Stocks fell hard Tuesday, then swung into a quick rebound as buyers stepped in to lend chipmakers and other tech stocks a surge of early strength.
X The Dow Jones industrial average opened down 2.2%, but showed a 0.3% gain 20 minutes after the open.
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The global feedback loop of investor confidence darkened abruptly this week, with last week’s late losses in the U.S. reverberating through Asia and Europe on Monday, then slamming back into U.S. stocks as investors also factored in the probability of the Federal Reserve rolling out an accelerated rate hike schedule and news of strict sanctions imposed on one of the largest U.S. banks.
The result sent all three major U.S. indexes below support at their 50-day moving averages, and the Dow to a record point loss for the day. The loss Monday was the Dow’s worst one-day percentage decline since August 2011.
On Tuesday, Japanese investors kept up the selling as Tokyo’s Nikkei 225 plunged 4.7%, its worst single-day performance since November 2016. The index had cut below its 50-day moving average in heavy trade Monday. China’s markets also took their licks, as Hong Kong’s Hang Seng Index buckled 5.1% in its deepest decline since July 2015. The Shanghai Composite’s 3.4% tumble was its widest loss since February 2016.
The Hang Seng ended 8.6% below its Jan. 29 peak and still holding a 2.3% gain so far this year. The Nikkei closed 10% below its Jan. 23 record, putting it down 5% year-to-date.
In Europe, the leading benchmarks in Paris, Frankfurt and London all remained down more than 2% in afternoon trade.
Nothing on the economic calendar, which includes the trade balance and the Job Openings and Labor Turnover Survey from the Labor Department, is likely to put much of a dent in the day’s market action. Given the role of the Fed in current market concerns, investors may pay close attention to an 8:50 a.m. ET speech from St. Louis Federal Reserve Bank President James Bullard.
Caterpillar Leads Dow; Tal, Sina Shed Early Losses; Chip Leaders Rally
Among IBD 50 stocks, SVB Financial Group (SIVB) shook off its deep premarket declines and rose 1.5% at the start of trade. The Santa Clara, Calif.-based bank dropped below its 10-week line in a weak-volume, 5% loss Monday.
Among China-based names, TAL Education (TAL) and Sina (SINA) also shed their premarket slides and rose 0.6% and 2.5%, respectively. TAL has held up well so far versus the volatile market, keeping above its 10-week line of support and within a three-month base pattern. Sina had pulled back more than 8% below a 119.30 cup-base buy point, tripping the automatic sell rule.
Chip names were sharply mixed. Skyworks slugged out a 12% opening gain after reporting better-than-forecast fiscal first-quarter earnings and revenue. Q2 guidance was below analysts targets, but management announced a $1 billion share buyback initiative. The early jump hauled shares back above support at both the 10-week and 40-week moving averages.
Cirrus Logic (CRUS) sloughed off a steep oremarket advance and gained 0.8%, as at least one analyst lowered the stock’s price target following a broad fiscal third-quarter revenue and earnings miss. Cirrus is working on its fourth straight weekly decline, ending Monday at its lowest level since July 2016.
Electronic components manufacturer Fabrinet (FN) rallied 24% at the open, after its fiscal second-quarter earnings and revenue narrowly topped consensus views, although third-quarter guidance was mixed.
A busy after hour reporting session is set to include quarterly results from Walt Disney (DIS), Beazer Homes (BZH), Anadarko Petroleum (APC), Gilead Sciences (GILD) and Akamai Technologies (AKAM), among others.