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Friday, September 30, 2022
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Stock Market Reverses Higher As Railroads Avoid Strike; Adobe Plunges

After falling at the open, the stock market reversed for small gains early Thursday. A nationwide rail strike was averted, bringing some relief to investors.


The Nasdaq composite and S&P 500 climbed 0.3% at 10 a.m. ET. The Dow Jones Industrial Average was up 0.4%.

Microsoft (MSFT), a major component of the three indexes, fell nearly 1% to a two-month low. The company’s planned acquisition of video game publisher Activision Blizzard (ATVI) faces more regulatory scrutiny in the U.K. Shares of Activision rose 0.3%.

Volume fell on the Nasdaq and rose on the NYSE compared with the same time on Wednesday.

Indexes on Wednesday bounced moderately from the prior day’s rout. The S&P 500, Nasdaq and Dow are below their 50-day lines.

Stock Market Relieved After Railroad Strike Avoided

The White House announced early today that railroad executives and unions reached a tentative agreement on a labor pact. The deal prevents a strike by freight train workers that would have crippled critical transportation lines and caused new supply chain headaches.

Union Pacific (UNP) climbed nearly 2%, and Norfolk Southern (NSC) rose 2.2%. CSX (CSX) was down 1%. All three stocks remain below their 50-day lines.

Retail sales surprisingly rose in August. The Census Bureau reported that overall sales rose 0.3% from July, above economist estimates for no change. Excluding autos, sales fell 0.3%. Estimates for ex-auto sales were for no change, according to Econoday.

“Despite a helping hand from cheaper gasoline, there’s little doubt that the rising cost of virtually everything else is draining the spending power of the American consumer,” said BMO Capital Markets economist Sal Guatieri.

Sales are still up 9.1% in the past year, but much of that reflects higher prices, he added. “Most importantly, the control measure of sales that is used to calculate personal consumption expenditures was unchanged in the month after July’s gain was cut in half to 0.4%.”

Yields Climb, Adobe Plummets

The yield on the 10-year Treasury note rose 3 basis points to 3.45%.

Adobe (ADBE) plunged 14% in heavy trading after the company’s mixed August-quarter results and news of a $20 billion acquisition. The digital media company beat earnings estimates but sales slightly missed views. Adobe also said it is acquiring Figma, which makes a design platform for team collaboration.

Adobe stock undercut its June low and slid to the lowest point since April 2020. Today’s drop is on track to be the worst since March 16, 2020, when it fell nearly 15%, according to Dow Jones Market Data.

The price of U.S. crude oil fell nearly 2% to $86.84 a barrel. The Energy Select Sector SPDR (XLE) slid 2.6% and was the worst performing S&P sector ETF. It is still forming a cup with handle, however.

IBD 50 Index Lags Stock Market

The Innovator IBD 50 ETF (FFTY) underperformed with a 1% drop. Energy stocks hurt the index.

CVR Energy (CVI) is falling to its 50-day moving average, but is still forming a cup-with-handle base. ConocoPhillips (COP) is back to the 115.57 buy point of yesterday’s breakout.

Florida-based utility NextEra Energy (NEE) gapped down more than 3% in heavy volume. Shares are below the 87.62 buy point of a double-bottom base and testing the 50-day line. The clean energy provider said late Wednesday it intends to sell $2 billion of equity units.

Each equity unit will be issued in an amount of $50 and will consist of a contract to purchase NextEra Energy common stock and a 5% undivided beneficial ownership interest in a NextEra Energy Capital Holdings debenture.


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