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Crude Oil Price Climbs, Stock Futures Slide As Syria Intensifies

Crude oil price gains. Mr. Zuckerberg goes to Washington. A Tesla (TSLA) price target cut. Rising momentum toward a U.S. military strike on Syria. All factored into a sharp pullback in U.S. stock futures and weak trade across global stock markets early Wednesday.

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Stock futures for the Dow Jones industrial average swooned 1%, and S&P 500 futures dropped 0.9% in premarket trading. Almost half of the Dow’s 30 blue chip components fell more than 1%. On the S&P 500, Fastenal (FAST) fell hardest following its fiscal first-quarter report. Retailer TJX (TJX) posted the index’s strongest premarket gain.

Nasdaq stock futures dropped 0.8% below fair value, with Fastenal and Tesla leading the early declines.

A powerful market rally on Tuesday left the Dow, S&P 500 and the Nasdaq with gains in five of the past six sessions. That has led to an improving market status as the three indexes climb off a test of support at their 200-day moving averages.  Markets remain volatile and quick to turn on a headline. In addition, all three benchmark indexes face an upcoming test of resistance at their 50-day moving averages. The Dow Jones ended Tuesday 1% below its 50-day line. The Nasdaq and S&P 500 were each 2% below that level.

The Trump administration pressed allies to support military action vs. Syria in response to a chemicals weapons attack reported on Saturday, various news reports said on Wednesday. Both the U.S. and France had reportedly positioned ships armed with cruise missiles in the eastern Mediterranean Sea.  A tweet from President Trump warned Russia of a pending missile attack in Syria, where the Kremlin maintains a broad military stance in Syria, supporting the country’s embattled president, Bashar al-Assad.

Crude oil prices continued higher, with West Texas Intermediate up 1.5% and above $66 per barrel early Wednesday, after rallying nearly 4% on Tuesday. Tension in Syria has kept upward pressure on crude, despite the release late Tuesday of data showing a surprise build-up in crude inventories during the week ended April 6. The Energy Information Administration reports its weekly oil inventory estimates at 10:30 a.m. ET.

Wednesday’s leading economic news is the release of minutes from the Federal Open Market Committee’s March 20-21 meeting. The Labor Department reports March consumer prices at 8:30 a.m. ET.

Facebook, Tesla, Fastenal, TJX, Viper In Early Motion

Facebook will again be tested Wednesday, as co-founder and Chief Executive Mark Zuckerberg goes before the House Energy & Commerce Committee. Investors felt Zuckerberg performed well in his first Senate hearing on Tuesday, sending Facebook shares up 4.5% in powerful trade. That put the stock 11% above a late-March low, but still down 15% from its Feb. 1 high and below its converged 10- and 40-week moving averages. Facebook stock futures slumped 0.7% in premarket trading.

Tesla stock futures skidded 1.5% lower after a Goldman Sachs note lowered the stock’s price target to 195, from 205 — 36% below the stock’s closing price on Tuesday. The note projected the company would find itself forced to go to markets for additional capital before the end of the year, counter to the guidance offered by company chief, Elon Musk. Musk tweeted for investors to “Place your bets” following the note’s release. Goldman held its sell rating on the stock.

Tesla shares ended Tuesday up 25% from an April 2 low, but still well below their 10- and 40-week levels of support.

Industrial supplies distributor Fastenal slumped more than 4% after reporting a narrow miss in its Q1 earnings. The stock had climbed 46% in August through January. But it stalled, consolidating below resistance near 58.

Framingham, Mass.-based retailer TJX vaulted nearly 5% in premarket trading. The stock is climbing the right side of a 19-month consolidation, meeting resistance as its attempts to move to new highs.

Among IBD 50 stocks, Viper Energy (VNOM) finagled a 1.5% gain. The oil-patch landowner is battling to clear a 26.29 buy point in a nine-week cup base.

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