Dow Jones futures fell modestly Wednesday morning, along with S&P 500 futures and Nasdaq futures. The major indexes had another volatile session Tuesday. The Dow eked out a small gain while the Nasdaq fell sharply after Snapchat parent Snap slashed guidance, citing deteriorating macroeconomic climate.
That slammed stocks broadly, but especially companies that depend on online advertising, including Facebook parent Meta Platforms, Google parent Alphabet, Twitter, Roku, Trade Desk and more. Snap stock crashed 43%.
Snap's stunning economic warning late Monday was paired Tuesday morning with surprisingly weak new-home sales and two manufacturing reports. When the economy hits an inflection point, markets can be behind the curve, even if already trending in that direction.
A stock market rally attempt remains but doesn't look inspiring. Tesla continued its near-vertical sell-off of the past several weeks.
Stocks To Watch
Albemarle tried to break above key resistance on Tuesday as the lithium giant raised guidance again, but slashed gains amid the retreat in growth stocks. Northrop Grumman moved above an early entry, but it's a tough market for any buys.
Dry bulk shippers Star Bulk Carriers and Grindrod Shipping beat views late Tuesday. SBLK stock rose modestly overnight while GRIN stock fell solidly. Both closed down more than 2% on Tuesday but near 52-week highs.
Diana Shipping topped views early Tuesday, closing up 5.8% to its best levels since 2015.
Northrop and ALB stock are on the IBD Leaderboard watchlist for possible inclusion. NOC stock is on SwingTrader.
Dow Jones Futures Today
Dow Jones futures fell 0.4% vs. fair value. S&P 500 futures retreated 0.4% and Nasdaq 100 futures lost 0.6%.
Crude oil prices rose 1%.
The 10-year Treasury yield fell 3 basis points to 2.73%.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
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Stock Market Rally
The stock market rally attempt technically had a mixed session with the Dow Jones rebounding into the green. But tech stocks had a rough session.
The Dow Jones Industrial Average rose 0.15% in Tuesday's stock market trading after trading lower for much of the session. The S&P 500 index retreated 0.8%. The Nasdaq composite declined 2.35%. The small-cap Russell 2000 gave up 1.5%.
U.S. crude oil prices dipped 0.5% to $109.72 a barrel.
The 10-year Treasury yield tumbled 10 basis points to 2.76%, close to testing its 50-day line.
Among the best ETFs, the Innovator IBD 50 ETF declined 0.7%, while the Innovator IBD Breakout Opportunities ETF lost nearly 1%. The iShares Expanded Tech-Software Sector ETF tumbled 3.5%. The VanEck Vectors Semiconductor ETF gave up 2.6%.
SPDR S&P Metals & Mining ETF slumped 1% and the Global X U.S. Infrastructure Development ETF ceded 0.9%. U.S. Global Jets ETF descended 4.6%. SPDR S&P Homebuilders ETF declined 2.7%. The Energy Select SPDR ETF edged up 0.4% and the Financial Select SPDR ETF dipped 0.2%. The Health Care Select Sector SPDR Fund rose 0.4%.
Reflecting more-speculative story stocks, ARK Innovation ETF plunged nearly 7% and ARK Genomics ETF 5.1%. The two Ark ETFs, which held up in a range last week, are undercutting the last several days of trading. Tesla stock is still the No. 1 holding across Ark Invest's ETFs.
Five Best Chinese Stocks To Watch Now
Albemarle Stock
ALB stock edged up 0.1% to 243.15 after reaching as high as 249.90. That intraday move pushed shares above short-term resistance at 244.90 and at 248. Albemarle stock is in a 42%-deep cup base with a 291.58 buy point.
The relative strength line is already at a record high, a bullish sign. The RS line, the blue line in the charts provided, tracks a stock's performance vs. the S&P 500 index.
Albemarle now sees full-year earnings of $12.30-$15 a share, the second big upward revision this month alone. On May 5, Albemarle raised its full-year EPS target to $9.25-$12.25 from just $5.65-$6.65. The lithium and bromine producer also hiked sales targets again. Albemarle cited increased variable-priced contracts, taking better advantage of skyrocketing lithium prices.
NOC Stock
Northrop stock rose 3.1% to 471.10, clearing a downward-sloping trendline, offering an early entry along with a rebound from the 50-day line. Shares also topped another early entry at 470.33, just above the May 5 short-term high. NOC stock is closing in on a 477.36 cup-with-handle buy point, according to MarketSmith analysis. The RS line for Northrop has been hitting new highs for weeks.
Snap Stock
Snap stock had already fallen more than 70% from its September peak of 83.34 before Monday night's warning. But that didn't stop the social media firm from crashing 43% to 12.79 on Tuesday.
With discretionary spending waning, advertisers are cutting back, hitting several big online players. FB stock sank 7.6%, back near late April's 52-week lows. Google stock retreated nearly 5%, breaking to a 52-week low. Roku, Pinterest and Trade Desk also were big losers.
Twitter Stock
Twitter stock sank 5.2% to 35.88. It's now 33% below Elon Musk's $54.20 takeover price. Musk has sent strong signals that he would like to get out of the deal or at least renegotiate the price. Twitter will hold its annual shareholder meeting, with the board having to explain how it plans to go forward. They'll vote on the plan Wednesday. Musk won't have an easy time getting out of the contract, though he may be able to force a settlement.
Without a deal, TWTR stock would likely fall well below 30, if Snap and Facebook stock are any guide. A lengthy legal battle could weigh on Twitter and Tesla stock, so both sides have incentives to reach a compromise.
Tesla Stock
Tesla stock retreated 6.9% to 628.16, hitting a 10-month low. Elon Musk's Twitter saga has been weighing on Tesla stock, which faces a number of other company and market headwinds. At this point, the next key TSLA stock level is the May 2021 low of 546.98.
Market Rally Analysis
Are you ready for a follow-through day? Technically, that could happen at any point now. The Nasdaq just reported its worst close since late 2020, but its rally attempt is still on. The S&P 500 and Dow Jones look a little better, but the market certainly doesn't have the feeling of a powerful rally.
The S&P 500 and Nasdaq continue to hit resistance at the fast-falling 10-day moving average, while the Dow is just above that short-term level. To say clearing the 10-day line is a minimum requirement for a rally attempt is like saying job applications shouldn't be in crayon.
When the economy turns quickly, it can catch economists, companies and investors off guard. New-home sales plunged 16.6% in April to a two-year low of 591,000. Two manufacturing gauges also came in well below views Tuesday. Walmart, Target and Snap are among the companies with big warnings in the past week. All of that is spurring a huge repricing of stocks.
A combination of rising costs and weakening demand is a killer for profit margins.
Even defensive sectors such as discounters and food producers aren't immune.
At some point, deteriorating economic conditions could spur the Federal Reserve to slow the pace of rate hikes, but probably not until at least 50-basis-point moves in June and July. However, markets are no longer fully pricing in half-point Fed rate hikes at both meetings.
Fed minutes from the May policy meeting will be released at 2 p.m. ET.
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What To Do Now
It's better to be a day or two late than to try to guess a market bottom. Amid a volatile correction or bear market, that's doubly true.
Over and over again, the market has provided little hints of positive action, only to tumble to new lows. Investors should wait for a follow-through day before getting off the sidelines. Even then, they should step back into the market carefully, especially if there are few good stocks to buy.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
