Stocks plowed into a weak open Monday, with the Dow and S&P 500 each threatening to snap four-day rallies. Economic data out of China and from the New York Federal Reserve indicated slowing growth. Oil prices and bond yields retreated, while Bitcoin held above $47,000. Tesla shares dropped as federal authorities announced an investigation into its Autopilot driving system. Boeing opened at the bottom of the Dow Jones today.
The Dow Jones Industrial Average dropped 0.6% at the starting bell, backing away from Friday’s record highs. The S&P 500 backed off 0.5%, also retreating from its record. The Nasdaq Composite tanked 0.8%, with vaccine maker Moderna (MRNA) down more than 7% and trading at the bottom of both the Nasdaq 100 and the S&P 500.
Data from China’s National Bureau of Statistics on Monday showed activity in industrial production, investment and retail sales slowed more than expected in July. In the U.S., the New York’s Federal Reserve’s August Empire State Manufacturing Index came in at 18.3 — down from 43 in July and far below views for a downshift to 30.
Sonos (SONO) spiked more than 9%. The International Trade Commission ruled Alphabet infringed on some of Sonos’ patents. In addition, Jefferies upgraded the stock to buy and raised its price target to 50, from 43. Sonos shares leapt 11.3% last week, following the company’s fiscal third-quarter report on Wednesday. Sonos is climbing the right side of a 17-week consolidation, ending Friday about 18% below a possible buy point at 44.82.
In early earnings news, China-based scooter maker Niu Technologies (NIU) gained 6.6% in early trade. HeadHunter Group (HHR) jumped 1.7%. Miner BHP Group (BHP), contract manufacturer Fabrinet (FN) and Israel-based e-commerce solutions provider Global-E Online (GLBE) are due to report after the market’s close.
Dow Jones Today: Disney Stock, Apple Stock
Apple (AAPL) popped 0.9% at the open, then dropped 0.3% on the Dow Jones today. Apple stock is hovering in a buy zone after topping a 145.19 entry in a 23-week consolidation. The IBD Leaderboard stock also broke out in June from a cup base formed within that consolidation. Shares are up almost 10% from that breakout.
Walt Disney (DIS) shares dipped 1.6% in early trade. Disney is one of IBD’s five stocks to watch this week. Disney stock pared gains last week after bouncing off its 50-day/10-week moving average. Breaking resistance around 186.29 would offer an early entry.
Tesla Stock: Feds Open Investigation
Tesla shares dropped 3.5% after the National Highway Traffic Safety Administration announced it had launched a formal investigation, looking into possible issues with the company’s Autopilot partially automated piloting system. The agency said it had identified 11 Tesla crashes since 2018 involving flashing lights, flares, an illuminated arrow board or cones warning of hazards while the Autopilot or Traffic Aware Cruise Control were engaged.
The IBD Leaderboard stock is just above an aggressive 700.10 buy point that formed deep within the stock’s seven-month consolidation. Shares ended Friday almost 4% above their short-term 21-day exponential moving average.
Vital Signs: Oil, Bond Yields, Bitcoin
Crude oil prices headed for a third straight decline on Monday, but still holding within a healthy $65 to $70 range. Data released Monday showed refinery activity in China fell to the lowest level in 14 months as independent refineries trimmed output due to tightened regulations. West Texas Intermediate traded down 3% to below $67 a barrel. WTI prices are down about 7.5% so far for August, and tracking toward their first decline in dive months.
The 10-year Treasury yield backed off sharply, to 1.23%, after taking a steep drop on Friday to settle just below 1.30%. Bond markets have been erratic following a dive in yields across 10 of the 11 weeks through the end of July. The 10-year yield touched its high for the year, just above 1.76%, in early April.
Bitcoin rallied almost 2% to trade around $46,518, after swinging as high as $48,048 and as low as $45,566 over the past 24 hours, according to Coindesk. Bitcoin touched a high above $64,829 in mid-April. Cryptocurrency plays Marathon Digital Holdings (MARA) and MicroStrategy (MSTR) pared their early gains to 1.2% and 1.4%, respectively.
China Markets Mixed, Europe Lower
China’s markets were uneven following the data release on Monday, with the Shanghai Composite finishing flat while Hong Kong’s Hang Seng Index took a 0.8% loss. In Japan, Tokyo’s Nikkei 225 tumbled 1.6%.
Among China gauges in the U.S. early Friday, the iShares MSCI China ETF (MCHI) dropped 1.6% in morning action. The Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) dipped 0.3%. Technology tracker KraneShares CSI China Internet ETF (KWEB) shifted 2.7% lower in early trade.
Europe’s markets carved deeper losses in afrernoon action. The FTSE 100 in London dropped 1.4%. The CAC-40 in Paris lagged 1% lower. Frankfurt’s DAX held losses to around 0.6%.
The SPDR Portfolio Europe ETF (SPEU) dropped 0.9% in early trade, after a 0.8% gain on Thursday. A four-week advance lifted the ETF 2.5% so far for August, to just below a 44.06 buy point in a nine-week flat base.
IBD 50, Dow Jones Today: Walmart Upgraded
Nvidia has formed a bullish flat base riding firm support at its 10-week moving average. The stock closed 3% below the 208.85 entry on Friday. Nvidia is also an IBD Leaderboard listing.
The Dow Jones today gears up for a big reporting week, beginning with Home Depot (HD) and Walmart (WMT) on Tuesday morning. Cisco Systems (CSCO) reports its fiscal fourth-quarter results after the market closes on Tuesday. That will leave the June quarters for all of the Dow’s 30 companies accounted for, excerpt for Salesforce.com (CRM) and Nike (NKE). Salesforce reports Aug. 24. Nike reports later in September.
Walmart rallied 0.6% at the open, after R5 Capital upgraded the stock to buy, from hold, and gave it a 169 price target. Walmart stock is sitting on an eight-week advance, which has brought it to less than 3% below a 153.66 buy point in IBD MarketSmith analysis charts as a 37-week consolidation.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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