The US stock market staged a two-day rally this week, beginning on Wednesday after the Federal Reserve failed to give valid reasons for abandoning its ultra-easy monetary policy. Many dealers counted on a more aggressive statement, which was reflected in stock indices. When investors realized that the debt crisis of the Chinese real estate giant Evergrande will not cause a wave effect in the global markets, as this event resulted in markets collapse on Monday, there was no reason to stay aside.The decision to enter the market again and build up long positions was taken at once.
Yesterday the blue-chip Dow was up 500 points, the best daily gain since July 20. The S&P500 index added 1.2% and the high-tech Nasdaq Composite was up 1%.
Today's premarket is very dynamic. Let's see who is making the most interesting moves today and what direction the market will open.
Everybody's favorite company Robinhood, which is definitely not overlooked this year by both traders and the US Securities Commission, showed decline. Already at the premarket, HOOD shares fell by 2% after China reported that it was launching its crackdown on cryptocurrencies. Coinbase's shares also suffered, dropping even more, by 3.6%. Today, the country's central bank announced that all cryptocurrency-related activity was illegal.
The shares of Nike, a much-loved brand, also fell. The sharp decline in quotes came after Nike lowered its revenue forecasts due to supply chain issues. The company said that it might expect annual sales growth in single digits in fiscal 2022, down from its previous forecast of low double-digit growth. Nike's stocks dropped more than 4% on the premarket. Under Armour also was hurt as the sportswear retailer's shares fell in the premarket following a decline in Nike's guidance. Under Armour lost more than 2% on the premarket.
Among the fall leaders are streaming video platform Roku's shares which dropped in the premarket following Wells Fargo's downgrade of Roku. The investment firm noted to its clients that Wall Street's expectations for Roku's revenue growth were probably too high, as competition in the field was growing at a fairly rapid pace. Roku's stocks were down 2.3%.
As for the market winners, Costco should be noted. The retailer beat expectations on earnings for the quarter. The company reported adjusted earnings per share of $3.90, beating expectations of $3.57. Net sales for the quarter were up more than 17% year over year.
Merck, a pharmaceutical giant along with AstraZeneca announced today that treatment with Lynparza slowed the progression of prostate cancer in a Phase 3 trial. Merck's stocks rose by more than 1% at the premarket.
As for the technical picture of the S&P500, yesterday's break down at 4,425 encouraged the traders and now the bulls' main target is to protect this range. If the intraday trading closes above 4,425, then we may count on the continued growth towards 4,488 and 4,535. If the index goes below 425 again, then another downward correction to the area of 4,346 and 4,231 is not excluded.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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