Dow Jones Futures Fall With Global Markets: FANG Stocks Haven't Done This Since April (2024)

Dow Jones futures fell modestly Monday morning, along with S&P 500 futures and Nasdaq futures, as global markets continued to slide. Last week, tech and growth stocks suffered sharp losses as the market uptrend came under pressure. The Dow Jones held up reasonably well, but the S&P 500 index tested its 50-day line and the Nasdaq composite plunged below that key support. Amazon.com (AMZN) and Netflix (NFLX) also undercut their 50-day averages last week, joining Facebook (FB) and Google-parent Alphabet (GOOGL).

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It's the first time all four FANG stocks have been below their 50-day lines at the same time since late April. All four dipped before the open in Monday's stock market trading.

Dow Jones Futures Today

Dow Jones futures fell 0.2% vs. fair value. S&P 500 futures lost a fraction. Nasdaq 100 futures retreated 0.1%. Remember that Dow futures and other overnight action don't necessarily translate in actual trading in the next regular session. The U.S. bond market is closed Monday for Columbus Day.

The Shanghai composite fell 3.7% Monday after Chinese markets were closed last week for holidays. Hours earlier, China's central bank cut banks' reserve requirements for the fourth time in 2018. China's economic growth is slowing, in part due to an escalating Trump trade war with Beijing.

Other Asian markets also retreated. European bourses also were lower. Italian stocks and bonds sold off as the populist government once again seemed headed for a budget showdown with the European Union.

Brazil Stocks Soar After Election

In Brazil's presidential election, right-wing Jair Bolsonaro will face off vs. left-wing Fernando Haddad in an Oct. 28 run-off. With virtually of the Sunday's votes counted, Bolsonaro has 46%. Haddad, who hails from the Workers Party and is a former mayor of São Paulo, took 29%.

Brazil ETFs rallied sharply early Monday amid hopes that Bolsonaro, who has recently adopted a pro-market platform, can win decisively and enact pension and other reforms as Brazil heads toward a long-term budget crisis. Brazil's Bovespa has been rallying recently on expectations of Bolsonaro victory. But his authoritarian streak worries many.

FANG Stocks Break Support

Amazon stock on Thursday and Netflix stock on Friday fell below their 50-day moving averages. Google stock, which had been hitting resistance at its 50-day line, slid 3.3%. Facebook stock continued its sharp correction, losing 4.3% to a fresh 5-month low. Facebook's relative strength line, which tracks a stock's performance vs. the S&P 500 index, is at its worst level in 19 months.

Amazon stock is only 8% off its all-time high, and as of Friday's close has a new flat base. A couple of strong days and Amazon could be setting up for a breakout. Netflix and Google stock technically are in consolidations as well, though they are far from potential buy points. Only Facebook stock looks broken.

Still, the FANG stocks, along with Apple (AAPL), have been huge stock market drivers over the last several years. If the FANG stocks are on the sideline, that's not a great sign for the Nasdaq or the stock market in general.

Apple Stock, Rail, HMO Groups Hold Up

On the bright side, Dow Jones stock Appledipped just 0.6% last week, with some distance from the 50-day line. Apple stock did fall 3.3% on Thursday-Friday. Apple stock edged lower early Monday.

Meanwhile, the Transportation-Rail group gained ground last week, the only in the top 25 industries to rise out of the 197 that IBD tracks. The Medical-Managed Care group just edged lower, with Centene (CNC) and UnitedHealth (UNH) among those setting up buy points.

IBD'S TAKE: Read IBD's The Big Picture column each day to stay on top of the market direction, a key indicator that lets you know when you can be aggressive and when you should move to the sidelines.

Chip, Software Sectors Big Losers

But the bad far outweighed the good. The software sector has the top market performer in 2018. But last week eight software groups fell more than 5% last week. The other two lost more than 3%.

Many top software stocks, as well as other leaders, broke below buy points or support levels.

The Philadelphia Semiconductor Index plunged 3.7% last week, hitting a three-month and crashing through its 200-day moving average. The Philly Sox's RS line is at a 52-week low.

When the market goes south, most stocks also decline, even top stocks. That's why understanding the overall market direction is so key. Pay close attention to the action of the major market averages and leading stocks.

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