Dow Jones futures fall, yields approach key Fed levels, inflation worries; Tesla, HubSpot in focus

Dow Jones futures fell early Friday, along with S&P 500 futures and Nasdaq futures, as Treasury yields continued to rise amid inflation worries and a Fed rate hike. Applied Materials, Deere and DoorDash were the key earnings overnight




X



The stock market rally slowed on Thursday amid a hot wholesale inflation report. The Dow Jones and other major indexes cut early losses but then returned to session lows due to hawkish statements from Federal Reserve politicians and a sell-off in hot Tesla shares. Tesla (TSLA) is recalling more than 362,000 vehicles due to defects in full autonomous driving that could have led to accidents.

But overall, the leading stocks continued to perform well.

Applied materials (AMAT), hubspot (HABS), DoorDash (RUSH UP), Dropbox (DBK), Shockwave Medical (SVAV), Texas roadhouse (TXRH) and Vail (VALE) were notable earnings reports after Thursday’s close.

Deer (DE) reported early Friday.

Dow Jones futures today

Dow Jones futures fell 0.5% relative to fair value. S&P 500 futures were down 0.7%. Nasdaq 100 futures fell 0.9%.

The yield on the 10-year Treasury rose 5 basis points to 3.89%, approaching 4% again, albeit below morning highs.

The dollar continued to rise along with Treasury yields.

Crude oil futures fell more than 3%. Copper prices fell by more than 1%.

Remember that overnight action in Dow futures and elsewhere does not necessarily translate into real trading in the next regular stock market session.

Key Income

Shares of AMAT rose 2% in premarket trading after Applied Materials’ earnings beat financial quarter guidance late Thursday, while the chip maker’s Q2 guidance topped the midpoint. Shares of Applied Materials fell 3.4% to 115.41 on Thursday. This is again below the base buy point of 116.19, although AMAT could bring it back on Friday.

Shares of HUBS surged 12% after hours, signaling a breakout as HubSpot’s earnings far outpaced earnings. Shares in the marketing software maker fell 1.5% to 361.93 on Thursday. According to MarketSmith analysis, HubSpot stock has a cup-and-handle base with a buy point of 399.65.

DASH shares rose 5% early Friday after DoorDash posted larger-than-expected losses. But revenue surpassed it, while the food delivery app giant also gave a rosy outlook and announced a $750 million buyout. Shares of DoorDash fell 1.9% to 66.89 on Thursday. DASH shares recently bottomed out, retracing the 200-day line.

DBX stock was virtually unchanged in extended action as Dropbox’s earnings just surpassed it. Shares of Dropbox fell 0.9% Thursday to 23.96, just below the cup-and-handle buy point at 24.19.

SWAV’s stock rose 5% at the end of the promotion as Shockwave’s profits cut viewership while revenue stagnated. Shockwave shares fell 4 cents on Thursday to 191.24, not far from its 50-day line but still some distance from its 200-day moving average.

Shares of TXRH fell 5% in overnight trading, signaling a move below a recent buy point as Texas Roadhouse’s earnings and revenue tumbled. Shares of TXRH rose 0.8% to 105.15 on Thursday, still in a range from 101.85 on a fixed entry.

Shares of Brazilian mining giant Vale tumbled after the release of fourth-quarter results. Vale shares closed up 0.2% through September 17. The stock was recently up 12% from a buy point of 17.19 for a cup with a handle. Investors can use a move above the 50-day line, which is roughly the same as the previous buy point, as an entry.

DE shares rose 3% early Friday as Deere’s earnings and revenue topped fiscal first quarter estimates and are projected higher into 2023.


Join IBD experts as they analyze valuable stocks in the stock market rally in IBD Live.


stock market rally

The stock market rally opened lower on the back of a strong producer price index and lower-than-expected jobless claims. This continues the trend of generally strong economic data, including Tuesday’s CPI inflation report. The major indexes rose from their lows but fell again in the last hour of trading.

Louis Fed President James Bullard said he favored a 50 basis point rate hike in the future. This comes after Cleveland Fed President Loretta Meister said she favored a half-point rate hike at the latest Fed meeting. TSLA stock was also a possible catalyst for the afternoon’s decline.

The Dow Jones industrial index fell 1.3% in stock trading on Thursday. The S&P 500 fell 1.4%. The Nasdaq Composite Index fell 1.8%. Small-cap Russell 2000 shares fell almost 1%.

US crude oil prices fell 0.1% to $78.49 a barrel.

Copper prices jumped 2.8%.

The 10-year Treasury yield rose 3 basis points to 3.84% after hitting 3.87% on the day. The 10-year Treasury yield is at a 2023 high, up from the Feb. 2 low of 3.33%.

Bullard of the St. Louis Fed said Thursday afternoon that he is open to a 50 basis point rate hike. Bullard is one of the Fed’s most hawkish politicians, and he’s most committed to big moves. But markets are still looking for a quarter-point advance in February and March and leaning for another one in June or July.

ETFs

Among growth ETFs, the Innovator IBD 50 ETF (FFTY) fell 2.4% and the Innovator IBD Breakout Opportunities (BOUT) ETF fell 1%. iShares Advanced Technology & Software ETF (IGV) fell 2.5%. The VanEck Vectors Semiconductor (SMH) ETF fell 2.7%. AMAT shares are a notable holding of SMH.

Reflecting more speculative stocks, the ARK Innovation ETF (ARKK) shed 2.8% and the ARK Genomics ETF (ARKG) shed 2.9%. Tesla shares make up the bulk of the Ark Invest ETF.

The SPDR S&P Metals & Mining ETF (XME) was up 1%, while the Global X US Infrastructure Development ETF (PAVE) lost 1%. The US Global Jets ETF (JETS) was down 1.8%. The SPDR S&P Homebuilders ETF (XHB) was down 1.2%. Energy Select SPDR ETF (XLE), Financial Select SPDR ETF (XLF) and Health Care Select Sector SPDR Fund (XLV) were down 1%.


Top 5 Chinese stocks to watch now


Tesla FSD review

The National Highway Traffic Safety Administration said Thursday that Tesla Full Self-Driving allows a vehicle to “exceed speed limits or pass intersections in an illegal or unpredictable manner (which) increases the risk of an accident.”

About 362,758 Tesla vehicles may be affected, according to NHTSA. Tesla, which has apparently disputed some of the findings, plans to issue a recall via an over-the-air software patch.

However, Tesla has been trying to solve some of these problems for years, so it’s entirely possible that Tesla doesn’t have a solution.

CEO Elon Musk called the move a recall, saying it was “anachronistic and just plain wrong!”

It’s also unclear if this withdrawal is the start of several regulatory steps over FSD, or if it’s a limited one-time promotion.

The NHTSA is conducting a wide-ranging investigation into Tesla’s FSD driver assistance systems and Autopilot, including collisions with stationary vehicles and phantom braking. The Justice Department is conducting a criminal investigation into Tesla’s self-driving claims. But there is no timeline for when these investigations could end or if regulators will take any action against Tesla.

Musk has been saying for years that Tesla will achieve fully autonomous driving “this year.” But even FSD Beta is just a level 2 driver assistance system.

Tesla shares fell 5.7% to 202.04 on Thursday. Initially, the shares only declined, but by the close of the sale intensified. It’s not clear if TSLA’s stock was pushing the overall market down or vice versa.

But the stock was still up 2.6% on the week and nearly doubled from the January 6 bear market low of 101.81. TSLA stock was approaching its 200-day moving average, an obvious resistance area.

Overnight, Tesla raised the price of more expensive Model Y crossovers in China by $290 after raising the entry-level price by the same amount a week earlier. Those that followed the big cuts at the end of October and January 6, but may encourage more potential buyers to act rather than wait for more cuts.

As Bloomberg reported earlier this week, Tesla will shut down production at its Shanghai plant starting Sunday to prepare for an unconfirmed Model 3 refresh later this year. This follows two long stops at the end of December and the end of January.

Tesla shares fell in premarket trading.

Market Rally Analysis

The stock market rally in February alternated between stability and strength despite mixed earnings and economic data.

Major indexes fell on Thursday, but all continue to trade in the recent range since the beginning of February. The Dow has indeed fallen below its 21-day line, but is still holding the 50-day mark.

A longer pause for the market rally would be appropriate.

Several other stocks have given buy signals, for example Albemarle (ALB), Iridium (IRDM) and Cisco Systems (CSCO). Many other recent movers are holding up well, including GlobalFoundries (GFS), Arista Seti (ANET) and Monster Drink (MNST).

There were also notable losers, including Shopify (SHOP) and Toast (TOAST) for earnings. But the general trend was favorable.

Many other leaders are tuning in. If the market rally breaks out of its recent pause, many of these names are likely to break out or trigger early entries.

Be aware that a stock market rally can go from a glass half full mentality to sell-offs in the face of uneven or ugly economic data and earnings reports. A recovery in Treasury and dollar yields could be more of a challenge, with 10-year yields approaching 4%.


Market Time with IBD ETF Market Strategy


What to do now

Investors need to be prepared by building their watchlists, doing extra work with potential big winners who are on the cusp of a buying point. Doing this prep work means you can focus on the best stocks with an even mind. This will help you avoid buying an advanced one.

Don’t focus too much, be prepared to cut off the losers, and be careful when making a profit. These rules will help protect you from gaps like Thursday’s TOST stock.

Read The Big Picture every day to stay up to date on market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson to update the stock market and much more.

YOU MAY ALSO LIKE:

Why this IBD tool makes it easy to find the best stocks

Do you want to make quick profits and avoid big losses? Try SwingTrader

The Best Growth Stocks to Buy and Watch

IBD Digital: Unlock premium stock listings, tools and IBD analysis today

Tesla vs. BYD: EV Giants are fighting for the crown, but which is the better buy?

Content Source

News Press Ohio – Latest News:
Columbus Local News || Cleveland Local News || Ohio State News || National News || Money and Economy News || Entertainment News || Tech News || Environment News

Related Articles

Back to top button