The major stock market indexes tested weekly support on Friday morning, with two-sided price action typical of options expiration. Twitter stock fell after allegations the Biden administration may have handed Elon Musk a get-out-of-deal-free card.
The Dow Industrial Average rose 1.4% in the morning session while the S&P 500 gained 1.2%. The Nasdaq composite underperformed, up 0.6%. The Russell 2000 small-cap index split the difference, up 1.0% at this hour.
NYSE volume was higher into the lunch hour, compared to the same time Thursday, while Nasdaq volume was lower.
Crude oil gained less than 1% to $84.80 per barrel. The 10-year Treasury note yield surged to another decade high above 4.30% and pulled back.
Natural gas sold off and is headed toward a sixth straight decline as EU leadership failed to agree on a gas price cap. Natgas futures fell 7.3%, cutting through $5 per million British thermal units.
Nasdaq 100 tracker Invesco QQQ Trust traded up 1.2%, shaking off more discouraging news from the tech sector.
Stock Market Earnings
Dow Jones component American Express fell 5.5% despite strong earnings and revenue in line with estimates. Shareholders hit the exits after the company set aside a sizable $778 million in reserves due to growing risk of loan defaults.
Also in the Dow, perennial underperformer Verizon sold off more than 5% after a mixed Q3 report and could test the Oct. 13 low, which also marks an 11-year low. Telecom industry growth has evaporated in the last five years.
Snap plunged 30% after warning of zero 2023 growth, setting off a wave of analyst downgrades. SNAP stock topped out in the low 80s just 13 months ago and has lost an astounding 91% of its value since that time.
More than anything, the stock's plunge warns current investors to exercise aggressive risk management in this tough market environment.
Can Musk Walk Away After Biden Surprise?
Bloomberg reported the Biden administration might "subject Elon Musk's ventures to national security reviews, including the deal for Twitter and Starlink." Twitter sold off into the lower 40s after the news but recovered when the White House said it "isn't aware" of a review.
Inadvertently, Biden may have handed Musk a get-out-of-deal-free card because the threat of government intervention lowers the deal's price tag. Don't be surprised if the mercurial CEO demands the deal be put on hold once again and heads back to the Delaware court.
Twitter fell as low as 43.80 after the report and bounced back to around 50 in the first half-hour of trading. That probably won't end the controversy because political channels will jump all over the rumor, just two weeks before the midterm election.
Stock Market Movers And Shakers
AT&T added to gains after rallying 7.7% on Thursday, in reaction to a surprisingly upbeat earnings report and outlook. AT&T stock pays an astronomical 6.63% dividend yield, attracting a lot of defensive capital. However, it's been stuck in a major downtrend since 2016.
Those shareholders now hope to benefit from a long-term bottom, a nascent uptrend and respectable EPS growth.
IBD 50 stocks Commercial Metals and Steel Dynamics are trading close to or above buy points.
CMC stock is also nearing April's all-time high at 46.68, gaining ground within a stage 1 base. It just hit a 52-week relative strength line high, setting off a blue dot on MarketSmith, and has lifted within two points of the 44.45 buy point.
Price action since the April top looks highly constructive, with three successful tests around the 200-week line.
STLD stock is also flashing a blue dot on Friday, after rallying nearly 5% on Thursday and topping the 88.72 buy point in heavy trading.
Keep in mind that EPS growth at both companies is now forecast to fall by double digits in 2023, despite current EPS Ratings in the mid-90s. The ongoing market correction is another big risk for any stock purchase.
