The stock market indexes trimmed some losses in afternoon trading Tuesday as sell signals emerged for leading stocks.
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Tuesday’s losses added to bearish signs for the stock market. The Nasdaq composite slid 1.2% around 1:30 p.m. ET, while the S&P 500 and Dow Jones Industrial Average fell about 0.8%.
Volume rose on the NYSE and Nasdaq, compared with the same time on Monday. Decliners outnumbered advancers by 2-1 on the Nasdaq and by 5-2 on the NYSE.
The Innovator IBD 50 ETF (FFTY) lost 2.7%, its performance worsening in afternoon trading. MongoDB (MDB), Global-e (GLBE), Braze (BRZE) and Five9 (FIVN) fell below their 50-day moving averages.
Health care was the only S&P sector index higher on the day, up only 0.2%. But insulin infusion system maker Insulet (PODD) tumbled more than 7% to a 10-month low ahead of its earnings report after the close. Glucose monitoring system maker Dexcom (DXCM) plunged below its 200-day moving average in heavy trading.
The Finance Select Sector SPDR (XLF) represented the weakest broad sector, down 1.5%. Moody’s downgraded the credit ratings of 10 regional banks and is reviewing the ratings of six others. The firm cited profit pressures and raised questions about some banks’ commercial loan portfolios.
SPDR S&P Regional Banking ETF (KRE) fell 2.2%. The news also hurt the Russell 2000, which fell 1.3%.
Earnings misses were a main reason for the broad weakness.
UPS, Datadog Among Earnings Movers
United Parcel Service (UPS) cut its loss to 1% after the delivery giant missed June-quarter sales expectations. In what could be a bad sign for the economy, shipping volumes declined and UPS cut its forecast for full-year sales and operating margins.
Datadog (DDOG), an IBD 50 stock, plummeted 18% on a current-quarter revenue forecast that was below expectations early Tuesday. The stock, which already had pared gains from its 103.80 buy point, triggered sell signals Tuesday. It fell more than 17% from the entry and gapped below the 50-day moving average in heavy volume.
Even positive results could not overcome bearish sentiment in today’s stock market.
Palantir Technologies (PLTR) fell nearly 7% after the software company met second-quarter profit and sales expectations. Palantir, which had been rallying on AI initiatives, also announced a $1 billion stock buyback.
Beyond Meat (BYND) gapped below its 50-day and 200-day moving averages, another backward step in the company’s long slump. A slowdown in sales for the maker of plant-based meat products accelerated to 31% in Q2, and the company cut its full-year sales outlook. The stock peaked at 239.71 a few months after its much-hyped May 2019 IPO, but today trades around 12.50.
Chinese stocks fell broadly after the country’s exports plunged 14.5% in July from a year earlier. It was the steepest year-over-year decline since February 2020, at the height of the Covid crisis.
China-based EV maker Li Auto (LI) skidded 8% even though it beat second-quarter estimates and raised guidance. No doubt some investors are taking profits after a run of more than 80% from a breakout to new highs in May.
The Shanghai Composite Index fell nearly 0.3%, while the Hong Kong Hang Seng slid 1.8%. The IShares MSCI China ETF (MCHI) lost nearly 2% in afternoon trading, while iShares China Large Cap (FXI) fell 2.1%.
Earnings Winners In Today’s Stock Market
Eli Lilly (LLY) surged past a buy point in heavy volume after the pharmaceuticals leader topped second-quarter views. Lilly cited strong growth in diabetes treatment Mounjaro. The stock broke out above the 469.87 buy point of a flat base. Eli Lilly’s 14% gain is likely to be the best single-day increase since June 29, 2000, when it rose 17.7%, according to Dow Jones Market Data.
Novo Nordisk (NVO) gapped above the 172.97 buy point of a flat base in heavy volume. The company’s weight-loss drug reduced the risk of heart attack and other cardiovascular issues for overweight adults in a study. Novo Nordisk is on track for its best day since Aug. 6, 2002, when it rallied 17.2%.
TransDigm (TDG) saw volatile trading after the company raised guidance and cited strong demand for commercial aviation components. The stock is trading in the widest price spread in at least a year. After rising above resistance around 900 on Monday, TDG is now below that level.
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