. China’s apparent easing of Covid restrictions failed to offset stock market concerns about future data and Jerome Powell’s speech.


The Nasdaq composite index fell 0.6%, and the S&P 500 lost 0.4%. The Dow Jones Industrial Average fell 0.3%. apple ( AAPL ) continued to weaken, falling further below its 50-day moving average.

Small caps led against the major indexes as the Russell 2000 rose 0.3%. Volume on the NYSE and Nasdaq rose compared to the same time on Monday.

Today’s declines offset Monday’s losses in the major indexes by about 1.5%. The S&P 500 fell back below 4,000 in Monday’s trade and remains below that level.

Hibbett ( HIBB ) pared losses after breaking above its 50-day line, but fell more than 11% on heavy volume. Sporting goods retailers missed sales and profit expectations in the October quarter, according to FactSet.

Chinese Stock Market Rally

Beijing has announced 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 are easing restrictions on property companies seeking to raise equity financing domestically.

The Shanghai Composite rose 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% year to date.

The iShares Hong Kong ETF ( EWH ) lost nearly 3%. The ETF held support at its 50-day moving average after rising above Nov. 11.

A handful of Chinese stocks rose after earnings reports. Video streaming service Known ( BILI ) surged more than 22% above its 50-day moving average. Social media platform Joy (YoY) increased by about 8% and Kanzhun (BZ) gained 13.5%. Software company Baozun (BZUN) missed the rally by gaining 2.2% in the afternoon.

All these stocks are in a deep correction.

E-commerce portal Pinduoduo ( PDD ) broke out of a cup base on Monday after a strong earnings report and added 6% in afternoon trade. It has now crossed 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 increased by 0.2% and reached 77.33 dollars/barrel. Earlier, oil rose about 2% on hopes of an easing of China’s quarantine regime.

The housing market has extended its weak spell.

The S&P CoreLogic Case-Shiller home price index rose to 10.9% in September from 13.1% a year earlier. Economists had forecast 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 is facing resistance at its 200-day moving average.

Investors await Powell’s comments

On the economic front, Federal Reserve Chairman Jerome Powell will give a speech at the Brookings Institution on Wednesday that will have the full attention of stock market investors. Powell will also take some questions from attendees.

In other economic developments, the November jobs report is due out on Friday. On Thursday, the latest jobless claims report and manufacturing sector data will be released.

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, marking the second monthly decline.

In an analysis of the survey, BMO Capital Markets economist Priscilla Thiagamoorthy said consumers are scaling back plans to make large purchases in the next six months.

“This is good news for the Fed, which is trying to reduce demand and restore price stability,” he said. “Although households are proving to be more resilient than previously expected amid a strong job market and excessive savings, inflationary pressures will continue to weigh heavily on consumer sentiment and spending plans.”

Also, 45.8% of the respondents in the survey said that more than 44.8% of jobs remained in October. 13% believe that it is difficult to keep things stable.

The yield on the 10-year Treasury Note increased by 2 basis points to 3.72%.


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