The stock market closed lower on Tuesday, threatening to derail confirmation of last week’s rally after consumer confidence slumped and Nike (NKE) issued forecasts below expectations.
After briefly trying to bounce back this morning, the main indices quickly headed south. The Nasdaq composite closed down 3%. The S&P 500 closed down 2% and the Dow Jones Industrial Average fell 1.6%. The Russell 2000 Small Cap Index fell 1.9%.
Volume fell on the NYSE and climbed on the Nasdaq from the same time Monday, according to early data.
Overview of the US stock market today
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Last Updated: 4:20 PM ET 06/28/2022
Tuesday’s losses come after the S&P 500’s second-biggest weekly gain of 2022 last week, which saw all major indexes rise steadily toward eventual resistance at their 10-week moving averages.
Stock market falls as recession looms
Earlier on Tuesday, US consumer confidence slumped to its lowest level in 16 months amid rapidly rising inflation. The Conference Board’s consumer confidence survey fell to 98.7 for the month, below the consensus forecast of 101.
“Continued pressure from rising prices is clearly impacting the consumer mindset,” said Cliff Hodge, chief investment officer at Cornerstone Wealth. “Controlling inflation will be the Fed’s number one priority. Unfortunately, the Fed has little ability to influence oil prices and pump prices.”
On Wednesday around 9 a.m. ET, Federal Reserve Chairman Jerome Powell is expected to participate in an economic policy roundtable ahead of the European Central Bank’s Central Banking Forum. Powell’s comments could have an effect on the market.
Treasury yields fell and the 10-year note fell 2 basis points to 3.19%.
Among the S&P 500 sectors, the energy sector leads by a wide margin for the second day in a row. The Energy Select Sector SPDR (XLE) climbed 2.7% as it attempts to break a two-week downtrend. The price of U.S. crude oil rose on Tuesday, rising 2% to $111.70 a barrel.
western oil (OXY) and Valero Energy (VLO) were among Tuesday’s biggest gainers among oil stocks, each jumping more than 3%. Occidental Petroleum shares also gained after Berkshire Hathaway (BRKB) again increased its stake in the oil company.
Nike leads decline in consumer discretionary stocks
BAE systems (BAESY) jumped 2.7% on Tuesday and approached a buy point of 40.75 of a flat base pattern. The defense contractor announced on Tuesday that its CV90MkIV has been selected by the Slovak government as the country’s new infantry fighting vehicle. UK-based BAE Systems reached new heights after Russia invaded Ukraine.
Nike (NKE) fell 7% after the company reported fiscal fourth-quarter results that beat expectations but issued a disappointing guidance. Wall Street expected Nike earnings per share to fall 13% to 81 cents per share with revenue down 2% to $12.07 billion. The sportswear giant posted sales of $12.2 billion, down 1% year-over-year, and earnings of 90 cents per share, down 3%, for its fourth fiscal quarter.
But disappointing gross margin forecasts offset the company’s higher-than-expected earnings. On the earnings call, Nike said it expects fiscal 2023 revenue to grow in the double digits on a currency-neutral basis. But actual dollar earnings in the current first quarter will only be flat or slightly higher, slightly below analysts’ expectations.
Stocks remain below a 50-day declining line and are poised to eclipse a 22-month low of 103.46 on May 26. The stock plunged from a record high of 179.10 on May 5, 2021.
defensive stock Molson Coors (TAP) broke above a buy point of 57.55 cups with handle. But the shares disappeared from the buying point in afternoon trading and closed below the entry.
Stocks were still holding a 0.7% gain on Tuesday as the RS line hit a new high. The defensive nature of drinking might make this title a safer bet, but the title needs to make a convincing breakthrough.
The Innovator IBD 50 (FFTY) ETF fell 1.9% on Tuesday, led by healthcare and technology stocks.
Follow Michael Molinski on Twitter @IMmolinski
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