Dow Jones futures fell solidly Friday morning, along with S&P 500 futures and Nasdaq futures, with the May jobs report on tap. Tesla CEO Elon Musk reportedly has frozen hiring and wants to cut 10% of staff amid "super bad" economic concerns. Tesla stock fell Friday after a solid bounce Thursday.
Apple fell modestly as the European Union moves toward legislation on a common charger standard, possibly as soon as June 7. Apple reportedly has been testing future iPhone models that would replace its Lightning charging port with the more-common USB-C connector.
The stock market rally had a strong Thursday, shrugging off a Microsoft profit warning and the Fed's No. 2 official signaling big rate hikes will continue through September.
Flex LNG, Howmet Aerospace, AAR Corp., Enphase Energy and ZIM Integrated Shipping are near buy points. FLNG stock, AAR and Howmet Aerospace cleared early buy points Thursday, while Enphase broke out. ZIM stock is setting up.
Tesla Job Cuts On 'Super Bad' Musk Concerns
Tesla is freezing hiring and needs to cut staff by about 10%, Elon Musk said in an internal email according to Reuters. That would be almost 10,000 jobs. Musk said he had a "super bad feeling" about the economy. The email, sent to executives Thursday, was titled "pause all hiring worldwide." Earlier in the week, Musk said employees should no longer work remotely.
That comes despite Tesla opening two new factories in the past few months and with the Shanghai plant finally ramping up toward capacity after covid-related restrictions.
Tesla stock fell 5% before Friday's open.
TSLA stock bounced 4.7% in Thursday's market rally. EV makers such as Xpeng were among Thursday's winners, with MongoDB and UiPath flying on earnings. All of these names still need a lot of repair work.
China EV and battery giant BYD reported record May sales, on track to seize Tesla's EV crown in the second quarter. BYD stock rose solidly, moving toward all-time highs.
Jobs Report
The Labor Department will release the May jobs report at 8:30 a.m. ET. Economists expect nonfarm payrolls to rise by 325,000 after April's 428,000. The jobless rate should dip to 3.5% with hourly earnings up 0.4% vs. April. The May jobs report follows Thursday's ADP Employment Report estimating that private payrolls rose just 128,000, far below views, with small firms cutting 91,000 jobs.
The Federal Reserve wants to see substantial cooling in the labor market to curb inflation and inflation expectations. But a half-point rate hike at the mid-June Fed meeting is baked in. Policymakers will get several months of economic data before changing course or speed.
Dow Jones Futures Today
Dow Jones futures declined 0.5% vs. fair value. S&P 500 futures lost 0.7% and Nasdaq 100 futures fell 1.1%. Apple stock is a Dow Jones, S&P 500 and Nasdaq titan. Tesla is a big S&P 500 and Nasdaq 100 component.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
ENPH stock is on IBD Leaderboard. Enphase and HWM stock are on SwingTrader. MSFT stock is on IBD Long-Term Leaders. ZIM stock is on the IBD 50. Howmet Aerospace was Thursday's IBD Stock Of The Day.
The video embedded in this article highlights Thursday's market action and analyzes FLNG stock, Enphase and Epam Systems.
Key Earnings
After the close, upscale retailers Lululemon Athletica and RH topped quarterly views, but RH gave weak guidance. Cybersecurity plays CrowdStrike and Okta topped and beat guidance. LULU stock edged higher early Friday, while RH and CRWD stock retreated modestly. OKTA stock jumped more than 15%. All four stocks are off recent lows, but a long way from being actionable.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally
The stock market rally got off to a rocky start Thursday as Microsoft warned on June-quarter earnings and revenue just before the opening bell, blaming currency swings. Not long after the open, Fed Vice Chair Lael Brainard said it's "very hard to see the cause for a pause" in September, becoming the latest policymaker to indicate that half-point rate hikes are likely for at least the next three meetings.
But the market rally soon rebounded for strong gains, led by techs and small caps. Even MSFT stock, down 4% at one point, closed up 0.8%.
The Dow Jones Industrial Average rose 1.3% in Thursday's stock market trading. The S&P 500 index advanced 1.8%. The Nasdaq composite jumped 2.7%. The small-cap Russell 2000 popped 2.4%.
U.S. crude oil prices rose 1.4% to $116.87 a barrel, after falling 3% before the open. OPEC+ will increase production quotas by 648,000 barrels per day in July and August, but less than some reports had suggested. U.S. crude oil inventories tumbled in the latest week.
The 10-year Treasury yield dipped 2 basis points to 2.91%, after surging 19 basis points in the prior two sessions.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF rose 0.9%, while the Innovator IBD Breakout Opportunities ETF edged up 0.2%. The iShares Expanded Tech-Software Sector ETF shot up 4.6%. MSFT stock is a major component. The VanEck Vectors Semiconductor ETF advanced 3.5%.
SPDR S&P Metals & Mining ETF was up 3.75% and the Global X U.S. Infrastructure Development ETF rose 2.1%. U.S. Global Jets ETF was up 1.6%. SPDR S&P Homebuilders ETF ascended 2.3%. The Energy Select SPDR ETF dipped 0.3% and the Financial Select SPDR ETF was up 1.4%. The Health Care Select Sector SPDR Fund rose 0.8%.
Reflecting more-speculative story stocks, ARK Innovation ETF flew 7.4% higher and ARK Genomics ETF was up 6.1%. Tesla stock remains the No. 1 holding across Ark Invest's ETFs, with BYD stock and XPEV stock also small holdings. Cathie Wood's ARKK also owns a lot of PATH stock.
Five Best Chinese Stocks To Watch Now
Stocks In, Near Buy Zones
Flex LNG stock jumped 7.75% to 30.04, rebounding powerfully from the 50-day line and getting above the 30 level, an area of resistance. Investors could buy FLNG stock, though it's nearly 7% above the 50-day line now. Shares are working on a 32.87 consolidation buy point, according to MarketSmith analysis.
The relative strength line for FLNG stock is at a record high. The RS line, the blue line in the charts provided, tracks a stock's performance vs. the S&P 500 index.
Howmet stock climbed 3.6% to 36.97, moving toward a 37.63 double-bottom buy point. Thursday's action pushed HWM stock above an early entry at 36.13, still in range from the 50-day line. The RS line for Howmet stock is already at a high. Howmet Aerospace makes titanium parts for the aerospace industry.
AIR stock climbed 3.2% to 50.13, bouncing from near its 50-day line and topping an early entry of 49.76. Shares are moving toward a 52.10 official buy point in a 15%-deep base. The RS line for AIR stock is at a new high.
Enphase stock surged 9% to 198.93, clearing a 193 buy point from a double-bottom base that formed in the lower part of a much-larger consolidation. The RS line for ENPH stock is well off all-time levels, but did hit a consolidation high on Thursday.
ZIM stock popped 3.2% to 66.37. Shares are in a cup base with a 75.81 buy point. But ZIM stock is working on a possible handle, though that needs a few more days. The container shipping stock is already more than 9% above its 50-day line.
Market Rally Analysis
The stock market rally had a solid bounce Thursday, despite the Microsoft warning and Fed rate-hike signals. The major indexes all found support at their 21-day lines once again.
Thursday's volume declined from Wednesday, so don't get too excited. Still, the market in the past several days has weathered or rallied on seemingly bad news.
Meanwhile, the Dow Jones and Russell 2000 are closing in on their 50-day lines, with the S&P 500 and Nasdaq not too far behind. That could serve as a temporary resistance area or spur yet another reversal toward lows. But even if the key indexes move past their 50-day lines, they still would face several other tests.
The current market rally pause this week is letting some possible handles start to form, such as with ZIM stock. Longer sideways action could be beneficial. It would let some stocks forge or finish bases and let moving averages catch up. Especially outside the oil and gas sector, there aren't that many stocks to buy. A number of stocks are setting up, but some — Atkore and ZIM come to mind — already are some distance above their 50-day lines.
Some chemicals, building materials and shipping stocks look interesting. Drug stocks are coming under pressure amid renewed buzz of possible price controls.
There were some huge moves among highly valued software stocks Thursday. MongoDB and UiPath surged 19% and 17%, respectively, on earnings. But plenty of other names powered higher, such as Datadog. But even after big percentage moves off recent bottoms, they have a long road ahead. And if the market sours, highly value growth names will be hard hit.
Time The Market With IBD's ETF Market Strategy
What To Do Now
The stock market rally had a solid session. Investors can keep nibbling on stocks, gradually adding to exposure. But in the past week many stocks have shown much-more volatile action than the major indexes, such as Albemarle. A real market sell-off could trigger major losses in would-be leading stocks. Keeping individual positions and overall exposure light is a good way to minimize losses and limit have much loss-cutting you need to do.
If the market rally has real legs, your initial positions should work and you can gradually increase exposure, generating big gains over the run.
For now, keep working on your watchlists. Energy will still be heavy in that list, but track stocks with strong relative strength across a variety of sectors.
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