The Dow Jones and S&P 500 fell slightly lower on Friday morning, while the Nasdaq pared gains after a huge market sell-off sent the major indexes to their lowest levels since late 2020.
Futures had trimmed or erased gains after Fed Chair Jerome Powell said policymakers were “very focused” on bringing inflation back to its 2% target. Stocks quickly recovered from a shaky start, but then fell again.
Adobe (ADBE) fell on earnings guidance while US steel (X) rebounded on preliminary second quarter earnings.
US-listed Chinese stocks were big early winners. Hopes for economic improvement in China and a favorable verdict for Ant Group, a tightly knit digital financial giant Alibaba (BABA) and its founder Jack Ma boosted shares.
BABA stock emerged after the opening, along with other e-commerce giants JD.com (JD) and Pinduo (PDD) although they trimmed early gains. The iShares MSCI China ETF (MCHI) rose 1.7%. KraneShares CSI China Internet ETF (KWEB) rose 2.8%.
Electric vehicle startups in China no (NOK), Xpeng (XPEV) and Li car (LI) all recovered in premarket trading as well. Electric and battery giant from China BYD (BYDDF) has not been active yet but is close to record highs.
Tesla (TSLA) edged up in morning trade. The EV giant hiked prices for the Model Y in China, a day after sharp price hikes in the US for most of its EVs. TSLA stock fell 8.5% Thursday to just above its 11-month low hit on May 24.
Other megacap stocks Apple (AAPL), Microsoft (MSFT) and Facebook parent meta platforms (META) have all undercut the recent 52-week lows, along with the major indices. Everyone got up on Friday morning.
MSFT shares are Long-Term Leaders on IBD. LI stock is on the IBD 50.
Dow Jones today
The Nasdaq gained 0.6%. Futures on the S&P 500 fell a fraction. Dow Jones futures lost 0.3%. Losses in ADBE stock weighed slightly on both the S&P 500 and the Nasdaq.
Futures had trimmed gains on Powell’s inflation comment.
“The Federal Reserve’s strong commitment to our price stability mandate contributes to widespread confidence in the dollar as a store of value,” Powell said at a Fed-sponsored conference ahead of the market opening. “To that end, my colleagues and I are very focused on bringing inflation back to our 2 percent target.”
The 10-year Treasury yield was flat at 3.31% after falling earlier.
US crude prices fell nearly 4%.
Bitcoin was trading well below $21,000 earlier this week, just above an 18-month low of $20,087.90.
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US-listed Chinese stocks were big morning gainers.
China’s central bank has accepted Ant Group’s application to become a financial holding company, Reuters reported, citing unnamed sources. That could be a step towards the digital finance giant’s long-awaited IPO. China’s last-minute halt to Ant’s IPO in late 2020 marked the start of the country’s tech crackdown.
BABA stock is up 2%, despite being well below the opening and premarket highs, and is headed for another resistance test at its 200-day moving average after retaking its 50-day moving average a few weeks ago .
JD.com stock gained 5% and also neared its 200-day moving average. The stock rose even after Chief Executive Xin Lijun told Bloomberg overnight on Friday that consumers are curbing their discretionary spending even after Shanghai ended lockdowns on June 1. However, he saw a recovery in the second half of the year.
PDD stock rose 1%. Pinduoduo is China’s No.3 e-commerce company after Alibaba and JD.com.
China’s EV shares rise
Among EV shares, Nio stock is up 5% and Xpeng stock is up 9%. Both have held support at their 50-day moving averages, but have some way to get back above their 200-day moving averages. This week, Nio unveiled its latest electric vehicle, the ES7 SUV. It will be Nio’s third new electric vehicle this year for a line of five vehicles.
Li Auto’s stock rose 6% to 33.62, with the EV maker on track for its sixth weekly gain. Shares are in deep long consolidation with a buy point of 37.55. A handle would be constructive, the longer the better. The line of relative strength for LI stock is at a 52-week high.
Li Auto will unveil a second hybrid sports utility vehicle, the L9, next week with deliveries beginning in the third quarter.
BYD stock rose 3%. Stocks are down this week after nearing record highs. BYD stock has a buy point of 41.24 from a deep cup base, according to MarketSmith analysis. But it is working on a grip that should appear after Friday with a buy point of 39.81 on a weekly chart. The RS line for BYD stock has just retreated from a record high.
BYD, which hasn’t been hit hard by the Covid lockdowns, will release several new models over the next few weeks. Deliveries to Australia will begin in the third quarter.
The five best Chinese stocks to watch right now
Adobe’s earnings rose 11% in the second quarter, while revenue rose 14%, both slightly above analyst estimates. But the software giant led full-year results low. ADBE shares fell 3% on Friday morning. Adobe shares hit a two-year low on Thursday.
Dow Jones Futures: US Steel Earnings Guidance
US Steel reported second-quarter results late Thursday. This was followed by strong preliminary results for the quarter ended June Nukor (NUE) and steel dynamics (STLD) earlier in the week.
US steel stocks surged 1%, well below intraday highs and still heading for big weekly losses. Nucor and STLD shares are also down this week amid the broad market sell-off. If the economy goes into recession, steel demand and prices would likely weaken significantly.
Tesla stock rose slightly. On Thursday, the stock fell 8.5% to 639.30. TSLA shares have almost undercut their May 24 low of 620.57.
Dow Jones Futures: Megacap Technologies
Apple stock is up less than 1%. Likewise Microsoft shares and META shares. All slipped to 52-week lows on Thursday.
Read The Big Picture every day to keep up to date with market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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