Stock Market Faces 5 Big Tests Involving Apple, Alphabet, Facebook, Intel, Twitter – Investor’s Business Daily

The stock market faces several key tests in the coming week. Can the Dow Jones, S&P 500 index and Nasdaq reclaim key support. Can Apple (AAPL) stock hold its 200-day? How will chip stocks respond? Will the 10-year Treasury yield top 3%? And is Twitter (TWTR) now a better stock than Facebook (FB) or Google-parent Alphabet (GOOGL)?

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Stock Market, Apple Stock Under Pressure

The Dow Jones industrial average, S&P 500 index and Nasdaq composite all fell below their 50-day moving averages on Friday. Apple stock, the top weighting in all three gauges, tumbled to just above its 200-day line. Several chip warnings set the stage for the stock market and Apple struggles; now Intel (INTC) leads several other big chip names with earnings this week. Meanwhile, the 10-year Treasury yield shot up to a four-year high of 2.96%, as inflation and Fed rate hike fears mount up.

Those stock market tests are interrelated to a large extent. But there’s also a big question. After struggling for years as a company and stock, Twitter has been roaring back over the past 12 months and in 2018 while FANG stocks Facebook and Google-parent Alphabet have lost momentum.

Can Dow Jones, S&P 500 Bounce Back?

The stock market is in a confirmed uptrend, and the major averages did close higher for the week. But the S&P 500, Dow Jones and Nasdaq composite came under pressure just as stock breakouts were picking up steam. The 50-day line usually is an important level, but it’s loomed especially large over the last several weeks.

Since tumbling through its 50-day line on Feb. 5, the S&P 500 has only closed above that level 13 times. The Dow Jones has only been ended above the 50-day in nine sessions since Feb. 5. The Nasdaq was above its 50-day for the most part from mid-February to March 21, but since then it’s had just 3 days over that line.

Can Apple Stock Hold 200-Day Line?

After tumbling 2.8% on Thursday, the iPhone maker fell 4.1% on Friday, crashing through its 50-day moving average and closing just above its 200-day line. No question, Apple stock was a major reason for Friday’s stock market sell-off.

Apple did trade below its 200-day line for a few days in early February as the brief stock market correction bottomed. But aside from that unusual market environment, Apple stock has not traded below its 200-day line since July 2016.

Technically, Apple is in a flat base. But its relative strength line, which tracks a stock’s performance vs. the S&P 500 index,

Will Chips Lead Or Lag?

Chip stocks set the stage for Friday’s sell-off in the major averages and Apple with gloomy outlooks from a trio of major semiconductor players: Chip-gear makers ASML (ASML) and Lam Research (LRCX) and contract chipmaker Taiwan Semiconductor Manufacturing (TSM). Taiwan Semi, which makes chips for Apple and many others, cited weak smartphone demand.

The iShares Philadelphia Semiconductor Index (SOXX) ETF dipped below its 50-day on Wednesday, then tumbled Thursday and Friday.

While the stock market can rally without chips participating, it’s not easy. Chips are a major part of the stock market. And chips are in so many products, from the Apple iPhone to the Tesla (TSLA) Model 3. So if semiconductors are struggling, that’s a bad sign for several other big stock market sectors.

Intel, Texas Instruments (TXN), MKS Instruments (MKSI) are among the key chip names on tap this week.

Treasury Yield Eyes 3%

The 10-year Treasury yield rose sharply last week, especially Wednesday-Friday, closing at a four-year high of 2.96% and contributing to Friday’s stock market slide. With oil prices at their highest levels since late 2014 and wage pressures bubbling, inflation and Fed rate hike concerns are growing.

Is Twitter Stock Better Than Facebook, Google-Parent Alphabet?

A year ago, this would have been a laughable question. At most, investors might debate whether Twitter or Snap was a better Facebook also-ran.

Over the past 12 months, Snap has tumbled 28%. Facebook has climbed 16% and Google-parent Alphabet 25%. Twitter stock has more than doubled, surging 118%. In 2018, Twitter has rallied 33%, while Facebook is down 6% while Google and Snap are up 2% and 4%, respectively.

Snap was massively overhyped for its March 2017 IPO. Facebook, struggling with user growth and time on site, is struggling with a data privacy scandal as well as Russian interference. Those Facebook woes have spilled over to Google, while both are facing growing headaches in Europe over competition and privacy concerns.

Twitter has gained momentum. In the fourth quarter it crushed adjusted earnings views and reported its first-ever GAAP profit. Always popular with reporters, policy experts and newshounds, Twitter is building on its news niche with more video even as Facebook de-emphasizes news.

Alphabet reports earnings late Monday, followed by Twitter early Wednesday and Facebook that evening.

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