Stock market slumps in late trading as this biotech tops buy point

The stock market remained limp after a slight gain in the stock market in afternoon trading on Monday. Second quarter earnings are in focus.

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The Nasdaq Composite is trading down 0.3% while the Dow Jones Industrial Average is up 0.1%. The S&P 500 is down 0.1% at the moment. Smallcaps have outperformed, with the Russell 2000 almost flat.

Volume was lower on the Nasdaq and higher on the NYSE than at the same time Friday.

There is only one stock listed on MarketSmith’s list of breakouts today. PTC Therapeutics (PTCT) outperformed the cup-with-handle base’s 45.19 buy point. Volumes have been mediocre, despite a nearly 6% jump in the share price. The biotech reported earnings after the close on Thursday.

That’s not surprising for the stock market after the Nasdaq gained 4.7% last week and 3.3% in the past week. A move above the 50-day moving average has left the major indices outperforming this week.

US Stock Market Today Overview Index Symbol Price Gain/Loss% Dow Jones (0DJIA) 32753.07 -92.06 -0.28 S&P 500 (0S&P5) 4112.23 -18.06 -0.44 Nasdaq (0NDQC) 12352.76 -37.93 -0.31 Russell 2000 (IWM) 187.26 +0.01 Change +0.01 IBD50 (FFTY) 28.48 +0.03 +0.11 Last Updated: 2:52 PM ET 8/1/2022

The Energy Select sector fell more than 2% as the SPDR (XLE) sector lags. US crude oil prices fell 4.8% to $93.89 a barrel. The ETF is facing resistance at the 50-day moving average.

ibd 50 down but celsius roar

The Innovator IBD 50 ETF (FFTY) fell 0.1%.

Celsius Holdings (CELH) led the IBD 50 with a 12% jump, taking the stock closer to November’s high of 110.22. PepsiCo (PEP) has agreed to acquire an 8.5% stake in the fitness beverage company and will become its preferred distribution partner. PepsiCo is investing $550 million in cash for its stake. PepsiCo shares rose 0.8% and are close to a 177.72 buy point.

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Builders Firstsource (BLDR) vaulted 7.6% after the company reported a 127% rise in earnings per share earlier today.

American Tower (AMT) fell below the 271.19 buy point on Friday’s breakout. So far, it appears to be a general decline.

Dako New Energy (DQ) fell 5.4% on light volume. The stock is getting support at the 50-day moving average.

Another busy week of earnings for the stock market

The stock market faces another busy week of earnings – the focal point of trading activity. So far, Q2 results are underperforming and prospects are slim.

According to FactSet, as of Friday, 73 percent of S&P 500 companies had outperformed EPS estimates, lower than the five-year average of 77 percent. S&P 500 companies are trailing EPS estimates by 3.1%, well below the five-year average of 8.8%.

Combined with companies that haven’t reported yet, earnings growth for Q2 in the S&P 500 is 6%. This would be the lowest year-on-year growth rate since the fourth quarter of 2020 when earnings grew 4%.

The profit outlook for the third quarter is cautious. FactSet says analysts are lowering their third-quarter EPS estimates by a higher-than-average margin. The bottom-up EPS estimate, which aggregates the average estimates for all S&P 500 companies, declined 2.5%. The latest estimate (July 28) is looking for $57.98 versus $59.44 on June 30.

Following today’s closing, fertilizer companies CF Industries (CF) and Mosaic (MOS) announced results, both trying to build on the right side of bases. Diamondback Energy (FANG) and Devon Energy (DVN) are also set to report. Both are testing potential resistance at the 50-day average.

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