Stock Market Gains Fade As Indexes Try To Extend Uptrend; This Beer Stock Tops Buy Point

After cooling off from two days of big gains Monday, the stock market tried to resume its uptrend Tuesday. Some indexes briefly gained more than 1%, but much of the early gains faded.


The Nasdaq composite climbed as much as 1% but reversed lower to a loss of 0.6%. The S&P 500 erased all gains and was flat. It is testing the 21-day exponential moving average.

The Dow Jones Industrial Average held up with a 0.3% gain. Dow component Nike (NKE) fell 3% in heavy trading after the sportswear company beat profit expectations but gave a weak outlook, citing a strong dollar. Its China sales fell 19% due to Covid lockdowns in that country.

Small caps also fared better, with the Russell 2000 up 0.3%. Volume fell on the NYSE and Nasdaq compared to the same time on Monday.

Indexes took a step back after the Conference Board’s consumer confidence index fell in June to 98.7, below economists ’estimates. The index was at 103.2 in May and is now at the lowest since February 2021.

The Expectations Index, which measures consumers’ short-term outlook for income, business, and labor markets – fell to the lowest since March 2013, the Conference Board said.

Lynn Franco, senior director of economic indicators at the Conference Board, said increasing concerns about inflation, especially gas and food prices, are driving the weaker outlook. “Expectations have now fallen well below a reading of 80, suggesting weaker growth in the second half of 2022 as well as growing risk of recession by yearend.”

Stock Market Faces Weakening Consumers

Chris Zaccarelli, chief investment officer for the Independent Advisor Alliance, said consumer confidence and financial conditions (especially interest rates) are indicating an economic slowdown ahead. “If we are able to avoid a recession, then the stock market is fairly valued; however, if we do go into recession then we would expect the lows for the year haven’t been hit yet.”

All S&P sectors were up, with Energy Select Sector SPDR (XLE) leading with a 2.2% increase. The price of US crude rose more than 1% to $ 110.75 a barrel.

US Stock Market Today Overview

Index Symbol Price Gain / Loss % Change
Dow Jones (0DJIA) 31539.69 +101.43 +0.32
S&P 500 (0S & P5) 3901.76 +1.65 +0.04
Nasdaq (0NDQC) 11459.24 -65.31 -0.57
Russell 2000 (IWM) 176.43 +0.69 +0.39
IBD 50 (FFTY) 27.77 -0.01 -0.04
Last Update: 11:02 AM ET 6/28/2022

The stock market is now in a confirmed uptrend, after a bullish follow-through last week. But other follow-throughs during this bear market have failed. So investors need to start with small trades. If this new uptrend has momentum, the initial purchases will flourish and more opportunities will appear.

More than a dozen stocks in the IBD 50 are forming bases, which is a positive sign for the stock market.

The Innovator IBD 50 ETF (FFTY) was nearly flat. Chicken supplier Pilgrim’s Pride (PPC) is still finding support after a pullback to the 10-week moving average, and is in a follow-on buy area.

Treasury yields are rebounding, and the 10-year note climbed 3 basis points to 3.22% Tuesday morning. The rising costs of borrowing are one reason the stock market has had a rough 2022. The Fed is committed to bringing down inflation through interest-rate hikes.

Molson Coors (TAP), which is not in the IBD 50, rose above the 57.55 buy point of a new base. But the brewery’s shares soon fell below the entry. Goldman Sachs upgraded the stock to neutral from sell and raised the price target from 46 to 54.

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Chinese Stock Markets Rebounding

Chinese stocks extended a rebound as China continued to loosen restrictions put in place to fight the spread of Covid-19. On Tuesday, officials shortened quarantine requirements for international travelers. China’s strict lockdowns have contributed to supply-chain problems across the globe.

The Shanghai composite rose 0.9% in a four-day, 4.4% rally. The Hong Kong Hang Seng added 0.9%. Its four-day advance now measures 6.7%. Tokyo’s Nikkei 225 rose 0.7%.

KraneShares China Internet ETF (KWEB) rose 1.5%. IShares China Large-Cap ETF (FXI) added 1.8%. Both ETFs are trading at the highest point since early March.


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