Dow Falls, Techs Lead After Sell-Off;  China Stocks Gain

Dow Falls, Techs Lead After Sell-Off; China Stocks Gain

The Dow Jones and S&P 500 turned slightly lower Friday morning, while the Nasdaq pared gains, after a huge market sell-off sent the major indexes to their worst levels since late 2020.




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Futures had slashed or erased gains after Fed chief Jerome Powell said policymakers are “acutely focused” on bringing inflation back down to their 2% target. Stocks quickly rebounded from a wobbly start but then faded again.

Adobe (ADBE) fell on earnings guidance, while US Steel (X) rallied on preliminary second-quarter earnings.

US-listed Chinese stocks were big early winners. Hopes for economic improvement in China, and a favorable ruling for Ant Group, a digital financial giant closely tied to Alibaba (BABA) and its founder Jack Ma, boosted the stocks.

BABA stock popped after the open, along with fellow e-commerce giants JD.com (JD) and Pinduoduo (PDD), though the pared early gains. The iShares MSCI China ETF (MCHI) rallied 1.7%. The KraneShares CSI China Internet ETF (KWEB) rose 2.8%.

China electric-vehicle startups Nio (NIO), xpeng (XPEV) and Li Auto (LI) all rallied in premarket trade as well. China EV and battery giant BYD (BYDDF) was not yet active, but is close to record highs.

Tesla (TSLA) rose modestly in morning trade. The EV giant raised Model Y prices in China, a day after hefty US price hikes on most of its EVs. TSLA stock dived 8.5% on Thursday to just above its 11-month low set on May 24.

Fellow megacap stocks Apple (AAPL), Microsoft (MSFT) and Facebook-parent Meta Platforms (META) have all undercut recent 52-week lows, along with the major indexes. All rose Friday morning.

MSFT stock is on IBD Long-Term Leaders. LI stock is on the IBD 50.

Dow Jones Today

The Nasdaq gained 0.6%. S&P 500 futures fell a fraction. Dow Jones futures lost 0.3%. Losses by ADBE stock weighed slightly against both the S&P 500 and Nasdaq.

Futures had slashed gains on Powell’s inflation comment.

“The Federal Reserve’s strong commitment to our price stability mandate contributes to the widespread confidence in the dollar as a store of value,” Powell said at a Fed-sponsored conference before the market open. “To that end, my colleagues and I are acutely focused on returning inflation to our 2% objective.”

The 10-year Treasury yield was unchanged at 3.31% after tumbling earlier.

US crude oil prices fell nearly 4%.

Bitcoin traded well below $21,000, just above an 18-month low of $20,087.90 earlier this week.


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China Stocks

US-listed Chinese stocks were big morning winners.

China’s central bank has accepted Ant Group’s application to become a financial holding company, Reuters reported, citing anonymous sources. That could be a step toward the long-sought after initial public offering of the digital financial giant. China’s last-minute halt to the Ant IPO in late 2020 marked the beginning of the nation’s tech crackdown.

BABA stock climbed 2%, though well off opening and premarket highs, moving toward another test of resistance at its 200-day line, after reclaiming its 50-day line a few weeks ago.

JD.com stock gained 5%, also advancing toward its 200-day line. The stock advanced despite Chief Executive Xin Lijun on Friday telling Bloomberg overnight that consumers are curbing discretionary spending, even after Shanghai ended lockdowns on June 1. But he did see a recovery over the second half of the year.

PDD stock climbed 1%. Pinduoduo is China’s No. 3 e-commerce firm after Alibaba and JD.com.

China EV Stocks Climb

As for EV stocks, Nio stock climbed 5% and Xpeng 9%. Both have held support at their 50-day lines, but have some distance to get back above their 200-day lines. This week Nio unveiled its latest EV, the ES7 SUV. It’ll be Nio’s third new EV this year for a lineup of five vehicles.

Li Auto stock rose 6% to 33.62, with the EV maker on track for its sixth weekly gain. Shares are in a deep, long consolidation with a 37.55 buy point. A handle, the longer the better, would be constructive. The relative strength line for LI stock is at a 52-week high.

Li Auto will unveil a second hybrid sport-utility vehicle, the L9, next week, with deliveries starting in the third quarter.

BYD stock rose 3%. Shares have retreated this week after nearing record highs. BYD stock has a 41.24 buy point from a deep cup base, according to MarketSmith analysis. But it’s working on a handle, which should appear on a weekly chart after Friday, with a 39.81 buy point. The RS line for BYD stock has just pulled back from a record high.

BYD, which was not greatly affected by the Covid lockdowns, will release several new models in the next several weeks. It’ll begin Australia deliveries in the third quarter.


Five Best Chinese Stocks To Watch Now


Adobe Earnings

Adobe earnings rose 11% in the second quarter, while revenue rose 14%, both modestly topping analyst views. But the software giant guided low on full-year results. ADBE stock fell 3% Friday morning. Adobe stock hit a two-year low on Thursday.

Dow Jones Futures: US Steel Earnings Guidance

US Steel guided up on second-quarter earnings late Thursday. That followed strong preliminary results on the June-ended quarter from Nucor (NUE) and Steel Dynamics (STLD) earlier in the week.

US Steel stock popped 1%, well off intraday highs and still headed for big weekly losses. Nucor and STLD stock are also down for the week amid the broad market sell-off. If the economy does go into recession, steel demand and pricing would likely weaken substantially.

Tesla Stock

Tesla stock climbed slightly. On Thursday, shares dived 8.5% to 639.30. TSLA stock nearly undercut its May 24 low of 620.57.

Dow Jones Futures: Megacap Techs

Apple stock rose less than 1%. So did Microsoft stock and META stock. All slid to 52-week lows on Thursday.

Read The Big Picture every day to stay in sync with the 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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