Dow Jones futures were slightly lower Monday morning as well as S&P 500 futures, and Nasdaq forwards. The stock market rally reached an inflection level last week, which marked a significant move higher.
Investors should build their positions through careful buys and not rush to increase their exposure. Although markets are showing solid technical action and seem to be improving, they appear to be betting for an optimistic economic outlook. Following earnings, Exxon Mobil XOM (XOM), Apple (AAPL), and Chevron CVX (CVX), made bullish plays. CVX stock and Exxon Mobil (XOM) offered early entries higher than their 50-day lines.
Apple stock became the first mega cap company to regain the 200-day line. Meanwhile, its relative strength is at an all-time high. This could be a good opportunity for investors to make an aggressive buy or perhaps even open a position with AAPL stock.
ON stock surpassed a trend line entrance on Friday. However, its RS line is at a new height. Usually, this is a buy signal for this top chip play. Nevertheless, Onsemi (ON) earnings are due prior to Monday’s open.
China’s EV makers Xpeng (XPEV), Li Auto (LI), and Nio (NIO) should report July deliveries by Monday’s close. China EV giant and battery giant BYDDF will likely report their July deliveries a day later. Each of the four manufacturers are increasing capacity and launching new models within the next few weeks. BYD sold the Seal sedan starting Friday.
Chevron, Exxon, and Tesla stock are all on the IBD 50. IBD Stock of the Day of Friday was Exxon. ON stock is on IBD Big Cap 20. Dow Jones components are Chevron and Apple stock.
Dow Jones Future on 1st August 2022
- Dow Jones futures fell 0.4% vs. fair value. S&P 500 futures dropped 0.45% while Nasdaq 100 forwards declined 0.4%.
- The 10-year Treasury yield increased 3 basis points to 2.67%.
- Crude oil futures fell 1%.
China’s official manufacturing indicator unexpectedly dropped to 49 in China’s July from 50.2 in June, just below the 50.2-day break-even point. Analysts had anticipated a slight rise to 50.4. The sales of the top 100 property developers in the country fell by 39.7% and 28.6%, respectively, between July 2021 & June. New buyers are being discouraged by a mortgage revolt over the unfinished property.
Stock Market Rally
To start the second week of January, the stock market fell due to a Walmart (WMT) profit warning concerns. The major indexes closed at their highest levels in three days, increasing sharply during the last three days.
The average of Dow Jones Industrial climbed 3% during last week’s stock market trading. The Nasdaq composite rose 4.7%. Russell 2000, a small-cap stock, jumped 4.25%. The S&P 500 index increased 4.3%.
The 10-year Treasury yield plunged 14 basis points to 2.64%. This was the lowest rate since April 1 and continued the steep decline from June 14, a peak of 3.48%. The yield curve has been inverted from the 1-year Treasury yield to the 10-year Treasury yield. Even the six-month rate (2.89%) is higher than the 10-year Treasury yield.
U.S. crude oil futures increased 4.1% to $98.62 per barrel after rising to $101/barrel at a point Friday. Front-month oil contract in July, sank 6.8%.
Exchange Traded Funds (ETFs)
The top ETF was the Innovator EBD 50 ETF (FFTY) which jumped 6.1% last week, while the Innovator IBD Breakout Opportunities gained 4.2%. The iShares ETF (IGV) rose 2.8%.
SPDR S&P Metals & Mining (XME) soared 10.3% last Wednesday, with steelmakers particularly stepping up. The ETF (PAVE) jumped 8.5%. U.S. Global Jets ETF (JETS), rose 2.7%. The Energy Select SPDR ETF (XLE) jumped 10.2%. XOM stock, and Chevron were the two dominant holdings. The Financial Select SPDR (XLF), rose 2.9%. The SPDR Fund XLV rose by a moderate 2%.