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Dow Jones Falls As CDC Reverses Mask Policy; Apple Earnings Due; Tesla Falls As UPS Stock Dives

The Dow Jones Industrial Average fell as the CDC got set to recommend 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 in earnings, with Lucid Motors (LCID) also dipping.




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CDC To Recommend Indoor Masking For Vaccinated People

It was widely reported that the Centers for Disease Control and Prevention is set to recommend fully vaccinated people once again wear masks indoors again in places with high Covid-19 transmission rates.

The move 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.

The CDC is slated to hold a briefing of the matter at 3 p.m. ET.

Nasdaq Dives As Growth Stocks Are Mauled

The Nasdaq struggled the most out of the major indexes, falling around 1.3% with an hour to go in the regular session. China stock Pinduoduo (PDD) was the biggest laggard, falling almost 11%.

The S&P 500 fared better, but still sank 0.7%. It had been sitting at record highs. Food processing giant Lamb Weston (LW) was the biggest laggard, falling almost 13% on earnings.

The VIX, popular measure of the stock market’s expectation of volatility based on S&P 500 index options, was up almost 10%. But the index was off highs for the day.

U.S. Stock Market Today Overview

Index Symbol Price Gain/Loss % Change
Dow Jones (0DJIA) 34991.31 -153.00 -0.44
S&P 500 (0S&P5) 4390.55 -31.75 -0.72
Nasdaq (0NDQC ) 14618.56 -222.15 -1.50
Russell 2000 (IWM) 217.35 -2.84 -1.29
IBD 50 (FFTY) 44.25 -1.17 -2.58
Last Update: 2:48 PM ET 7/27/2021

The S&P sectors were mostly red, with utilities and real estate making the best gains. Technology and consumer discretionary were the biggest laggards

Small caps were getting mauled by the bears, with the Russell 2000 falling more than 1.2%.

But it was growth stocks that fared worst of all. The Innovator IBD 50 ETF (FFTY) was down 2.6%. It comes after an 8.7% jump last week.

Dow Jones Dips, Apple Earnings Due

The Dow Jones Industrial Average was faring best out of the major indexes, but still fell 0.4%.

Apple was one of the worst performing components, slipping almost 2%. The stock is extended past a cup buy point of 137.17, MarketSmith analysis shows.

It comes as the iPhone maker gets set to report earnings after the close. Apple earnings are expected to rise 54% to $1.01 a share, according to Zacks Investment Research. Revenue is seen rising 23% to $73.1 billion.

Microsoft Stock, Alphabet Dip Ahead Of Report

Microsoft was down more than 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.

Microsoft earnings are due after the close, with analysts expecting the software giant to earn $1.91 per share on revenue of $44.1 billion.

Google parent Alphabet is also set to report after the close. GOOGL stock was down almost 2%.

Analysts estimate EPS will jump 90% to $19.21 with gross revenue jumping 46% to $56.02 billion. Analysts project 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 reversed for losses of more than 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 was managing 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 stock dipped around 4%, 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% in its first day of trading.

UPS Stock Sinks

UPS stock took a dive, despite the fact it managed to best second-quarter earnings views.

The stock gapped down, and was still giving up more than 7%. This caused the stock to fall through the floor of a flat base, MarketSmith analysis shows.

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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