Dow Jones Futures Drop: Inflation, Employment Knowledge Might Be Catalyst for Sick Market Rally

Dow Jones futures fell sharply early Thursday, along with S&P 500 futures and Nasdaq futures, with some key jobs and inflation data due before the market open. .




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Stock market rally looks for direction on Wednesday. The major indexes closed mixed. But the details show even more weakness, with the losers easily outpacing the winners.

With the uptrend under pressure, this is not a good time to make new purchases or hold more than exposure to the token.

The health sector continues to lead the way, recovering from Tuesday’s losses. UnitedHealth (UNH) has moved higher in the buy zone after just breaking out on Wednesday. Vertex Pharmaceuticals (VRTX) received an early entry after Tuesday’s pullback. McKesson (MCK) is holding key support in its shallows, not far from a positive entry. Lantheus (profit) is trading around its 50-day mark, consolidating after a strong rally earlier this year. All have relative strength line near a record high.

High-end furniture retailer RH (RH) full-year estimates were cut, citing weaker demand and a deteriorating economic environment. RH stock fell continuously overnight, signaling a two-year low. As of now, the stock is down 11% this week.

Simply good food (SMPL), making low-carb snacks and drinks, income statement early Thursday. SMPL stock rose 2% to 41.20 on Wednesday, near an entry level of 42.01 in a consolidation.

Several other food and beverage stocks are doing well, reflecting defensive sentiment in the market. Giant cereal General Mills (GIS) rose 6.35% on Wednesday to 74.72, a breakout on rising earnings and dividends. Post Holdings (PARCEL) is right at a point of purchase while Kellogg (KY) is setting.

Tesla shares fell 1.8% to 685.47, down 7% so far this week. Stocks are continuing to retreat from the 10-week moving average and are heading back to recent lows. LI stock rose 2.7% to 38.08, back above a buy point, but still wider than the key moving averages. Tesla (TSLA) and Chinese EV startup Li Auto (LIFE) will report Q2 revenue later this week.

UNH stock is on IBD Rankings. LNTH stock is on the Leaderboard watchlist. Simply Good Foods, UnitedHealth and VRTX stocks are available on IBD 50. Vertex and MCK shares are available on IBD Big Cap 20. Lantheus on Wednesday IBD shares of the day.

The video embedded in this article analyzes Wednesday’s market action and discusses GIS stock, McKesson and Neurocriminal Biosciences (NBIX).

Dow Jones Futures Today

The Dow Jones is down 1.1% from fair value. S&P 500 futures lost 1.4% and Nasdaq 100 futures lost 1.6%.

The yield on the 10-year Treasury note fell 3 basis points to 3.06%.

Bitcoin drops to just over $19,000. Late Wednesday, the SEC rejected Grayscale’s bid to transfer the Grayscale Bitcoin Trust (GBTC), the largest Bitcoin fund, into an ETF that fully tracks the spot price of Bitcoin.

China’s manufacturing index for China rose 0.6 points in June to 50.2, back above breakeven for the first time in four months as the country recovered from the shutdowns. Covid. But it’s a bit lower than the views for 50.5. The services index rose to 54.7 from 47.8 in May.

The US ISM manufacturing index for June is due on Friday morning, following some negative reports by factories in the region.

At 8:30 a.m. ET on Thursday, investors will get key U.S. jobs and inflation data. The Department of Labor issues weekly unemployment claims. The Commerce Department will release May earnings and spending reports, including the Federal Reserve’s preferred inflation gauge.

Remember that action overnight in Dow futures contract and elsewhere it doesn’t necessarily translate into actual trading the next week stock market meeting.


Join IBD experts as they analyze stocks that could act in the stock market rally on IBD Live


Rally stock market

The stock market recovered to trade in a narrow range on Wednesday.

The Dow Jones Industrial Average fell less than 0.1% on Wednesday stock market trading. The S&P 500 index lost a small portion. The Nasdaq Composite Index rose 0.3%. The small cap Russell 2000 lost 1%.

US crude oil prices fell 1.8% to $109.78 a barrel, reversing solid gains in the morning. Gasoline futures fell 2.8%.

The yield on the 10-year Treasury note fell 12 basis points to 3.09%. The two-year yield fell to 3.06%. The two- to 10-year yield spread fell to 3 basis points, highlighting recession fears.

Fed Director Jerome Powell again emphasized Wednesday that the central bank’s priority is to fight inflation, even in the face of a recession risk.

ETF

Among the Best ETFsThe Innovator IBD 50 ETF (FFTY) fell 1.25%, while the Innovator IBD Breakthrough Opportunity ETF (BOUT) increased by 0.75%. iShares Expanded Software-Technology Sector ETF (VAT) increased by 0.2%. VanEck Vectors Semiconductor ETF (SMH) sank 1.8%.

SPDR S&P Metals & Mining ETF (XME) fell 2.8% and the US X Global Infrastructure Development Fund (SAVE) back 1.3%. US Global Jets ETF (JETS) spent 1.5%. SPDR S&P Homebuilders ETF (XHB) embedded 0.4%. The Energy Select SPDR ETF (XLE) fell 3.5% and the financial SPDR ETF (XLF) slipped by 0.6%. SPDR Fund for the Healthcare Sector (XLV) rose 0.9%, with UNH, Vertex and McKesson shares all included in the ETF.

Reflecting a more speculative narrative on stocks, the ARK Innovation ETF (ARKK) retreat 1.6% and ARK Genomics ETF (ARKG) lost 0.6%. TSLA stock remains the top holding on Ark Invest ETFs.


The five best Chinese stocks to watch right now


Market aggregation analysis

The stock market rally showed no upside, managing only a mixed session following Tuesday’s massive losses.

The details are less impressive, with losers outstripping advancers by almost 2 to 1 on both the NYSE and Nasdaq.

Markets turn to “bullish under pressure” on Tuesday as Nasdaq composite and S&P 500 close below Friday’s low track date.

Research from Eric Krull, co-author of The Lifecycle Trade, shows that there is a 90% chance the rally will eventually fail when an index closes below the intraday low.

The rally is not officially over until the indexes drop to their recent lows.

The Dow Jones didn’t close below its intraday low, but it wasn’t far off.

For its part, the Russell 2000 index closed below Friday’s low on Wednesday.

Healing potions, while defensive food reserves increase well. But energy stocks, which rose earlier in the week, fell sharply on Wednesday.


Market Timing with IBD’s ETF Market Strategy


What to do now

The stock market rally isn’t over yet, but the outlook isn’t high. The odds are simply not in your favor right now. Investors should focus on preserving their mental and physical capital and preparing for a sustainable uptrend in the market.

Read Big picture every day to stay in sync with market trends and top stocks and sectors.

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

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