U.S. equities are testing into the red as I write this on Tuesday, rolling over as the post-payroll enthusiasm fades and fears regarding Federal Reserve interest rates hikes and chaos in President Donald Trump’s administration returns.
The Dow Jones Industrial Average is stalling out once more near its 50-day moving average; setting up a possible test of its 200-day moving average and the February lows in the days and weeks ahead. Not only is the Fed decision looming, but Washington needs to iron out another budget deal before the end of the month.
With the Dow Industrials struggling, it’s worth noting that both the Dow Jones Utility Average and the Dow Jones Transportation Average are struggling as well. That sets up a possible “Dow Theory” warning signal that could spell trouble for the broad market.
Here are five key Dow stocks that are showing weakness:
Dow Theory: American Express (AXP)
American Express Company (NYSE:AXP) shares are threatening to fall back towards their 200-day moving average after losing, once more, their 50-day average.
Shares have been pressured by fears of a consumer credit card bubble, rising interest rates, and word Amazon.com, Inc. (NASDAQ:AMZN) is looking to move in on their turf by potentially issuing a small business credit card.
The company will next report results on April 18. The company is looking for earnings of $1.70 per share on revenues of $8.6 billion. When the company last reported on Jan. 18, earnings of $1.58 beat estimates by four cents on a 10.2% rise in revenues.
Dow Theory: General Electric (GE)
Where to begin with General Electric Company (NYSE:GE), which has seen its share price decimated on frustration with new management, a bad bet on traditional energy, and disappointing corporate restructuring plans.
Shares never really got a bounce off of the February low. And now, they are looking at a breakdown as analysts including JPMorgan lower their price targets.
The company will next report results on April 20 before the bell. Analysts are looking for earnings of 12 cents per share on revenues of $27.3 billion.
When the company last reported on January 24, earnings of 27 cents per share missed estimates by a penny on a 5.1% drop in revenue.
Dow Theory: Home Depot (HD)
After a big rise in late 2017 on hurricane rebuilding, Home Depot Inc (NYSE:HD) shares are languishing now in a narrowing wedge pattern with critical support at $175.
Watch for a breakdown to set up a test of the 200-day moving average. Especially since appliance sales — which will be affected by President Trump’s metal tariffs — have been a big driver of sales lately.
The company will next report results on May 15 before the bell. Analysts are looking for earnings of $2.08 per share on revenues of $25.3 billion. When the company last reported on February 20, earnings of $1.69 per share beat estimates by five cents on a 7.5% gain in revenue.
Dow Theory: Procter & Gamble (PG)
Procter & Gamble Co (NYSE:PG) shares are trading below their February panic low, falling back through the $80-per-share level, as the declining 20-day moving average continues to act as strong resistance.
Price has been hit by headwinds from store brand competition (especially upmarket, organic offerings) as well as Amazon’s decision to purchase Whole Foods Market.
The company will next report results on April 26 before the bell. Analysts are looking for earnings of $1 per share on revenues of $16.3 billion.
When the company last reported on Jan. 23, earnings of $1.19 beat estimates by five cents on a 3.2% rise in revenues.
Dow Theory: Merck (MRK)
Merck & Co., Inc (NYSE:MRK) shares are languishing within the confines of a six-month trading range after a short-lived excursion above its 200-day moving average in January.
Intense political pressure on high drug prices and the roll off of drug patent is pressuring prices. Recent earnings were disappointing amid increasing reliance on its Keytruda cancer immunotherapy drug.
The company will next report on May 1 before the bell. Analysts are looking for earnings of 99 cents per share on revenues of $10.1 billion. When the company last reported on Feb. 2, earnings of 98 cents per share beat estimates by four cents on a 3.1% rise in revenues.