The Dow Jones Industrial Average reversed lower early Friday. The S&P 500 and Nasdaq composite also initially spiked but then faded to post losses about an hour after the opening bell. The indexes finished the worst first half of the year in decades — and for the Nasdaq composite, the worst first half on record.
Dow Jones Lags
In morning trading, the Dow Jones Industrial Average was down 0.6% as the S&P 500 saw a decline of 0.5%. Both indexes were off their morning lows. The Nasdaq was down 0.5%. Small caps fared the best, with the Russell 2000 at break-even. Volume was lower on the Nasdaq and on the NYSE vs. the same time on Thursday, according to IBD data.
The indexes initially rose Friday morning after the S&P Global US Manufacturing Purchasing Managers’ Index came out. The headline PMI dropped to its lowest level since July 2020 amid a
near-stagnation of factory output and a fall in new orders. The index hit 52.7 in June, down from 57.0 in May.
“The PMI survey has fallen in June to a level indicative of the manufacturing sector acting as a drag on GDP, with that drag set to intensify as we move through the summer,” said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.
For first half of 2022 the Nasdaq was down a record 29.4%, and the S&P 500 down 20.6%. “The already-struggling stock market rally faced more difficulty Thursday, as the major stock indexes ended with moderate losses, even after cutting into heavy losses at the market open,” Thursday’s Big Picture column said. “Given the extremely challenging environment, investors should remain on the defensive and focus only on stocks showing exceptional fundamental and technical strength.”
The 10-year yield continued to fall on Friday, to 2.86% in early trading. Thursday was the first time the 10-year yield fell below 3% in nearly a month. Crude oil prices rallied back early Friday after facing declines earlier this week. The commodity rose 2.3% Friday to $108.15 a barrel.
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Among S&P 500 sectors, results were mixed. The utilities and real estate sectors outperformed while health care and technology lagged.
Stocks leading the upside in the Dow Jones industrials on Friday included McDonald’s (MCD) and Coca-Cola (KO), up over 1% each. On the downside, UnitedHealth Group (UNH), Nike (NKE) and Intel (INTC) fell.
UnitedHealth traded back below a recent 507.35 double-bottom buy point. The stock broke out above this area earlier this week. But its stock is struggling to trade above the entry. UnitedHealth recently reclaimed its 50-day line and its RS line is at new highs on the weekly chart.
China EV Sales Top June, Q2 Expectations
Li Auto stock was in a buy zone early Friday but reversed to a 4% loss. Nio and Xpeng also traded lower and are on track to notch a five-day losing streak following big gains in recent weeks.
Nio delivered a record 12,961 vehicles in June, up 60.3% from a year earlier and from May’s 7,024. Xpeng delivered 15,295 vehicles in June. This was its best month since December and was a 133% jump from a year earlier. Li Auto delivered 13,024 Li One hybrid SUVs in June, 68.9% higher vs. a year earlier. That was the highest monthly sales since last December. Li Auto delivered 11,496 vehicles in May.
China EV and battery giant BYD (BYDDF) is also due to report June sales. BYDDF stock is still in a buy zone from Monday’s breakout past a 39.81 cup-with-handle entry. Its relative strength line has surged to highs.
Follow Rachel Fox on Twitter at @IBD_RFox for more Dow Jones and stock market commentary.
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