Market Rally Buckling From Fed, Apple, Tesla, Cloud Stocks; What To Do Now

Dow Jones futures will open on Sunday evening, along with S&P 500 futures and Nasdaq futures. Despite a strong close in Friday’s whip session, stock market stocks took a big hit last week, with major indexes falling on hawkish reactions. from Fed chief Jerome Powell.




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The Nasdaq had its worst week since January as megacaps sank and cloud stocks fell.

apple (AAPL), Amazon.com (AMZN) and parent Google alphabet (GOOGL) lost more than 10% for the week, along with parent Facebook Meta Platforms (META), Tesla stock and Microsoft stock are not far behind. Google stock, Meta, Amazon.com (AMZN) and Microsoft (MSFT) hit a bear market low. Apple stock and Tesla (TSLA) didn’t, but they were close.

At the same time, Twilio (TWLO) and Atlassian (TEAM) fell on Friday due to disappointing results and guidance, losing more than 40% for the week. Many other software names have collapsed, with or without money.

Market meeting trying to fight the Fed with the big tech sector? That’s a high number. Therefore, even though stocks and sectors are showing strength, investors should be very cautious in the current environment.

In other news, Warren Buffett’s Berkshire Hathaway (BRKB) on Saturday reported a 20% increase in profits. The conglomerate suffered total losses as the bear market hit the investment.

Dow Jones Futures today

Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.

Remember that overnight movements in Dow futures and elsewhere do not necessarily translate into actual trading in the next trading session.


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Stock Market Rally

Stocks in the stock market started the week on a positive note but sold off on Wednesday afternoon after comments from Fed chief Jerome Powell. The main index left the country on Thursday. Stocks rallied on Friday after a mixed jobs report, but ended the day flat.

The Dow Jones Industrial Average still fell 1.4% in market trade last week. The S&P 500 index was down 3.3%. The Nasdaq composite fell 5.7%, its worst loss since the weekend ended Jan. 21. The small-cap Russell 2000 fell 2.4%.

The 10-year Treasury yield jumped 15 basis points to 4.16%. The 10-year yield continued its advance after shedding a 12-week winning streak and briefly traded around 4%.

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The dollar rose 0.2% for the week, but fell 1.9% on Friday, its biggest daily decline of the year. It probably helped the stock market advance on Friday.

The market now sees a 61.5% chance of a 50-basis-point rate hike at the Fed’s December meeting. The consumer price index for October will be released on Thursday. The November jobs and CPI reports will be released ahead of the Fed’s rate hike decision on December 14.

US crude oil prices jumped 5.4% last week to $92.61 a barrel. Natural gas rose almost 13%.

Tech Wreck

Apple stock, which rose to the 200-day line last week, fell 11.15% to 138.38 last week. AAPL stock came within a penny at the end of October, although it still has some distance from the June bear market. Microsoft jumped 6.1%, Google 10.1%, Amazon 12% and META stock 8.5%, all to multi-year lows. Tesla stock fell 9.2% for the week, reaching its lowest point since Oct. 24 on Friday. This is after a strong start to the week, reaching 237.40 intraday Tuesday.

Meanwhile, dark days for cloud software. Here are a few examples: Atlassian stock fell 29% on Friday and 38% for the week. Twilio stock fell nearly 35% on Friday and 43.5% for the week. Snowy hills (SNOW), which won’t report for a few weeks, was down 17% for the week.

At the same time, Fortinet (FTNT) fell 17.5% for the week after weak billing guidance weighed on a strong revenue and earnings outlook. Paycom (PAYC) fell 10.3% despite strong results and guidance.

Companies looking to cut costs may curb software spending when setting budgets for 2023.

ETFs

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 1.2% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) lost 2%. The share value of the iShares Expanded Tech-Software Sector ETF (IGV) changed by +10.2% during the week. The last stock price of VanEck Vectors Semiconductor ETF (SMH) changed by +0.7% during the week.

Over the past month, the price of the SPDR S&P Metals & Mining ETF has changed by +2%. Global X US Infrastructure Development ETF shares rose 0.1%. The US Global Jets ETF’s share price changed by +0.3%. The SPDR S&P Homebuilders ETF’s share price has changed by -5%. Over the past month, the price of the Energy Select SPDR ETF has changed by +2.44%. Shares of the Financial Select SPDR ETF (XLF) The Health Care Select Sector SPDR Fund (XLV) lost 1.5%.

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Over the past month, the price of the ARK Innovation ETF has changed by +9.4% during the week. The Tesla Stock fund has a large holding in Ark Invest’s ETFs.


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Market Rally Analysis

The stock market has had a bad week, with the Fed hawkish and earnings often-weak in the major indexes. The Dow Jones, which led the market’s rise, had the smallest decline, but returned below its 200-day moving average. The Russell 2000 hit resistance near the 200-day line but bounced back on Friday to close above the 50-day line. The S&P 500 defied a 50-day low.

The Nasdaq composite, which missed its 50-day moving average, fell the most, closing below its intraday low on Wednesday, a bullish sign.

The major index extended losses on Thursday, then took a beating on Friday on a mixed jobs report.

Negative trading activity and large returns in many stocks have resulted in a shift to a “market under pressure.”

The main market driver was Fed chief Powell, who pulled the rug out from the rally by signaling a smaller change in rate hikes but higher funding rates.

Meanwhile, tech megacaps, including Apple, Tesla and Amazon, have suffered significant losses. Cloud software names such as Atlassian and Twilio have fallen, along with key factors in recent earnings.

Chips haven’t had a terrible week, relatively speaking, but only a few names are trading close to highs.


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There are many areas of the bear market. The medical field looks strong overall. Energy names, including many oil stocks, LNG plays and coal miners, plus a few solar stocks, are doing well.

Lithium and some iron games work well. Infrastructure companies for the energy, utilities and telecommunications industries are bright areas. Communication companies in general are a rare technology field that leads. Some restaurants and discount retailers are showing strength. Various funds, especially brokers and brokerages, have made significant gains.

However, it is difficult to find strong collections with such huge technology platforms. It will be difficult for the major indicators to move forward with Apple, Google, Tesla and cloud software names. But trying to move forward in the stagnant or collapsing areas?

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If the inflation report shows a clear and significant reduction in interest rates, encouraging a reduction in Fed rate hikes, megacaps and cloud computing could be lower. However, a return to technological leadership may be some ways off. On the other hand, if the October CPI report on November 10 shows that inflation is still warm, technology stocks may pull the main sectors to end the rally.

Tuesday is election day. Stock markets tend to do better with divided government, and Republicans are set to regain control of the House and possibly the Senate. But political forecasters have been predicting at least one House GOP victory all year, so it’s unclear whether Tuesday’s actual results will be a big mover.


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What to do now

Stock market liquidity is under pressure. The Fed is changing from fast and furious to slow and long, but still hawkish. The technology sector is an accident. The major indexes have reduced some key levels. Indexes and key values ​​are subject to seasonal and daily fluctuations.

It’s not a good environment to buy stocks. Investors should seek to reduce the spread, either explicitly or simply by reducing losses in different positions.

If stocks show renewed strength, with the S&P 500 and perhaps the Nasdaq rising above their 50-day moving averages, investors may begin to raise their stakes. But it may take technology to slow down and inflation data to show the cooling.

If conditions improve, you want to be prepared. There are several deposits to be made, with many more not too far away. So, prepare your watch list, be patient and persevere.

Read The Big Picture every day to stay in tune with the direction of the market and stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market reforms and more.

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