U.S. indices give back gains from early trading 📌
U.S. indices came under pressure again today despite an upwardly promising session. Investors are concerned that the opening of China's economy despite a growing number of new cases may prove unsustainable. What's more, the November index of pending U.S. home sales contracts supported recessionary sentiment, which, surrounded by a hawkish Fed, does not fill the bulls with optimism. On a monthly basis, the index surprised with a 4% decline against an expected drop of 1%. On an annualized basis, the index is already losing nearly 39%. The reading exacerbated the sell-off of the Blackstone fund (BX.US), which has significant exposure to the US real estate market. Managed by Stephen Schwarzmann, the fund is already losing nearly 43% year-to-date. Declines on the S&P500 are also being fueled by a vigorous sell-off in Apple (AAPL.US) shares, which 'weigh' most heavily on it.
Chart of the US500, D1 interval. Sellers are pushing the index looking to test the strength of support at 3800 points, which coincides with the 23.6 Fibonacci retracement of the upward wave initiated in March 2020. The index has again settled below the SMA 200 (red line) and the SMA 100 (black line) losing bullish momentum. Source: xStation5
Among technology companies, we see a definite deterioration in sentiment. Shares of Apple (AAPL.US) slid to new 2022 lows near $127 per share as investors fear that a surge in coronavirus cases in China will trigger a turn toward 'Covid Zero' restrictions exacerbating the US giant's iPhone supply and manufacturing liquidity problems. The main iPhone factory is located in Zhengzhou. According to investors, nearly 90% of the company's iPhones are assembled in China, and the Chinese market accounts for 1/5 of the company's revenue. In addition to concerns around supply, concerns around demand are still in play as high interest rates, an economic slowdown and increasingly weak consumer financial health could curb demand for the company's products. Apple shares are losing nearly 30% this year. Historically, their biggest drop was in 2008, when they lost nearly 57%.
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Apple shares (AAPL.US), D1 interval. Source: xStation5
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