The major stock indexes posted mixed results in the morning trading on Tuesday. Nasdaq and Big Tech stocks grew. Investors were tense ahead of today's debt ceiling meeting, and the Dow Jones Industrial Average was dragged down by Home Depot's (HD) earnings.
At 3 pm ET, President Joe Biden will meet with congressional leaders. New debt ceiling talks will take place at 3 p.m. ET. If there is no agreement on raising the debt ceiling, the U.S. may default around June 1.
The Dow Jones Industrial Average fell 0.6%, while the Nasdaq gained 0.2%. The S&P500 fell 0.3%. Russell 2000 fell 1%, worse than major indices.
Volumes on the NYSE and Nasdaq rose compared to Monday's same time.
The Nasdaq-tracking Invesco Trust QQQ ETF (QQQ), which tracks the Nasdaq100, has gained 0.6%. This shows that Big Tech is still a resilient sector. The Innovator IBD50 ETF (FFTY), which tracks the Nasdaq 100, fell 1%.
Crude oil fell 0.5%, to $70.82 a barrel. Gold futures fell 1.1%, trading at $2,000 psychological level. Bitcoin fell 1.4% to $27.090.
The yield on the 10-year U.S. Treasury bond increased by 6 basis points, to 3.57%. CME FedWatch shows that there is a 70% chance of no rate hike during the June Fed meeting.
The European stock market fell, with the German DAX falling 0.1% and Paris CAC dropping 0.2%. In afternoon trading, the London FTSE fell 0.3%.
FTC sends a shiver through the Biotech Industry
Horizon Therapeutics' (HZNP), which is a subsidiary of Amgen (AMGN), fell by over 15% after Bloomberg reported that the Federal Trade Commission would file a lawsuit in order to block Amgen's ($28 billion) acquisition bid.
HZNP is set to experience its biggest one-day percentage drop since Aug. 3 when it fell 18.47%.
Amgen produces therapeutics to treat cancers, inflammatory diseases and cardiovascular disease.
Amgen said it was disappointed with the FTC decision, but remained committed to the acquisition. Amgen said it does not see "legitimate competitive issues" and intends to close the acquisition in mid-December.
AMGN shares fell 0.9% after the news.
Retail sales in April rose by 0.4%, compared to the 0.7% forecasted but were higher than the minus 0.0% in March.
The metric without autos was in line the forecast of 0.4%. The data includes durable and nondurable segments in consumer spending that make up the majority of GDP.
The April Industrial Production increased 0.5%, compared to the consensus of zero growth, and manufacturing rose 1.0% versus the 0.1% estimate. This reading includes manufacturing, mining and electric and natural gas utilities.
Home Depot's stock market outlook is gloomy
Home Depot's stock dropped 1.7% after it missed Q1 sales expectations and beat earnings expectations. Comparable sales dropped 4.5% over the past year.
The home improvement retailer attributed the lack of sales to lumber price deflation, and bad weather in Western U.S. The big box retailer anticipates a 2%-5% drop in sales for the full year 2023.
The Dow Jones component also projected a decline of 7% to 13% in EPS for the current fiscal period. It expects to earn between $14.52 and $15.52 per share by 2024, as opposed to the FactSet estimate of $15.72.
The shares fell below the 50 day line. This is a warning sign.
Lowe's, a competitor (LOW), also fell by 1.4% to show solidarity and dropped below its 50-day level. The fall triggered the rule of 7% selling from the 212.60 purchase point for a cup with handle base.
Capital One (COF), a stock owned by Warren Buffett, jumped 2.7% on heavy volume after Berkshire Hathaway reported a buy of more than 9.9 million shares.
Berkshire sold Bank of New York Mellon BK and U.S. Bancorp USB during the quarter.
Baidu, the Chinese internet company, rose 3.6% following better-than expected Q1 sales and earnings. It reiterated its commitment to its artificial intelligence (AI), generative business. BIDU launched its Ernie Bot chatbot AI in March.
This move, which adds to the 6.3% increase on Monday, takes it back over its 200-day line.
On Holding, an IBD 50 company (ONON), fell 9.4% despite sales and earnings that were better than expected in the first quarter. The Swiss athletic shoe maker has also increased its sales forecast for the full year.
The 21-day exponential moving mean has been broken by the shares.
Other Stock Market Movers
Sea Limited (SE), a Singapore-based entertainment and e-commerce platform, reported lower-than-expected sales and earnings for Q1.
Stocks fell below the 50-dyline, which is a warning sign.
C3.ai's (AI) stock rose 3.1% on heavy volume to add to the 23.4% increase from Monday, after enterprise AI giant lifted its revenue guidance beyond expectations. The company will report earnings on May 31.
On Monday, shares regained the 50-day line. Stocks are up 117% so far this year.