Dow Jones futures fell modestly early Wednesday, along with S&P 500 futures and Nasdaq futures Tesla earnings loom tonight while President Joe Biden is in Israel.
The stock market rally initially slid Tuesday as Nvidia fell on tighter U.S. restrictions on AI chip exports to China. But stocks rebounded off lows to close mixed, led by small caps, despite surging Treasury yields.
Fair Isaac, Super Micro Computer, Woodward, DraftKings and Arista Networks are stocks to watch near buy points. None have imminent earnings, though Arista is less than two weeks away.
ASML kicked off earnings for chip-equipment makers early Wednesday, warning of flat 2024 sales. The Dutch chip-gear giant fell modestly Wednesday morning. Lam Research follows Wednesday night with huge customer Taiwan Semiconductor due Thursday morning.
J.B. Hunt Transport Services, United Airlines, Morgan Stanley and Interactive Brokers fell overnight in negative reactions to earnings or guidance. Travelers edged lower on weak earnings while fellow Dow Jones component Procter & Gamble rose modestly on results.
But all eyes are turning to Tesla, which reports Wednesday night. TSLA stock has held up, not far from buy points, as bulls look to future possible growth drivers.
Tesla stock, Nvidia and are on IBD Leaderboard, with DraftKings and WWD stock on the Leaderboard watchlist. FICO stock is on IBD Long-Term Leaders. Nvdia stock, Tesla, DraftKings, Super Micro and Arista Networks are on the IBD 50. Tesla, Nvidia and SMCI stock are on the IBD Big Cap 20. Fair Isaac was Tuesday's IBD Stock Of The Day.
The video embedded in the article discussed Tuesday's market action and analyzed FICO stock, SMCI and DraftKings.
Dow Jones Futures Today
Dow Jones futures fell 0.2% vs. fair value. S&P 500 futures retreated 0.4% and Nasdaq 100 futures declined 0.5%. NVDA stock dropped nearly 2%, adding to Tuesday's losses.
Chinese economic data came in stronger than expected overnight. Third-quarter GDP rose 4.9% vs. a year earlier, down from Q2's 6.3% but above views for 4.6%. September retail sales grew 5.5%, above August's 4.6% and estimates for 4.8%. Industrial production climbed 4.5%, steady vs. August but slightly above forecasts for 4.3%.
The 10-year Treasury bond yield ticked down to 4.83%.
Crude oil futures rose 2% after Iran, a key Hamas supporter, called for an embargo of Israel. Biden, in Tel Aviv, suggested Israel wasn't responsible for a blast near a Gaza hospital Tuesday.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
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Stock Market Rally
The stock market rally opened solidly lower Tuesday, thanks to Nvidia and soaring Treasury yields, fueled by surprisingly strong retail sales. But small caps roared higher while the major indexes closed narrowly mixed.
The Dow Jones Industrial Average edged higher in Tuesday's stock market trading, above the 200-day line but below the 50-day. The S&P 500 index finished just below break-even. The Nasdaq composite fell 0.2%, but well off the 1.5% morning low.
Market breadth was strong, with winners easily beating losers. New lows continue to outpace new highs, however.
The small-cap Russell 2000 turned higher a few minutes into Tuesday's session. It surged 1.1% for the day, but failed to retake the 21-day line.
The Invesco S&P 500 Equal Weight ETF gained 0.5%, outpacing the S&P 500 and retaking the 21-day line.
The First Trust Nasdaq 100 Equal Weighted Index ETF closed flat, trading narrowly between the 50-day and 21-day lines. The QQQ ETF sank 0.3%, but holding above the 50-day.
Nothing has really changed so far this week. The Nasdaq's trading on Monday and Tuesday were both within Friday's trading.
A number of leading stocks are setting up, but need the Nasdaq to get above last Thursday's high, which would mark a decisive clearing of the 50-day.
U.S. crude oil prices closed flat at $86.66 a barrel.
The 10-year Treasury bond yield surged 14 basis points to 4.85%. That's back near the 16-year high of 4.89% set on Oct. 6. The two-year Treasury yield leapt 12 basis points to 5.21%, a 17-year high.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF climbed 0.75%. The iShares Expanded Tech-Software Sector ETF gained 0.5%.
The VanEck Vectors Semiconductor ETF sank 1.2%, but slashed losses. Nvidia stock pared its big intraday loss, but still fell 4.7%. It's SMH's largest component. ASML, LRCX stock and Taiwan Semi also are big holdings.
Reflecting more-speculative story stocks, ARK Innovation ETF advanced1.7% and ARK Genomics ETF rose 1.1%%. Tesla stock is the No. 1 holding across Ark Invest's ETFs. DKNG stock also is a top-10 Ark holding.
SPDR S&P Metals & Mining ETF rallied 2.1%. SPDR S&P Homebuilders ETF edged up 0.2%. The Energy Select SPDR ETF rose 1% and the Health Care Select Sector SPDR Fund dipped 0.1%.
The Industrial Select Sector SPDR Fund climbed 0.3%.
The Financial Select SPDR ETF rose 0.5%.
Five Best Chinese Stocks To Watch Now
Stocks To Watch
Fair Isaac stock popped 3.6% to 918.29, rebounding from the 50-day line in strong volume. Shares cleared a 916.41 flat-base buy point. The relative strength line for FICO stock is at a record high, a bullish sign.
SMCI stock had an upside, outside day, rising 2.35% to 298.54 in above-average volume. Super Micro stock has a 317.50 cup-with-handle buy point. Investors might see an early entry around 300.
Woodward stock climbed 1.1% to 131.01 not far from a 133.15 flat-base buy point, according to MarketSmith analysis. Investors could use 131.49 as an early entry, with WWD stock moving above that level intraday Tuesday.
ANET stock dipped 0.7% to 195.41. Shares are working on a 198.70 cup-with-handle base. The RS line has been hitting new highs on a weekly chart. Arista earnings are due Oct. 30. Also, Arista's top customers, Meta Platforms and Microsoft, report next week.
DKNG stock rose 1.5% to 30.25, extending Monday's bounce from the 50-day. DraftKings stock has a 34.49 buy point, but investors could use the Oct. 11 high of 31.10 as an early entry, which would coincide with breaking a trendline.
DraftKings will release Q3 earnings on Nov. 2.
Tesla Earnings
Tesla earnings are due Wednesday night. Analysts have been cutting third-quarter forecasts all year, continuing after the EV giant's weak Q3 deliveries. Wall Street sees Tesla earnings per share tumbling 31% to 72 cents, which would be the lowest EPS in two years. Revenue should rise 10% vs. a year earlier, but slip vs. Q2. Gross profit margins are expected to fall further amid ongoing price cuts.
But the focus will be on the Tesla earnings call. Investors will want positive signals on gross margins, especially with price cuts continuing in October, including Tuesday's $3,650 cut on the base Model 3 in the U.K.
They'll also want to know more about the Cybertruck, including a launch date and much more. They'll also want any hints about other potential growth drivers.
Tesla stock edged up 0.4% to 2454.85 on Tuesday after another test of the 50-day line. Shares have a 278.98 cup-with-handle base. Investors could use the Oct. 10 high of 268.94 as an early entry.
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What To Do Now
The major indexes are still trading within a recent range. So are many leading stocks, many of which are forging handles in recent days.
A decisive move higher would offer a number of buying opportunities, but a decisive break lower would trigger serious concerns about a market rally that's already under pressure. It's possible that the market could move sideways until next week's big earnings reports.
Investors should consider these various scenarios, but don't bet on what might happen. This is a time for patience and preparation.
Have your watchlists ready. Look for stocks near buy points with strong relative strength. Definitely keep upcoming earnings in mind.
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