U.S. stocks gain in early trade as Nike leads

U.S. STOCKS GAIN IN EARLY TRADE AS NIKE LEADS (1030 EST/1530 GMT)

Major U.S. indexes are higher in early trade on Wednesday, putting them on track for a second straight advance, buoyed by a surge in Nike shares after the athletic apparel retailer posted quarterly results.

Nike is on track for their biggest one-day percentage gain since June 2021 after posting its second-best quarterly revenue growth in more than a decade, prompting multiple analysts to boost their price targets on the stock.

Also providing a lift are Carnival Corp CCL and FedEx FDX after each posted quarterly results , with FedEx promising more aggressive cost cuts .

The gains in Nike and Carnival are helping to propel the consumer discretionary S5COND sector to a more than 1% gain. In fact, all 11 S&P 500 groups are now in positive territory, with financials SPF out front.

On the economic front, existing home sales fell for a tenth straight month to a 2-1/2 year low in November as the housing market continues to struggle with higher mortgage rates. However, consumer confidence rebounded in December as inflation has started to ebb while the labor market remains tight.

Below is an early market snapshot:

(Chuck Mikolajczak)

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NASDAQ COMPOSITE: ROUGH MONTH, TOUGH YEAR (0845 EST/1345 GMT)

It's been a rough month of December for the Nasdaq Composite IXIC. The tech-laden index is off more than 8%, putting it down nearly 33% so far this year. With this, 2022 is shaping up to be the IXIC's worst year since a 41% collapse in 2008.

Meanwhile, with just seven trading days to go in December, the IXIC is on track to end below its rising 55-month moving average (MMA) for the first time since August 2010:

The 55-MMA is a Fibonacci-based moving average, which has proven to be resilient for more than 10 years now. And despite intra-month violations in October and November of this year, the IXIC quickly snapped back to finish those months above it.

The 55-MMA now resides at 10,737, while the IXIC ended Tuesday at 10,547.

There is additional support at the 61.8% Fibonacci retracement of the March 2020-November 2021 advance at 10,291. The IXIC essentially used this level as a lunching pad for its October-November recoveries.

Thus, traders will be watching for any surprise month-end rally that can safely propel the Composite back above the 55-MMA.

That said, the upside remains challenging as since collapsing below another Fibonacci-based moving average, the 8-MMA, in January, the IXIC has been unable to score a monthly close back above it. This descending moving average now resides at 11,362.

Given that the 8-MMA and the 55-MMA are rapidly converging, the Composite, with a range breakout, may soon provide clarity as to its next significant trend.

On the plus-side, however, even as the Composite appears fragile as its slips below its 55-MMA, the Nasdaq New High/New Low index, on a monthly basis, at 17.7%, is still showing a constructive turn.

(Terence Gabriel)

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