The major stock market indexes are down in the last hour and near the lows of the day, as investors show concern over continued rate hikes. Chinese stocks hold up as the Chinese government eased up Covid testing policies and restrictions in some cities.
The S&P 500 shed 1.4% while the Nasdaq also gave back 1.5%. The Dow Jones Industrial Average trimmed down 1.1%. The Russell 2000 small-cap index lost 2.4%.
The tech-heavy Nasdaq 100-tracking Invesco QQQ trust ETF pulled back 1.3%.
The S&P 500 is hugging the 200-day moving average, a key level to watch for support.
Volume on the NYSE and Nasdaq were lower vs. the same time on Friday.
Crude oil pulled back 1.2% to $78.88 per barrel. OPEC+ agreed to leave oil production targets intact amid potential increased demand from China.
The Energy Select Sector SPDR ETF gave back 1.9%.
Natural gas plunged 8.4%. It is trading below $6 per million British thermal units.
The 10-year Treasury note yield added eight basis points to 3.58%, a level it hasn't seen since September.
European markets were mixed, with the German DAX losing 0.6% and the Paris CAC 40 off 0.7%. The London FTSE 100 gained 0.2% in afternoon trading.
Odds for a 50-basis-point hike at the mid-December Fed meeting stand at 77%, while 23% are looking for a 75-basis-point hike, according to the CME FedWatch Tool. A 50-basis-point hike would be smaller than the last four hikes, each of 75 basis points. The Fed will be watching employee wage growth data for a downturn to reinforce its lower rate hike.
Friday's better-than-expected job report numbers reinforce the 50 point basis rate hike as the Fed strives for a 2% inflation level. The Fed is looking for declining hiring and wages to ease rate hikes, but is still facing strong employment numbers. The inflation rate is at a 40-year high.
The benchmark fed funds rate recently ranged between 3.75% and 4%, and is expected to be near 5% in spring 2023, according the Wall Street Journal.
November PMI No Big Surprise; Factory Orders Strong
The November final Purchasing Managers Index (PMI) came in at 46.2, slightly lower than the 46.3 consensus estimate. The index surveys over 400 U.S. companies for feedback on what is happening in the services economy. Positive numbers can shed light on business growth and profits, and can be a factor in interest rate decisions.
October factory orders rose 1% vs. the 0.7% consensus estimate, an increase from the 0.4% growth in September. The orders data indicate how busy factories will be in coming months as manufacturers work to fill both durable and nondurable goods orders.
The November Institute for Supply Management (ISM) Services Index was 56.5 vs. the 53.5 consensus, an increase from October's 54.4. A number above 50 shows expansion, while a number below 50 shows contraction. The services index consists of business activity, new orders, employment and supplier deliveries.
Airline Stock Breaks Out Of Base; Energy Stock Hits Sell Rule
United Airlines rose 2.8% and broke out of a cup-with-handle base, hitting the 45.67 buy point. Leaderboard added the airline stock as a half position.
Morgan Stanley upgraded UAL to overweight from equal-weight and maintained its 67 price target. Shares are trading around 45. UAL leads the S&P 500 Index today.
Petroleum refiner Valero Energy dropped 3.1% and hit the 7% to 8% sell rule of a cup-with-handle base with a buy point of 132.03. Shares dropped below the 50-day moving average.
Chinese Stocks Fade
Chinese stocks rallied overnight, with the Shanghai Composite up 1.8% and the Hong Kong Hang Seng rallying 4.5%. Authorities in China have been relaxing Covid restrictions. But U.S.-listed China stocks faded.
Electric vehicle maker XPeng reversed lower after making early gains, and was off 3.8%. Online entertainment company Bilibili pulled back 1.2% in heavy volume, giving back morning gains.
E-commerce giant Alibaba gained 0.7%. Li Auto reversed lower, down 3.2% ahead of Friday's Q3 earnings report.
Search-engine leader Baidu added 4.5% and held up better than other China stocks. Online shopping company JD.com notched up 0.8%.
Retail Earnings To Watch For This Week
Companies set to post earnings this week include AutoZone on Tuesday and Campbell Soup, Ollie's Bargain Outlet and Costco on Wednesday. Keep an eye out for Lululemon and Chewy on Thursday.
MGM Resorts gained 2% after Truist upgraded the stock to buy from hold and raised its price target.
Digital currency platform company Silvergate Capital dropped 5.9% after Morgan Stanley downgraded the stock to underweight from equal weight and cut its price target to 24. It is trading near 25.
Stock Market Today: IBD 50 Chip Stock Breaks Out
The Innovator IBD 50 ETF lost 2.3%, faring worse than the major stock market indexes.
Integrated circuit developer Allegro MicroSystems rose 2.7% and broke out past the 32.07 buy point of a cup-with-handle base. Volume was heavy.
Fertilizer maker CF Industries gave back opening gains, down 1.1%, but is finding support at its 21-day exponential moving average.
Medical staffing provider Cross Country Healthcare plunged 5.2% but found support at its 50-day moving average.
