The Dow Jones Industrial Average fell as the CDC recommended some fully vaccinated people begin wearing masks indoors once again. Microsoft (MSFT) and Alphabet (GOOGL) fell ahead of earnings, with Apple (AAPL) also down. Tesla (TSLA) and United Parcel Service (UPS) slipped on earnings, with Lucid Motors (LCID) also dipping.
CDC Recommends Indoor Masking For Vaccinated People
The Centers for Disease Control and Prevention has recommended fully vaccinated people once again wear masks indoors in places with high Covid-19 transmission rates.
The CDC also recommended that K-12 schools adopt universal masking for teachers, staff, students and visitors. This move comes regardless of vaccination status.
It comes as fears rise over the spread of the more contagious delta variant. With the fall season approaching, it is seen causing a surge in Covid-19 cases. It comes as many big employers plan to bring workers back to the office.
Nasdaq Dives As Growth Stocks Get Spanked
The Nasdaq struggled the most out of the major indexes, closing down 1.2% after a challenging session. China stock Pinduoduo (PDD) was the biggest laggard, falling more than 10%.
The S&P 500 fared better, but still sank 0.5%. It had been sitting at record highs. Food processing giant Lamb Weston (LW) was the biggest laggard, falling almost 14% on earnings.
The VIX, a popular measure of the stock market’s expectation of volatility based on S&P 500 index options, was up about 9%. But the index was off highs for the day.
U.S. Stock Market Today Overview
Last Update: 4:04 PM ET 7/27/2021
The S&P sectors closed mixed, with utilities and health care making the best gains. Technology and consumer discretionary were the biggest laggards
Small caps were driven down by the bears, with the Russell 2000 falling about 1.2%.
But it was growth stocks that fared worst of all. The Innovator IBD 50 ETF (FFTY) fell 2.1%. That comes after an 8.7% jump last week.
Dow Jones Slips, Apple Reports Earnings
The Dow Jones Industrial Average was faring best out of the major indexes, but still fell 0.2%.
Apple was one of the worst performing components, slipping 1.5% before it reported earnings. The stock is extended past a cup buy point of 137.17, MarketSmith analysis shows.
Apple earnings were expected to rise 54% to $1.01 a share, according to Zacks Investment Research. Revenue was seen rising 23% to $73.1 billion. The company easily topped revenue estimates, recording a 36% jump to $81.4 billion.
Microsoft Stock, Alphabet Fall Ahead Of Reports
Microsoft was down almost 1% ahead of earnings, though it rallied off lows. It remains clear of a shallow cup base with a proper buy point of 263.29.
The software stock is extended past its 5% buy zone, which runs as high as 276.45.
Analysts expected software giant Microsoft to report $1.91 per share earnings on revenue of $44.1 billion after the close.
Google parent Alphabet was also set to report after the close. GOOGL stock closed down almost 2%.
Analysts estimated EPS would jump 90% to $19.21 with gross revenue jumping 46% to $56.02 billion. Analysts projected YouTube advertising revenue of $6.3 billion and cloud computing revenue of $4.4 billion. Both Microsoft and Alphabet are members of the prestigious IBD Leaderboard of leading growth stocks.
Tesla Stock, Lucid Motors Hit Reverse
Tesla stock reversed lower, despite a Q2 earnings beat. Though it posted early gains, it couldn’t hold onto them. It closed down about 2%.
Tesla earnings beat forecasts late Monday. EPS of $1.45 per share was well clear of analyst views for 90 cents per share. Revenue of $11.96 billion was also better than expected.
Tesla stock managed to find support at its 50-day moving average, but remains mired in a consolidation.
Management expects Model S production to continue to increase throughout the rest of the year. However it pushed back the release of its Semi truck to 2022.
Lucid Motors stock was also falling following its debut Monday. The EV maker’s stock dipped more than 5%, but remains above its 50-day line.
It debuted Monday after merging with the special-purpose acquisition company Churchill Capital IV. It gained almost 11% its first day of trading.
Futures Fall On Huge Earnings Night
UPS Stock Sinks
UPS stock took a dive, despite the fact it managed to best second-quarter earnings views.
The stock gapped down, closing down 7%. This caused the stock to fall through the floor of a flat base, according to MarketSmith analysis.
UPS earnings grew a healthy 44% vs. a year earlier to $3.06 a share with revenue up 14.5% to $23.42 billion. Nevertheless, the stock was hammered as shipping volume fell while management sees slower growth.
Third Bridge analyst Patrick Donnelly warned that Amazon (AMZN) poses a major threat to the firm, despite it being a key UPS customer.
“The biggest risk for the company moving forward will be the continued competitive pressure by Amazon Fulfillment,” he said in a research note. “As a customer and competitor, Amazon is able to cherry pick the most attractive parcels for final mile delivery while leaving UPS with the remaining volume.”
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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