The Dow Jones Industrial Average continues to fall away from its recent push towards the 27,000 level. Investors were taking a pause or looking for stocks to sell after Friday’s strong job numbers called into question the likelihood of multiple Federal Reserve rate cuts this year. We will know more when Fed chairman Jerome Powell gives his semi-annual testimony to Congress starting on Wednesday.
As a reminder, the economy added 224,000 new jobs in June as wages rose at a 3.1% annualized rate. Before the jobs report, the futures market had assigned a 26% chance of a 0.5% rate cut. Now, those odds are at zero.
Wall Street is also waiting for actual progress on the renewed U.S.-China trade talks, as well as indications that the troubles at Deutsche Bank (NYSE:DB) aren’t signs of more systematic problems over in the Eurozone. In response, a number of mega-cap stocks are rolling over and look headed for further losses. Here are four stocks to sell or avoid:
Stocks to Sell: 3M (MMM)
3M (NYSE:MMM) shares are dropping hard and fast away from their 50-day moving average, closing back in on its late May lows in the wake of a downgrade from analysts at RBC Capital Markets — echoing an earnings warning from German chemical maker BASF. The company is highly attuned to industrial activity globally, which is slowing.
The company will next report results on July 25 before the bell. Analysts are looking for earnings of $2.10 per share on revenues of $8.1 billion. When the company last reported on April 25, earnings of $2.23 missed estimates by 27 cents on a 5% decline in revenues.
With energy prices drifting lower, Apache (NYSE:APA) is retesting its late May lows and looks set for a drop back to its late December lows near $24, which would be worth a loss of nearly 8% from here. The tensions in the Persian Gulf with Iran and a recommitment by OPEC+ to keep production low haven’t been able to push energy prices back up — weighing on the entire energy sector.
The company will next report results on July 31 after the close. Analysts are looking for earnings of 25 cents per share on revenues of $1.7 billion. When the company last reported on May 1, earnings of 10 cents per share missed estimates by two cents on a 6.4% decline in revenues.
Shares of DuPont (NYSE:DD) are cutting back below their 50-day moving average, heading for a return to their May lows, which would be worth a loss of roughly 10% from here. This continues a downtrend that has been in play since January 2018, capping a loss of more than 30% overall.
The company will next report results on Aug. 1 before the bell. Analysts are looking for earnings of 87 cents per share on revenues of $5.6 billion. When the company last reported on May 2, earnings of 84 cents per share missed estimates by a penny on an 8.7% decline in revenues.
Shares of Fastenal (NASDAQ:FAST), which are directly tied to industrial activity via its sales of screws and other fasteners, is breaking down out of a three-month consolidation range in what looks like a return to its May lows. This comes as the 50-day moving average proves to be intractable resistance. A violation of the 200-day moving average would set up a fall all the way back to its December low.
The company will next report results on July 11 before the bell. Analysts are looking for earnings of 37 cents per share on revenues of $1.4 billion. When the company last reported on April 11, earnings of 34 cents per share beat estimates by a penny on a 10.4% rise in revenues.
As of this writing, William Roth did not hold a position in any of the aforementioned securities.