Stock futures shunted sharply lower Wednesday as bond yields jumped, commodity prices withered and Bitcoin tumbled to a three-month low. Earnings news produced a few early winners, with Target and Take-Two Interactive leading the list. Salesforce.com was a lonely advancer on the Dow Jones today, following an analyst upgrade.
Dow Jones futures carved 0.8% lower as Microsoft (MSFT), Chevron (CVX) and Apple (AAPL) all dropped about 1.5%. S&P 500 futures skidded 1.1% below fair value, implying an open back below the index’s 50-day moving average.
At the top of the Nasdaq, China-based travel site Trip.com (TCOM) traded up 3% after reporting its first-quarter results.
Big box retailer Target (TGT) rallied 3.8%, running high on the S&P 500 and placing the stock in a possible buy zone, after shredding analysts’ first-quarter earnings expectations. ‘Grand Theft Auto’ game developer Take-Two Interactive (TTWO) was also high on the S&P 500, up 2.8% after reporting its fiscal fourth quarter earnings.
Ford Motor (F) climbed 0.7%, as Tudor Pickering initiated Ford stock with a buy rating and a 17 price target, after the company offered on Tuesday the first look at its first electric version of its F-150 pickup — the Lightning. A full reveal ceremony is set for Wednesday evening.
Dow Jones Today: Salesforce Upgrade
Salesforce.com (CRM) whittled its early gain to 0.2%, the sole early gain on the Dow Jones today. Morgan Stanley upgraded Salesforce stock to overweight, from equal weight, while keeping its price target unchanged at 270.
The report cited share price underperformance following the December announcement of the Slack acquisition. The deal is expected to close in July. The note said Salesforce was well positioned to benefit from increased corporate spending on digital transformation.
The big fireworks may occur after the close on the Dow Jones today, with Cisco Systems (CSCO) due to report its fiscal third-quarter earnings. Cisco chares dropped 1.3% in early trade.
Bitcoin Tumbles To 3-Month Low
The Bitcoin price broke lower yet again overnight, tumbling below $36,300 to its lowest level since early February. The cryptocurrency traded around $36,500 early Wednesday, according to CoinDesk.
Chinese regulators on Tuesday stepped up their warnings, saying financial institutions should not accept cryptocurrencies as payment. Bitcoin came under heavy selling over the past week, after Elon Musk said Tesla would no longer accept the cryptocurrency as payment for its electric vehicles, citing environmental concerns.
Earnings News: Target, Zim Integrated
Israel-based Zim Integrated Shipping Services (ZIM) rose 3.4% after reporting a strong first-quarter sales and earnings beat. Shares are trading just below a 43.09 buy point in an IPO base. The stock ended Tuesday 178% above its January initial offering price.
Target rallied 2.6%, pointing it toward a buy zone on a rebound from support at its 10-week moving average. The Minneapolis-based retailer reported a 525% earnings gain on a 23% revenue increase. Same-store sales popped almost 23%. Digital sales soared 50%.
Vital Signs: Oil, Copper, Bond Yields
West Texas Intermediate oil prices fell almost 2% to near $64 a barrel — still well within its recent trading range below the 33-month high at $67.98 posted on March 8. WTI remains up 33% so far this year.
Copper dropped 2.4% to $4.61, backing away from last week’s record peak above $4.78 per pound. Copper broke past its previous record high, set in February 2011, on May 5.
The 10-year Treasury yield rose to 1.67%, vs. the CBOE settle of 1.64% on Tuesday. April inflation data tripped a surge in the 10-year to above 1.69% a week ago. Yields had skirted pre-pandemic levels late in March, climbing to almost 1.76%, the highest level since January 2020.
Dow Jones Today: The Nasdaq Knot
Heading into the seven final trading days of May, the Nasdaq Composite is tracking toward its first monthly loss since October, down 4.7% since April 30. The Dow Jones today opens holding a 0.6% gain, on track for a fourth straight monthly advance. The S&P 500 is down 1.3%, poised to snap its three-month run up.
So “sell in May and go away” may not have been a bad idea. The debate over whether the current inflation trend is a blip or will remain persistent shows no signs of reaching a conclusion. And that appears to have the Nasdaq tied in a knot, below the 14,000 level and wrapped around its flattening 50-day moving average.
For more detailed analysis of the current stock market and its status, study the Big Picture.
Tuesday’s Big Picture article noted the Nasdaq faced the possibility of a sixth straight weekly decline. If that occurs, it will be the first time since the fourth quarter of 2012.
The best strategy for growth stock investors is still to avoid what’s not working (large-cap technology stocks) and go with what’s working (energy, financials, materials). Keep positions small to start. The market will tell you pretty quickly if your timing was right. Add to winning positions and cut your laggards loose.
May’s Best Performers On Dow Jones Today
Specialty chemicals maker Dow (DOW) has been the hottest ticket on the Dow industrials this month, as rising commodities prices point to an upswing in the cyclical stock’s markets.
Shares are up more than 11% since April 30. That included a breakout from a six-week flat base with a buy point at 67.37.
Dow shares on Tuesday remained in the buy range above that entry, which runs to 70.74. Dow stock holds an 80 Composite Rating from IBD. Its relative strength rating is 81, and its relative strength line punched through to new highs alongside the breakout.
Goldman stock has loitered for the past two weeks in its buy range above a 356.95 buy point in a seven-week cup base. The buy range extends to 374.80.
JPMorgan and American Express are also in buy ranges. JPMorgan’s entry is at 161.79, unless more aggressive chart readers plotted a buy point at 157.35.
American Express has a 151.56 buy point, and a buy range effective through 159.14.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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