The stock market indexes opened sharply lower for the second session in a row on Monday, led by small caps and tech stocks. Caution is building ahead of Fed Chairman Jerome Powell's Jackson Hole address on Friday while investors hope Nvidia's Q2 report on Wednesday isn't "as bad as feared."
The Dow Jones Industrial Average has shed 1.3% in the first hour while the S&P 500 is down 1.6%. The Nasdaq composite is getting hit even harder, dropping 1.7%. The Russell 2000 has fallen 1.5%.
Volume on the NYSE and the Nasdaq has dropped double-digit percentages, compared to the first hour on Friday.
The S&P Volatility index has surged more than 10%, lifting above 23 for the first time since Aug. 3. Gold fell to a four-week low while the 10-Year Treasury yield poked against 3.0%.
Crude oil is dropping like a rock again this morning, down 4.2% to $86.80 per barrel. Natural gas lifted toward the $10 psychological level, up 3.9% at this hour. The Natgas futures contract hasn't traded in double digits since 2008.
European markets are trading lower as well, down more 1.5%.
Meme stocks continued to post volatile moves.
Bed Bath & Beyond is trading higher by 2.6% after nearly completing a two-week, 42-point round trip. Bloomberg is reporting that certain suppliers have halted shipments to the retailer due to unpaid bills.
AMC has dumped 31% but shareholders of record have just received one "Preferred Equity Unit," or APE, for each share of common stock.
Netflix has fallen 5.2% after being downgraded to sell at boutique firm CFRA Research. The analyst warned that NFLX stock may underperform the S&P 500 Index for the rest of the year.
Chairman Powell Jackson Hole Address On Friday
Federal Reserve Chairman Jerome Powell delivers his annual address to the Jackson Hole economic symposium on Friday.
There's enormous hype ahead of the speech, but Fed governors have spoken with a single voice since the July meeting. Their message has been simple and unambiguous: The economy is still running too hot and it will take multiple rate hikes to bring inflation down to the 2% target level.
Stock market watchers are concerned the summer rally is ignoring this message, but that probably isn't true.
Technical conditions hit extremely oversold levels in June, igniting the powerful force of mean reversion. We're seeing that in play now, with major indexes lifting into and reversing at 200-day moving average resistance. Oversold readings have eased at the same time, perhaps allowing more aggressive sellers to take control of the ticker tape in September.
Still, everyone in the financial world will follow the speech closely, looking for subtle clues to policy shifts.
Deutsche Bank analyst Tim Wessel summed up the event to Barron's on Monday, noting that "Powell's remarks are one of the key events that can jolt U.S. policy expectations from their recent range, along with inflation and employment data preceding the September [Fed decision on rates]."
Nvidia Earnings After Wednesday's Close
Nvidia is trading lower by more than 3%. The chip powerhouse reports Q2 earnings after Wednesday's close, with FactSet forecasting a profit of just 50 cents per share.
On Aug. 8, the company lowered Q2 revenue guidance from $8.1 billion to $6.7 billion, citing "lower sell-in of gaming products." It fell 6.3% after the news and failed an attempt to recover those losses last week.
NVDA stock is currently down a whopping 42% in 2022 and hasn't touched the 200-day moving average since breaking support in April. The cryptocurrency crash has amplified this loss, lowering demand for graphics hardware used for solely mining digital assets.
However, there are signs that Nvidia is nearing a long-term bottom.
For starters, the Earnings Per Share Rating has jumped to a very bullish 97 after four quarters beating expectations. In addition, the pristine "A" SMR Rating points to a very profitable tech giant that has, unfortunately, fallen out of favor in 2022.
Monday Stock Market Highlights
No. 36 on the IBD 50, Tesla is trading lower by 3.1% after announcing a price hike for its self-driving software. TSLA stock is set to split 3-for-1 on Thursday.
No, 32 Arista Networks is down by 2.5%. ANET stock posted a weekly Relative Strength Line Blue Dot on Friday, following a relentless 46% rise since mid-June. ANET stock was featured in the Aug. 17 IBD 50 Stocks To Watch.
Insulet has lifted within 6% of the 275.93 buy point of a 196-day double-bottom base.
The company just received clearance for Omnipod 5, a treatment for children aged two years and older with Type 1 Diabetes. PODD stock is trading 1% lower on Monday morning.
