The Dow Jones Industrial Average fell as stocks struggled amid House Speaker Nancy Pelosi’s visit to Taiwan. China Action Digital AMTD (HKD) exploded and is now up nearly 26,000%. Monolithic power systems (MPWR) surged to strong results. caterpillar (CAT) fell on earnings.
Volume rose on both the Nasdaq and the New York Stock Exchange according to preliminary data.
The yield on the benchmark 10-year Treasury note rose 15 basis points to 2.75%. West Texas Intermediate crude oil rose slightly to just over $94 a barrel.
Nancy Pelosi’s Taiwan visits Angers China; Fed officials speak
The shares spiked amid a headline-grabbing visit by President Pelosi (D–California) to Taiwan.
She is the highest ranking American official in a quarter century to visit the island.
Chinese media reported that the People’s Liberation Army sent an unknown number of Russian-made Su-35 fighter jets over the Taiwan Strait in a show of force. China has also taken action against the island, suspending imports from Taiwanese companies producing pastries, baked goods and sweets.
Longer-term ratifications of the visit remain to be seen, although Oanda’s senior market analyst Edward Moya said there could be economic impacts.
Overview of the US stock market today
|Index||Symbol||Price||loss of profit||% To change|
|Dow Jones||(0 MONEY)||32396.76||-401.64||-1.22|
Last Updated: 4:30 PM ET on 08/02/2022
“China’s response to Pelosi’s trip to Taiwan could impact supply chains and demand, which could keep inflationary pressures strong,” he said in a note to clients. “Traders are starting to bet the Fed won’t take rates much above neutral.”
Chicago Fed President Charles Evans also warned on Tuesday that the economy needs a rate-fixing that slows economic growth. San Francisco Fed President Mary Daly also said the Fed’s work on inflation was “far from nearly done.”
Nasdaq fades as small caps gain
The Nasdaq ended the day down 0.2%. Former Dominion Freight Line (ODFL) lagged as it fell more than 3%.
The S&P 500 also struggled, dropping 0.7%. Molson Coors (FAUCET) was among the laggards here, dropping more than 10% on earnings.
The S&P 500 sectors were all negative. Real estate and financials were the worst performers.
Small caps also fell, with the Russell 2000 slipping 0.1%.
The Innovator IBD 50 ETF (FFTY), an indicator of growth stocks, stood out, rising 1%.
The Dow Jones falls as Caterpillar profits miss
The Dow Jones Industrial Average was the hardest hit among the major indices. It fell by 1.2%.
He was hit following a bad report from Caterpillar. The industrial giant closed the day down 5.9%. CAT stock moved away from the key 50-day moving average. It fell in extremely high volume.
He was hammered after missing revenue expectations for the second quarter. Management said it was impacted by Caterpillar’s exit from Russia as well as ongoing supply chain issues.
AMTD Digital is exploding, beware of these dangers
In a mania-esque stock meme movement, AMTD Digital exploded.
It ended the session up 126%, although it closed session highs.
HKD stock is now up more than 21,426% since its IPO in mid-July. The introductory price was 7.80. It also increased by 32,000%.
Such a parabolic move makes the stock extremely risky. Buying now would be closer to gambling than investing.
The Hong Kong-based investment banking firm is the creator of a digital platform named AMTD SpiderNet used by fintech companies.
MPWR Stock Eyes Leaderboard on Earnings Movement
Monolithic Power Systems stock was one of the best performers in the stock market today. It ended the session up 9.4%.
The Kirkland, Wash.-based company saw EPS jump 80% to $3.25 per share. Revenue soared 57% to $461 million. This was clear to analysts.
Strong sales of power chips for enterprise data, storage and computing applications helped the company deliver its outstanding report. For the current quarter, Monolithic expects revenue of $480 million to $500 million. The midpoint of $490 million is well above Wall Street’s target of $458 million.
MWPR stock is looking to break through a consolidation buy point of 514.80. Its strong performance has earned the chipmaker a spot on the IBD Ranking Watchlist.
Outside of Dow Jones: These 2 Stock Test Entries
Pollution control stock Aris Water Solutions rose above a buy point of 22.10 from a cup basis, MarketSmith analysis shows.
The relative force line also reached a new high. Aris works to reduce the water and carbon footprint of companies.
Investors should stay away for now as the company reports earnings on Thursday, a risk for anyone buying this breakout.
One approach put forward by Investor’s Business Daily is to using options as a strategy to reduce risk to earnings. It’s a way to capitalize on a stock’s upside potential around earnings, while reducing downside risk.
Hershey’s chocolate stock rose above a flat base entry of 231.69 but closed below. The stock boasts a strong EPS rating of 92 out of 99.
It is also in the top 6% of stocks by price performance over the past 12 months. In total, the funds hold 43% of its shares.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more growth stock analysis.
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