The split market continues: Nasdaq 100 futures fell early Wednesday while futures for the Dow Jones industrial average rose slightly vs. fair value. North Korea's latest moves revived geopolitical concerns.
X Nasdaq 100 futures fell 0.4% vs. fair value while Dow futures were 0.1% higher and S&P 500 futures were roughly flat. The dollar, which has been trending lower, retreated vs. the Japanese yen on news that North Korea successfully tested an intercontinental ballistic missile for the first time.
North Korea's Kim Jong Un promised more "gift packages" for America. Secretary of State Rex Tillerson confirmed that North Korea launched an ICBM, calling it a "new escalation" that will brought before the United Nations Security Council. The U.S. and South Korea ordered a significant live-fire missile test as a response, just hours after China and Russia urged the two countries to halt big military exercises on the Korean Peninsula.
Japan's Nikkei rose 0.25% after initially falling modestly while South Korea's Kospi gained 0.3%. China's Shanghai composite climbed 0.8% and Hong Kong's Hang Seng 0.5%. In European trade intraday, the U.K.'s FTSE was flat, Germany's Dax was little changed and France's CAC-40 climbed 0.1%.
Jekyll-And-Hyde Market
The overnight action exacerbates the Jekyll-and-Hyde market split underway for the last few weeks.
On Monday, Apple (AAPL), Facebook (FB), Amazon (AMZN), Netflix (NFLX), Google parent Alphabet (GOOGL) and many other leading big-cap titans pushed the Nasdaq composite lower again after another failed attempt at retaking the 50-day moving average. Meanwhile, the Dow Jones industrial average powered to a record high and S&P 500 index edged higher, with JPMorgan Chase (JPM) and Goldman Sachs (GS) leading the Dow while Bank of America (BAC) cleared a buy point.
As the classic tale of "Dr. Jekyll and Mr. Hyde" shows, a split personality is unstable. While there are leaders and laggards, the major averages generally follow the same path. So will Bank of America and JPMorgan carry the day, or does the market succumb to Apple, Facebook, Amazon and Google and a tech-led correction?
Apple
Apple was the first and most notable tech titan to undercut its 50-day moving average on June 10, following the sudden tech stock reversal on June 9. In recent days, Apple has been relatively stable, holding in a consolidation beneath its 50-day, but not heading below that area. But it certainly isn't showing leadership either.
FANGs
Facebook fell 1.9% on Monday, finally closing below its 50-day line after several tests. Amazon, which finished last week just pennies below the 50-day, initially rallied Monday but then reversed for a 1.5% loss, clearly separating from its support line. Netflix, the smallest of the FANG internet giants, continued to descend, sliding 2.2% to its lowest level since late April. Google parent Alphabet lost 1.1%, back to late April prices.
Microsoft, Chips, Software
Among other big techs, Microsoft (MSFT) retreated 1.1%, continuing to find 50-day resistance.
A slew of chip and chip-equipment stocks have tumbled through their key support lines in recent days and weeks. Even the holdouts are running into trouble.
Nvidia (NVDA) is still above its 50-day line, but is rapidly approaching that level after climax-like action from May 9-June 9. Micron Technology (MU), which reversed lower Friday despite seemingly strong earnings and guidance, fell sharply on Monday, undercutting its 50-day line.
Workday (WDAY), Adobe Systems (ADBE) and Paycom (PAYC) are top software firms that dropped below the 50-day on Monday.
Bank of America, JPMorgan
BofA, JPMorgan and other bank stocks have surged after they announced huge stock buybacks and dividend hikes last week following the completion of the second round of annual stress tests. A sharp rise in U.S. Treasury yields, partly due to a stronger eurozone economy that's lifting German bund yields and the euro, should be good for banks.
JPMorgan rose 1.5% on Monday to 92.75, closing in on a 94.08 cup base. BofA advanced 1.7% to 24.68, closing above a 24.35 aggressive buy point. It's approaching a conventional entry of 25.90. Investment bank Morgan Stanley (MS) and superregionals Comerica (CMA) and Keycorp (KEY) are just below buy points themselves.
The Dow industrials and S&P 500 have advanced even though the Dow includes Apple and Microsoft (and laggard techs Intel (INTC) and Cisco Systems (CSCO)), while the S&P 500 has all those plus a plethora of chip, internet and software plays. Energy stocks have given a recent lift to both indexes, as oil prices have risen for eight straight sessions.
But U.S. crude futures fell 1.6% early Wednesday amid reports that Russia opposes deeper production cuts.
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