S&P 500 futures rose modest late Monday, along with Dow Jones futures and Nasdaq futures. Google-parent Alphabet (GOOGL) reported strong earnings late Monday but the stock failed to move. Its report also could shed some light on Facebook (FB), Twitter (TWTR), Amazon (AMZN) and Microsoft (MSFT), but those stocks were quiet after hours as well.
The S&P 500 index, Dow Jones and Nasdaq composite all hit resistance at the 50-day moving average in the stock market today. Blame three key factors: Apple (AAPL) undercutting more support, the chip sector continuing to sell off and the 10-year Treasury yield moving to the cusp of 3%.
S&P 500 Futures, Google Muted
S&P 500 futures rose 0.2% vs. fair value. Dow Jones futures were nearly 0.2% higher. Nasdaq 100 futures advanced 0.2%.
Alphabet earnings beat estimates, even excluding an investment gain for its Uber stake. Revenue growth was the strongest in years. But traffic acquisition costs and capital spending both surged, slashing profit margins. In late trading, Google’s parent fell slightly up-and-down-trading, but the moves were fractional. Ahead of earnings, the stock fell 0.3% to 1,073.81, closing below its 50-day for a second straight session.
Alphabet didn’t provide much direction for social networks Facebook and Twitter, which like Google are almost entirely dependent on advertising for revenue. Google also signaled cloud computing was growing rapidly as it competes vs. Amazon Web Services and Microsoft Azure. Facebook, Twitter, Amazon and Microsoft, which all report later this week, were not moving much after hours.
Stock Market Indexes Hit 50-Day Resistance
In Monday’s session, the S&P 500 closed a fraction higher, while the Nasdaq composite and Dow Jones fell modestly. But the major averages all continued to hold below their 50-day moving averages after falling below that key level Friday. In both sessions, the culprits were largely the same: Apple, chip stocks and Treasury yields.
Apple Breaks Support, Again
Apple fell 0.3% to 165.24, a modest retreat, amid fresh signs of weak iPhone X demand. But the stock fell below its 200-day moving average. Aside from a few days during the brief stock market correction in early February, Apple hadn’t undercut that level since July 2016.
Apple, which has skidded 7.3% in the past four sessions, also has undercut the low of its consolidation. Upside? Apple could now create a double-bottom base with a slightly lower entry. So, a relentless Apple bull could claim that the iPhone maker moved closer to a buy point on Monday.
Chip Stocks Extend Losses
The Philadelphia Semiconductor Index retreated 1.3% on Monday, undercutting recent lows to its worst levels since the February correction. The Philly Sox index is just above its 200-day line, an area of support that it hasn’t breached since July 2016. The semiconductor index has retreated 7.6% over the last four sessions.
Treasury Yield Tests 3%
The 10-year Treasury yield rose as high as 2.99%, settling for a modest rise to 2.975%. The 10-year yield already hit a four-year high on Friday. Treasury yields are rising amid growing inflation concerns as well as the related risk of additional Fed rate hikes. Higher interest rates, all other things being equal, act as a brake on growth and make bonds relatively more attractive for investors.
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