Stock futures narrowed some losses Wednesday, as September hiring data topped expectations, and as oil prices held near their highest level in seven years ahead of inventories data. Acuity Brands (AYI) gained after a strong fiscal fourth-quarter report. Steel and airline stocks tumbled on analyst downgrades. And Boeing (BA) and Apple (GS) led the declines on the Dow Jones today.
Dow Jones Industrial Average futures pared losses to 0.7% in early action, set to erase a large share of Tuesday’s 0.9% rebound. S&P 500 futures fell 0.9% below fair value, but were off early lows. Nasdaq 100 futures traded 1% lower on the stock market today, with the small-cap Russell 2000 futures down 0.9%.
American Airlines (AAL) dropped 4% and JetBlue (JBLU) slumped 3%, after downgrades from Goldman Sachs. Steelmakers also earned Goldman downgrades, with U.S. Steel (X) tumbling 4.6% and Nucor (NUE) off 2.9%.
Data privacy services provider Palantir (PLTR) surged more than 8% after inking a $823 million contract with the U.S. Army.
Commercial lighting products manufacturer Acuity Brands (AYI) swept 4.9% higher after reporting a strong fiscal fourth-quarter earnings beat. Revenue also cleared targets, and the company reported that price increases compensated for rising costs. Acuity stock is in a 22-week consolidation, attempting to regain support.
Dow Jones Today: Goldman, Microsoft
Goldman Sachs and Microsoft are stocks to watch on the Dow Jones today, after leading yesterday’s rebound among the industrials.
Goldman’s six-week consolidation also qualifies as a flat base. Its pullback looks more severe than Microsoft’s, but is only 11% deep. It undercut a prior buy point, but stopped well short of the automatic sell rule. Shares have a year-to-date gain of more than 46%.
Europe Stocks Tank; September Hiring Rebounds
Europe’s markets pared some losses in afternoon trade, hurt in early trade by weak manufacturing data and as a key U.K. inflation forecast rose to a 13-year high. Frankfurt’s DAX eased to a 1.6% loss. The CAC-40 in Paris dropped 1.6%, while the FTSE 100 in London slumped 1.1%. In Japan, Tokyo’s Nikkei 225 closed 1.1% lower. Hong Kong’s Hang Seng Index slipped 0.6%. The Shanghai Stock Exchange remains closed on the final day of its National Day holiday.
In economic news, an early report from the Mortgage Bankers Association showed mortgage applications down 7% last week. Refinance activity fell 10%, to its lowest level in three months.
The ADP Employment report estimated private payrolls rose by 568,000 in September vs. estimates of 428,000. It’s also up from revised 340,000 in August. The leisure and hospitality sector did the most hiring, adding 226,000 workers. Manufacturing added 49,000 new employees, while trade, transportation and utilities expanded payrolls by 54,000 jobs.
The Energy Information Administration’s weekly oil inventory data is due for release at 10:30 a.m. ET.
Vital Signs: Oil, NatGas, Bond Yields, Bitcoin
West Texas Intermediate crude futures eased 0.9% early Wednesday to trade just below $78.25 a barrel. U.S. oil prices are now working on the seventh week of a rally that has lifted them to their highest level since November 2014.
Natural gas futures reversed early gains and dropped 2.9% to $6.13 per 1 million British thermal units. Shortages driving price spikes in Europe have led U.S. natural gas into the seventh month of its rally, up 148% through Tuesday since Dec. 31, and at its highest level since December 2008.
Bond yields ticked higher, with the 10-year Treasury yield up one basis point to 1.54%. Yields hit their low at just below 1.13% in July. They touched this year’s high, above 1.76%, in March.
Bitcoin bounced more than 5% to trade just below $52,800. The cryptocurrency swung as high as $52,797 and as low as $49,624 over the past 24 hours.
IBD 50: Western Alliance, Diamondback, Stifel
Among IBD 50 stocks, Western Alliance Bancorp (WAL) is hovering near a 109.94 entry in a 22-week cup base. Diamondback Energy (FANG) is holding in a buy range above a 102.63 cup base entry. Stifel Financial (SF) was less than 1% below a 71 buy point in a 22-week cup-with-handle base.
Taskus (TASK) is testing the 10-week moving average. Datadog (DDOG), which was mentioned in an earlier Stock Market Today update, is already rebounding from the 10-week line. Datadog is an IBD Leaderboard listing.
With the market in correction, these stocks are all watchlist candidates. Until the market forms a bottom and confirms a fresh uptrend with a follow through day, investors should be shying away from new purchases.
Nasdaq, S&P 500, Dow Jones Today
The Dow Jones today is holding above a low sketched out on Friday, and appears set to continue a back and forth trading trend. Tuesday’s rally briefly topped the index’s short-term 10-day moving average.
The index has traded for short periods above its 10-day moving average in every session since Sept. 28. But has been unable to clock a daily close above that level. A move above that indicator could suggest a shift in the market mood.
In terms of longer-term support, the Dow now has four weekly closes below its 50-day moving average. That is its longest retreat below that level of support since March and April 2020.
For more detailed analysis of the current stock market and its status, study the Big Picture.
The S&P 500 is also holding just below its 10-day line, after scratching off a new low on Monday. Monday’s lows for the Nasdaq composite and S&P 500 could be the beginnings of a bottom to the market’s current pullback. Bottoms can eventually lead to new uptrends, but this process takes at least several days to take shape.
One resilient element of the market’s recent pullback have been small caps. The S&P Smallcap 600 continues to trade above its 50-day moving average, after rebounding from a test of 200-day line on Sept. 22. The Russell 2000 is slightly more sloppy, but continues to trade tight to its converged 50-day and 200-day averages. And the Russell is trading just 3.5% off its early September highs, vs. a 4.4% pullback for the S&P 500, and a 6.2% drop for the Nasdaq.
Please follow Alan R. Elliott on Twitter @IBD_Aelliott
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