Dow Jones futures fell Wednesday morning, along with S&P 500 futures and Nasdaq futures, as soaring U.K. inflation sent Treasury yields running up. Target reported weaker-than-expected second-quarter earnings before the open.
The stock market rally had a mixed Tuesday, with the major indexes backing off afternoon highs as the S&P 500 came within one point of its 200-day moving average.
Walmart and Home Depot earnings lifted the Dow and many retailers, with Costco Wholesale, AutoNation and Penske Automotive clearing buy points.
Antero Resources and EQT Corp. topped buy points as natural gas prices soared.
Tesla briefly cleared an aggressive entry Tuesday morning, but TSLA stock reversed slightly lower with the Nasdaq.
Tesla CEO Elon Musk tweeted Tuesday night that he was going to buy the Manchester United soccer club, later clarifying that he was joking. Manchester United stock still rose early Wednesday.
Costco stock was added to IBD Leaderboard and SwingTrader.
The video embedded in this article discussed the market action and analyzed AR stock, Costco and Insulet.
Dow Jones Futures Today
Dow Jones futures fell 0.55% vs. fair value. S&P 500 futures sank 0.75%. Nasdaq 100 futures declined 0.8%.
U.K. inflation hit 10.1% in July, well above views and a 40-year high.
The 10-year Treasury yield jumped 9 basis points to 2.91%. Markets are now leaning toward another 75-basis-point hike in late September.
Mortgage applications fell last week to their lowest level since 2000. The Commerce Department releases July retail sales data at 8:30 a.m. ET. At 2 p.m. ET, the Federal Reserve will release minutes from its late July Fed meeting.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Key Earnings Wednesday
Early Wednesday, Target reported Q2 EPS well below views as the discounter sold off unwanted inventory. Total revenue was in line but same-store sales fell short. Lowe's topped on EPS but missed on sales.
Analog Devices topped fiscal Q3 estimates and guided slightly higher. Zim Integrated Shipping missed on Q2 EPS and sales, though the oceangoing container shipper reaffirmed some full-year guidance.
TGT stock fell modestly in premarket trading after Tuesday's 3.9% gain on Walmart results. Lowe's stock rose modestly, signaling a move to its 200-day line after testing that key level Tuesday.
ADI stock, which had been moving up the right side of a base, fell slightly. ZIM stock declined solidly, signaling a sharp drop below key moving averages.
BBBY Stock Leads Meme Mania
Meanwhile, Bed Bath & Beyond continues to skyrocket amid revived interest in this meme stock. BBBY stock shot up 29% to 20.65 in record volume, though that's after vaulting to 28.60 intraday. Bed Bath & Beyond, which in the real world is a money-losing housewares retailer with fast-falling sales, is up 355% from a July 27 low of 4.54.
BBBY stock jumped more than 30% early Wednesday.
Ryan Cohen, chairman of original meme stock GameStop, disclosed Tuesday that he still owns Bed Bath & Beyond shares and hefty call options for BBBY stock betting on prices from 60-80.
GME stock popped 6.3% Tuesday, adding a modest gain in premarket trade.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally Tuesday
The stock market rally was mixed for much of the morning and turned broadly higher in the afternoon before fading again.
Dow Jones giants Walmart and Home Depot beat second-quarter views early Tuesday. In a huge relief for markets, Walmart did not slash guidance for the rest of the year.
The Dow Jones Industrial Average rose 0.7% in Tuesday's stock market trading, with WMT stock up 5.1% and Home Depot rising 4.1%. The S&P 500 index climbed 0.2%. The Nasdaq composite dipped 0.2%. The small-cap Russell 2000 closed just below break-even.
U.S. crude oil prices reversed lower, sinking 3.2% to $86.53 a barrel, the lowest close since late January. U.S. natural gas futures jumped 6.9% to the highest close in 14 years. Energy prices continued to spike in Europe, spurring more demand for LNG exports.
The 10-year Treasury yield rose 3 basis points to 2.82%.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF fell 1.3%, while the Innovator IBD Breakout Opportunities ETF edged up 0.4%. The iShares Expanded Tech-Software Sector ETF slipped 0.6%. The VanEck Vectors Semiconductor ETF retreated 1.1%.
SPDR S&P Metals & Mining ETF climbed 0.9% and the Global X U.S. Infrastructure Development ETF advanced 0.6%. U.S. Global Jets ETF ascended 0.9. SPDR S&P Homebuilders ETF climbed 1%. The Energy Select SPDR ETF dipped 0.2% and the Financial Select SPDR ETF rose 0.7%. The Health Care Select Sector SPDR Fund dipped 0.3%.
Reflecting more-speculative story stocks, ARK Innovation ETF fell 2.8% and ARK Genomics ETF 3.9%. Tesla stock is still a major holding across Ark Invest's ETFs.
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Tesla Stock
TSLA stock dipped 0.9% to 919.69 on Tuesday. Intraday, shares hit 944, just topping a 940.92 aggressive entry from a way-too-low handle. Tesla stock soon reversed lower with the Nasdaq and highly valued growth, but held support at the 200-day line.
Shares fell slightly early Wednesday.
Musk Scores An Own LOL
Tuesday night, Tesla CEO Elon Musk tweeted that "I'm buying Manchester United ur welcome." The world-famous Manchester United soccer team is publicly traded on the NYSE. The general consensus was that Musk was probably joking, but you never know with the world's wealthiest troll.
As it turns out, Musk clarified that it was a "long-running joke," stating that he's not buying an sports teams.
Joking about buying a publicly traded company might upset the SEC, but it all happened outside of even extended trading. Still, MANU stock rose 3% before the open.
The Manchester U tweets came as Musk is trying to get out of a deal to buy Twitter for $44 billion, or $54.20 a share.
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Stocks In Buy Zones
Costco stock rose 1.3% to 553.02, just clearing a 552.81 cup-with-handle buy point. COST stock rallied on strong Walmart earnings and reaffirmed second-half guidance. But Costco stock edged lower Wednesday morning following Target earnings. Smaller rival BJ's Wholesale on Thursday also could swing COST stock.
AutoNation stock vaulted 7.3% to 132.49, blasting above resistance from the past few months in above-average volume. Intraday, shares topped the official buy point of 133.58 from a nine-month consolidation. The relative strength line hit a new high, reflecting AutoNation's outperformance vs. the S&P 500 index. AN stock seems right at the edge of being extended from the more-actionable 125-126 area and especially moving averages.
Penske Automotive stock leapt 5.6% to 124.16, breaking out past a cup-with-handle buy point of 121.55. Volume was above average for PAG stock.
EQT stock popped 4.3% to close at 47.19, clearing a 46.81 cup-with-handle buy point, according to MarketSmith analysis. Shares edged up after hours.
Antero Resources stock rose 4.2% to 40.55, but closed in the lower half of Tuesday's range. AR stock hit 42.16 intraday, briefly topping a 41.05 buy point from a handle that's slightly too low to be valid.
EQT and Antero rallied early Wednesday, with natural gas prices continuing to climb.
Market Rally Analysis
The stock market rally shrugged off some mixed early weakness to close higher. The Dow Jones, which just crossed its 200-day line on Monday, led the way with a fifth straight gain. The Russell 2000, which ticked past that long-term average on Friday, tested and held it Tuesday.
The S&P 500 nearly reached the 200-day line before slipping back. But it was not an emphatic rejection for sure.
The Nasdaq has a little distance to reach the 200-day.
Growth stocks arguably are due for a breather.
There also may be some rotation into "real economy" sectors such as energy and commodities, retail and even some transportation names.
But growth gave up ground grudgingly. The Nasdaq, down more than 1% in the morning, rebounded to modestly positive before slipping to finish slightly in the red. ARKK and speculative growth names retreated somewhat.
Meanwhile, BBBY stock shows that speculative meme mania is bubbling up again.
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What To Do Now
The stock market rally is hovering around a key resistance area, with some rotation, at least in the short run, toward natgas, retail and other real economy names.
Investors should continue to be cautious about adding exposure. If you add, say, EQT stock or Costco, that's fine, but don't pack your portfolio with natgas and retailers.
Perhaps this week's winners will continue to run and lead for some time. Or the Nasdaq could quickly take charge again. Or the market rally could see a noticeable pullback to the 21-day line.
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