Stock Market Falls Broadly, But Twitter Climbs As Elon Musk Nears Deal

A sell-off in the U.S. stock market resumed Monday morning, with the S&P 500 off more than 1%. But Twitter (TWTR) rallied as Elon Musk’s bid for the company neared an agreement.

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Twitter was a big mover, up nearly 4% in heavy trading. The social media company is in advanced talks on a sale to Tesla CEO Musk, and a deal could be finalized Monday, The Wall Street Journal reported. The deal is valued at $43 billion.

Twitter initially balked at the offer and set up a poison pill plan to thwart it. But since Musk announced financing arrangements for the deal, Twitter’s board has warmed up to it, the Journal said.

The S&P 500 fell 1.2% though it bounced modestly from opening lows. The Nasdaq composite was down 0.7%. Last week’s resistance at the 50-day moving average turned out to be the tipping point that killed a nascent rebound.

The Dow Jones Industrial Average fell 1.1%. A breakout for Dow component Verizon Communications (VZ) has failed after shares fell more than 7% below the 54.80 buy point. Chevron (CVX) gapped below its 50-day line in active trading.

But Coca-Cola (KO) rose nearly 2% in big volume, hitting a new high, after the company beat first-quarter expectations and gave a bullish outlook.

Stock Market Volume Rises, Breadth Weakens

Compounding losses, volume rose sharply on the NYSE and Nasdaq compared with the same time on Friday. Declining stocks led advancers by a 4-to-1 ratio on the NYSE, and by 2-to-1 in the Nasdaq.

As bad as U.S. stock market losses were, they paled in comparison with China.

The Shanghai Composite plummeted 5.1% in the largest one-day drop for the index since Feb. 3, 2020. The mainland China index is now down nearly 52% from its record high in October, 2007, and made its lowest close since June 15, 2020, according to Dow Jones Market Data.

The Hong Kong Hang Seng plunged 3.7% Monday. Its 7.7% five-day decline is the largest since March 15. In Tokyo, the Nikkei 225 Index fell 1.9%.

IShares China Big Cap ETF (FXI) fell 2.3%. KraneShares China Internet ETF (KWEB) extended a slide with a 1.6% drop.

China Stock Market Plummets

Chinese shares came under more selling as authorities impose lockdowns in many cities, and residents of the capital, Beijing, prepared for a possible lockdown. The Covid wave comes on top of a regulatory crackdown and other issues hitting the Chinese economy.

The Chinese lockdowns are a big reason why the price of U.S. crude oil fell more than 5%, to $96.68 a barrel. It’s the first time oil trades below $100 a barrel since April 13.

Energy Select Sector SPDR (XLE) slid 5%, gapping below its 50-day moving average. The ETF is also below the 80.32 buy point of a flat base it cleared last week.

The Innovator IBD 50 ETF (FFTY) tumbled 2.3%. But new member Silicon Motion (SIMO) soared 7.5% in huge volume after Bloomberg reported the memory-chip maker is exploring a sale. A deal could be valued at $2.7 billion. The stock is forming a cup base but remains 14% away from the 96.99 buy point.

Nearly every IBD 50 stock was down. Costamare (CMRE) gapped below its 50-day line in heavy volume and is close to again erasing gains of more than 20% from its last buy point.

Marriott International (MAR) fell below the 179.40 buy point it topped April 14. Carlisle (CSL), National Storage (NSA) and Harmony Biosciences (HRMY) are some of the stocks falling back below buy points.

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