Dow Jones Falls On Mixed Data; Will Apple Buckle Under China Exit?

The Dow Jones Industrial Average deepened losses throughout Monday and ended near session lows at 1.4% at closing bell.

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The S&P 500’s fall of 1.8% was steeper at 4 p.m. ET. The index ‘s key 4000 level was slipping in late trading and remained evasive in today’s action. The tech-dominated Nasdaq fell the most at close of day, shedding nearly 2%.

The small-cap Russell 2000 led declines and ended with a steep fall of more than 2.5%.

On Sunday, OPEC+ maintained its production levels as the $60 Russia oil cap comes into effect. Crude oil fell over 3% to 77.33 as fears of recession offset optimism over China’s easing lockdown.

In notable stock action, Hostess Brands (TWNK) fell sharply below the 50-day moving average. That’s bearish action for a leading stock that had climbed as much as 25% from its 23.23 buy point. With the stock giving back most of its big gain, it also threatens a round-trip sell signal.

Clearfield (CLFD) triggered a sell signal on Monday by falling more than 7% from its entry of 125.93 in a double-bottom base.

Yield Rises After Mixed Data

The yield on the 10-year Treasury note rose 9 basis points to 3.59%.

Mixed economic data gave some uncertainty to the market’s near-term outlook. The final S&P Global U.S. Services PMI Business Activity Index was 46.2 in November, down from 47.8 in October. Business activity in the private sector fell sharply in November.

Output fell at its sharpest since May 2020. According to Chris Williamson, chief business economist at S&P Global Market Intelligence, the data suggest a contraction of 1% annualized in the fourth quarter. “Falling output, rising cost of living, higher interest rates, weaker global demand and reduced confidence”  are dragging the economy headed into 2023.

However, the November ISM services index rose to 56.5 from 54.4 in October and suggested growth continued in November. Capital goods orders rose, though not as much as inflation. Comerica analysts believe that GDP grew 1.75% after adjusting for inflation in 2022 — and will likely stay the same for 2023.

Dow Jones’ Leader Apple’s China Exodus

Apple (AAPL) is accelerating its move out of China, according to reports. The Cupertino, Calif.-based tech giant has been moving its manufacturing hubs to the U.S., Mexico, Vietnam, India and Thailand.

However, reports suggest that it will take much more than a decade for newer factories to match the Dow Jones leader’s  China’s scale. China has 70% of global smartphone production. A staggering 98% of iPhones are made in China. Foxconn, in Zhangzhou, assembles 85% of iPhone Pro models, according to Counterpoint Research. But the “iPhone City” factory faces challenges even as Covid lockdowns ease.

China also holds nearly 50% of global smartphone shipments. The vast supply-chain network and equipment vendor and partner channels will be difficult to replicate. Earlier estimates also indicated that in a decade the electronics and hardware industry may reduce its China reliance by 20%-30%. Apple shares fell nearly 1% in today’s session as the stock tried to hold above its 10-week moving average.

Stocks Moving Today

In the Dow Jones industrials, Chevron (CVX) fell below its most recent buy point at 182.50. So far, there’s no sell signal. Chevron is also a Leaderboard stock. UnitedHealth (UNH) slipped after rebounding off the 50-day line.  A breakout past 553.23 in a cup-with-handle base has failed. There is no new entry so far.

MGM Resorts (MGM) was up nearly 2% at closing bell after Barry Jonas, an analyst at Truist, upgraded the stock to buy from hold and raised the price target to 50 from 40.

Murphy Oil (MUR) slipped nearly 3% after JPMorgan analyst Arun Jayaram upgraded shares to overweight from neutral. The stock has a new price target of 56.

Starbucks (SBUX) got a downgrade to hold from buy from Deutsche Bank analyst Brian Mullan. The new price target of 106, up from 100, is higher though. Shares fell over 1% at closing on Monday.

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