Dow Jones Today Slashes 500 Points As Covid, Yields, Oil, China Hammer Global Markets; AutoNation, Five9 Advance

Stocks dived into early losses Monday — tracking overseas action — as coronavirus concerns, China trade news and an OPEC+ oil production decision hammered global markets. A few cracks of light began to show through the slide, with IBD stocks Moderna, Nvidia and DocuSign rising, and AutoNation receiving a boost from earnings news. Walmart showed resilience on the Dow Jones today, as the index opened down 675 points,.


The Dow Jones Industrial Average scratched off 1.9%, sending the benchmark back below its 21-day and 50-day moving averages. The S&P 500 backed off 1.7% and the Nasdaq Composite carved a 1.6% loss. The Nasdaq and S&P 500 were holding well above their 50-day support.

Small caps were under particular pressure, with the Russell 2000 trading down 2.2%.

Despite the early sell off, vaccine producer Moderna (MRNA) rallied 3.9% to lead the IBD 50 list. Its Covid-19 vaccine is seen as among the most effective against the fast-moving delta strain of the virus. The stock is working on its fourth straight advance, and notched a 23% gain last week.

IBD 50 peers Nvidia (NVDA) and DocuSign (DOCU) shook off opening losses and reversed higher. Nvida gained 1%. DocuSign rose 0.9%.

SPX Flow (FLOW) rallied 28% after Ingersoll Rand (IR) agreed to buy the beverage industry equipment maker for $3.6 billion. Ingersoll Rand shares slipped 2.8%.

Stocks dived in Hong Kong as U.S. Treasury Secretary Janet Yellen criticized the effectiveness of Trump administration tariffs against China. Tech stock investors worried over rising regulation in Hong Kong, as well as oversight limiting registration of Chinese stocks on U.S. markets. The Hong Kong Hang Seng Index shed 1.8%. In Japan, Tokyo’s Nikkei 225 closed 1.25% lower.

Stocks in Europe saw an even sharper drop, responding to the spread of the Covid-19 Delta variant, as well as impact from a historical spell of flooding in Germany. In afternoon trade, Frankfurt’s DAX, the CAC-40 in Paris and London’s FTSE 100 were all down more than 2%.

Dow Jones Today: Chevron Leads Slide

Boeing (BA) and Goldman Sachs (GS) dumped about 4% each, battling for the low spot on the Dow Jones today.

Walmart (WMT) showed early resilience, rising 0.6% in opening trade.

Apple (AAPL) dropped 1.9%, leaning toward a third-straight decline. Apple stock is sitting on a seven-week advance, and is extended above a 137.17 buy point. IBM (IBM) reports its second-quarter results after the market close.

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S&P 500, Nasdaq: Qualcomm, Zoom Video, Tesla

On the S&P 500, oil stocks posted five of the 10 deepest early losses. Marathon Oil (MRO) fell hardest, down 5.8%. Airlines and cruise line operators were also hard hit, with Norwegian Cruise Line Holdings (NCLH) down 5.8%, and American Airlines Group (AAL) showing a 4.9% loss.

Qualcomm (QCOM) showed some resilience, a holdout among S&P 500 and Nasdaq 100 stocks. It shed early gains and dipped 0.2% after Goldman Sachs upgraded the chipmaker to neutral, from sell. It also raised Qualcomm’s price target to 148, from 136.

China-based names fell to the bottom of the Nasdaq 100. (JD), Pinduoduo (PDD) and Baidu (BIDU) were all down more than 2%. Zoom Video (ZM) and ASML Holdings (ASML) also took hard hits.

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Zoom Video shares slumped 1.8% after the company agreed to pay $14.7 billion for customer contact software maker Five9 (FIVN). Five9 shares rallied 7.8%.

ASML dropped 2.3%, hurt by a Wall Street Journal report that the Biden administration has pressured the Dutch government to prevent sales of top-end chip equipment to China.

Tesla (TSLA) dropped 2.2%, as it leaned toward a fifth-straight day of declines.

Auto retailer AutoNation (AN) gained 0.5%. The Ft. Lauderdale, Fla.-based outfit reported huge second-quarter revenue and earnings beats.

Vital Signs: Oil Prices, Bond Yields

Oil prices retreated after the Organization of Petroleum Exporting Countries and partners led by Russia, typically called OPEC+, agreed Sunday to a planned increase in production.

West Texas Intermediate swooned 3.7% to just above $69 a barrel. Oil prices now have dipped for two weeks, on the heels of a six-week rally. Prices on July 6 reached $76.98, their highest level since October 2014. They are now positioned for a test of support at their 50-day moving average.

Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live

Bonds climbed, sending yields sharply lower early Monday. The 10-year yield backed off to 1.22%, down from a settle at 1.30% and a high of 1.42% on Tuesday. Yields have declined in eight of the past nine weeks, and are poised for a test of support at their 200-day moving average. The last time the 10-year yield broke below the 200-day support line was in December 2018. That began a nine-month slide that ended just ahead of the Covid-19 pandemic.

Dow Jones Today: Blue Chip Bases, Earnings

The Dow Jones today sets up for a week in which nine of its components, or 30% of the index, report earnings. Four of those are in bases or near buy points.

IBM reports Monday afternoon. Travelers (TRV) reports second-quarter results early Tuesday. Coca-Cola (KO), Verizon (VZ) and Honeywell International (HON) report on Wednesday morning.

Coca-Cola is the only one of those with technical and fundamental indicators qualifying for CAN SLIM investors. Its Composite Rating of 80 from IBD ranks it No. 1 among makers of non-alcoholic beverages.

Coca-Cola shares ended Friday just a fraction below a 56.58 buy point in a flat base. Coke’s relative strength rating is lagging. But its relative strength line is within striking distance of the six-month high chalked up in March.

Market Conditions: Protecting Capital

Deteriorating market action, including the Nasdaq slip on Friday below its 21-day exponential moving average, cautions investors to be on the defensive. Protecting capital — locking in even small gains and limiting exposure — is for now the name of the game. In general, it is a time for building watchlists rather than making buys.

For more detailed analysis of the current stock market and its status, study the Big Picture.

With earnings season gathering steam, investors may be tempted to grab leading stocks poised to pass buy points on earnings news. Those who do should study up on their earnings season options strategy, in order to limit risk.

Find Alan R. Elliott on Twitter @IBD_Aelliott


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