The Dow Jones Industrial Average was trading slightly lower after reversing a five-day winning streak that crossed the 200-day moving average yesterday.
The blue chip index opened 0.6% lower and fell another 0.1% in the afternoon, while the S&P 500, which fell 0.8%, lost another 0.2%. The Nasdaq composite that led the downtrend has continued to fall 1.7% led by small caps. The small cap index, Russell 2000, which fell 1.34% at the opening bell, fell another 0.5%.
The yield on the benchmark 10-year government bond added 78 basis points to 2.90%. Crude oil has stabilized after the recent sharp drop to stand at $87.18 a barrel.
Volume was slightly lower on the Nasdaq and NYSE compared to opening hours on Tuesday.
Retail sales delay
Retail sales in July fell short of expectations, unchanged from June. Still, LPL Financial Chief Economist Jeffery Roach noted that consumers had more money for discretionary spending in July. The company also noted that retail sales in July and Walmart’s positive quarter show continued consumer spending, supported by a strong job market.
Investors are now focused on the release of the 2 p.m. Fed minutes of the July meeting, when central bankers raised interest rates by a decisive 75 basis points to fight inflation. Signs of cooling inflation have now given hope that the Fed’s aggressive tightening will ease in its September meeting.
Boost for EV and Healthcare
The Inflation Reduction Act was signed by President Joe Biden on Tuesday. There is now a $7,500 tax credit on eligible EV purchases and health benefits for eligible individuals. EV pure plays as Tesla (TSLA) and Rivian (RIVN), healthcare companies such as UnitedHealth Group (UNH), and renewable energy shares such as Enphase Energy (ENPH) and SolarEdge (SEDG) is likely to benefit.
UNH is an IBD Leaderboard stock, while Enphase is an industry leader.
Lithium producer and IBD Leaderboard stock, Albemarle (ALB) is also poised to take advantage of the law, which requires a certain level of minerals for EV batteries to be mined locally or from U.S. FTA partners in order to qualify for a tax credit.
Keep an eye on Dow Jones stocks
Shares of Apple (AAPL) are on guard as the iPhone 14 launch approaches. The release date should be in September when Apple usually launches new phones and watches. The stock was just upgraded to Outperform from Neutral by Credit Suisse analyst Shannon Cross.
The stock was also one of Warren Buffet’s largest second-quarter purchases for his Berkshire Hathaway portfolio. Stocks are building a double bottom base within a longer consolidation, showing a buy point of 179.70.
Another Dow Jones Leader, Disney (DIS) reaches its 200-day moving line after a strong quarter. The media and entertainment giant has recently overtaken Netflix in subscriptions, while revenues from its iconic parks have skyrocketed.
Longtime tech leader and Dow stocks Cisco (CSCO) reports Q2 results after market close. In the previous quarter, the network giant reported revenue of $12.8 billion, equal to the same quarter in 2021, although profits rose 7%. The company expects slightly lower sales, with profits of 60-70 cents for the current quarter.
US stock market overview today
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Last Update: 12:00 PM ET 7/27-2022
Beyond the Dow Jones
Retail giants Target (TGT) and lowe’s (LOW) missed Q2 expectations. Lowes posted lower-than-expected same-store sales, but profits came in above estimates. Shares rose in early trading.
Target posted earnings of 39 cents a share and missed expectations of 79 cents by a wide margin. The company maintained its outlook for the full year. Shares of Target, which rose yesterday after Walmart’s profits knocked, have fallen but are outside of today’s lows.
Retailers Kohls (KSS) and Foot Locker (FL) also report this week, with KSS tomorrow and Foot Locker on Friday. Kohl broke above the 50-day mark yesterday. Shares of FL have also risen.
Analog Devices (ADI) posted double-digit growth, with revenue of $3.1 billion and earnings of $2.52 per share. Still, shares are down more than 4%.
A perfect meme move
Bed, bath and more (BBBY) is in tears after the news that GameStop (GME) CEO Ryan Cohen bought out-of-the-money call options worth $1.6 million, allowing him to buy the stock between $60 and $80. The shares are trading at 20.65. In a perfect meme move, the news comes as BBBY struggles to keep the doors open after a bleak first quarter.
Elon Musk scored a small win after one Twitter (TWTR) employee was asked to provide documents that could reveal the number of fake accounts on the social media platform.
Shares of Twitter and Tesla (TSLA) fell after the news.
IBD Leaderboard Stock, Costco Wholesale (COST) continues to stand guard. The stock is at a buy point of 552.81 in a cup with handle.
Make sure to follow Vidya on Twitter at @IBD_Vidya for more information on growth stocks and the Dow Jones Industrial Average.
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