Dow Jones Futures Fall As China Concerns Hit Market Rally; Why You Should Be Cautious

Dow Jones futures fell Sunday night, along with S&P 500 futures and Nasdaq futures with rising China Covid infections, lockdowns and protests in focus. Key economic data and notable earnings reports are due during the week. The stock market rally had solid gains in the holiday-shortened Thanksgiving week. The Dow Jones hit a seven-month high. But the S&P 500 index is coming up to its 200-day moving average, a key resistance area. Several economic reports loom next week, including the November jobs report. Those will be key for Fed rate expectations. So investors may want to be cautious about adding much exposure in the very short term.

Key Earnings

Data storage firm Pure Storage (PSTG), Chinese e-commerce giant Pinduoduo (PDD), Dollar General (DG) and Ulta Beauty (ULTA) report earnings this coming week. PDD stock, Dollar General, Pure Storage and Ulta Beauty are all near buy points as well. Salesforce.com (CRM) and Snowflake (SNOW) headline a number of software earnings reports, with guidance key for the entire sector and the IT spending outlook. Snowflake is expected to report its first-ever quarterly profit. But SNOW stock, and most of these other software plays, are well off highs. Megacaps also are still struggling. Tesla (TSLA) rebounded this week, but from bear market lows. Amazon.com (AMZN) is still below most moving averages. Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA) and Google-parent Alphabet (GOOGL) are all above their 50-day lines, but below their 200-day. The video embedded in this article reviewed the market rally over the past week and analyzed Dexcom (DXCM), Avis Budget Group (CAR) and PSTG stock.

Weekend News

Chinese protests are spreading rapidly against the government’s strict zero-Covid policy, as lockdowns and severe restrictions ramp up amid record coronavirus infections. It’s the greatest defiance vs. President Xi Jinping since he took power in 2012. The lockdowns and protests are further challenges to the struggling Chinese economy. U.S. holiday shopping appears to be decent, at best. Black Friday online sales rose 2.3% vs. a year earlier to a record $9.12 billion, amid somewhat-sparse in-person crowds. Apple products are in demand. The Biden administration eased Venezuela oil sanctions, letting Chevron (CVX) produce crude in the country for the next six months and export it to the U.S. It’s a big shift in policy. That comes as the U.S. may soon halt releases from the much-reduced Strategic Petroleum Reserve. Macau has tentatively renewed 10-year casino licenses for Wynn Resorts (WYNN), Las Vegas Sands (LVS), MGM Resorts (MGM) and Melco Resorts & Entertainment (MLCO). That lifts a big uncertainty for Macau-focused casino operators, still struggling with China’s Covid restrictions. Final terms should be set before Jan. 1.

Dow Jones Futures Today

Dow Jones futures fell 0.5% vs. fair value. S&P 500 futures declined 0.6% and Nasdaq 100 futures sank 0.75%. The 10-year Treasury yield declined 6 basis points to 3.65%. Crude prices fell more than 2% to a 2022 low on China concerns and Chevron set to pump crude in Venezuela. Copper futures sank nearly 2%. Protests vs. China’s Covid curbs could be affecting Dow Jones futures and commodity prices. Hong Kong’s Hang Seng sank nearly 2%, but well off early lows. Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.