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“Life is like riding a bicycle. To keep your balance, you must keep moving.” – Albert Einstein
It’s a new week, and while it has been typical to see futures lower on the first trading day of the week so far this year, the S&P 500 and Dow are currently indicated higher. Nasdaq futures were higher earlier but have given up those gains. The catalyst for the weakness in tech stocks this morning is likely due to new COVID lockdowns in China and the impact that these shutdowns will have on tech supply chains.
Crude oil prices are down over 5%, and the cause for that decline seems to be tied to some positive sentiment related to cease-fire negotiations over the Russia-Ukraine war, but it could also be related to concerns over demand as China starts new rounds of Covid lockdowns. One thing for sure, is that a new wave of lockdowns in China, will not be good for global economic growth.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
It’s a new week for the markets in what has been a lousy year. Heading into the week, all but four sectors are oversold, while Energy and Utilities actually finished last week at overbought levels. Consumer Staples (XLP) was the big loser last week falling close to 6%, while Technology (XLK) and Communication Services (XLC) fell more than 3%. On a year-to-date basis, the performance disparity between Energy and everyone else continues to widen. While XLE is up over 38% YTD, no other sector is in the black, and Consumer Discretionary (XLY), XLK, and XLC are all underperforming the Energy sector by more than 50 percentage points YTD. Gaps in performance of that magnitude are pretty much unprecedented.
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