Stock market indexes reversed lower in the first hour of Tuesday’s session, following Monday downward afternoon’s reversal. The mixed action signals caution ahead of Thursday’s closely watched inflation report. Bed Bath & Beyond (BBBY) lost a ton of money last quarter but rallied 31% in the first hour. Dow Jones component Boeing (BA) fell less than 1% after a Morgan Stanley downgrade.
Fed Chair Jerome Powell delivered comments to a Swedish audience of central bankers ahead of the opening bell. The stock market bounced after the speech, which offered no new policy statements.
The S&P 500 rallied above the 50-day moving average Monday and reversed, closing at the intraday low. Other major indexes reversed as well, highlighting continued rejection at key resistance levels.
This price action is typical of a bear market, but its been three months since the S&P hit a new low. Good trades can happen in two-sided market conditions but high cash levels, between 60% and 80%, should be maintained.
The Dow Jones Industrial Average, Nasdaq and S&P 500 were down 0.1% in the first hour. The Russell 2000 small-cap index fell 0.3%.
Nasdaq and NYSE volume fell compared with the first hour of Monday’s session.
The 10-year Treasury note yield jumped more than 2%, or 8 basis points, to 3.6%.
Crude oil added less than a buck to $75 per barrel. European bourses fell in unison, posting losses of less than 1%, while Asian markets were mixed in quiet trading.
In the crypto world, Bitcoin probed a three-week high near $17,300 while Coinbase (COIN) rallied into tough resistance around 40.
Stock Market: The Week Ahead
This week’s economic calendar is light until Thursday’s December consumer price index (CPI) report.
November’s 0.1% reading shocked market watchers, and sent short sellers packing, but the stock market could not hold subsequent gains. Estimates have come way down in the last month, with many analysts looking for another 0.1% reading. Bulls could take back control of the tape if the number hits that low mark.
However, core CPI estimates are much higher for December, at 0.4%. Divergence between the two readings may highlight deeply rooted structural inflation that will take much longer to get under control.
Bed Bath & Beyond On Fire; Boeing downgraded
Bed Bath & Beyond reported a loss of $3.65 per share in the November-ended quarter, while revenue fell 33% year-over-year to $1.26 billion.
President and CEO Sue Gove dodged the bankruptcy question, delivering a diplomatic but self-serving response, insisting that “we are implementing our plan expeditiously while managing our financial position in a changing landscape. We are delivering on our aggressive second half commitment of $250 million in SG&A (selling, general, and administrative expenses) optimization, or $500 million in annualized savings.”
BBBY shares rose 31% to 2.10 despite the weak report, still 93% lower than August’s peak at 30.
Dow Jones component Boeing fell after Morgan Stanley analyst Kristine Liwag downgraded the aerospace giant to equal weight from overweight, lifting the price target to 220. BA stock climbed above the 200 level last week for the first time since March 2022. It mounted the 173.95 buy point of a 60-day cup base in November and reached the 20%-25% profit-taking zone on Friday.
Stock Market Movers And Shakers
The Innovator IBD 50 ETF (FFTY) outperformed with a 0.3% increase.
IBD 50 components griffon (GFF) charged above the 5% buy zone Monday, after a two-month flat base, and is closing in on the 20%-25% profit-taking zone. GFF stock traded lower by 0.6% Tuesday but is still near an all-time high.
The building construction manufacturer has posted high double- or triple-digit earnings growth in each of the last four quarters.
So in the IBD 50, AxonEnterprise (AXON) surged higher Monday, lifting above the 21-day line for the first time since a Dec. 6 selling gap.
The company formerly known as Taser now shows a well-developed consolidation with price about 8% below a 193.95 buy point. That level is close to three peaks and reversals carved in 2021. AXON shares traded 1.3% higher Tuesday morning.
Profits at the law enforcement gear maker are expected to grow 33% this year.
Follow Alan Farley on Twitter at @msttrader.
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