Dow Jones futures fell sharply Friday morning, along with S&P 500 futures and Nasdaq futures, as the post-Fed sell-off continues. The Dow is on track to undercut its June lows.
The stock market closed lower Thursday, with resilient growth leaders selling off as Treasury yields skyrocketed.
Tesla, Celsius Holdings, Shockwave Medical, Enphase Energy and On Semiconductor are five holdout stocks that are now coming under heavy pressure.
These stocks haven't broken down, yet. It's possible that the recent action will end up being bullish shakeouts and tests of key support. But anyone who bought these names in the prior couple of sessions is sitting on decent losses, with the risk that these holdouts will break down in the coming days.
CELH stock and Shockwave Medical are on the IBD Leaderboard watchlist. Tesla stock, Celsius, Shockwave, Enphase Energy are all on the IBD 50. ENPH stock and Onsemi are on the IBD Big Cap 20.
Key Earnings
FedEx released official first-quarter results during Thursday's session after last week announcing disastrous preliminary figures and pulling guidance amid global economic weakness. On Thursday, FedEx announced higher package rates and announced cost-cutting measures to save $2.2 billion to $2.27 billion in fiscal 2023. The shipping giant stuck with fiscal 2025 EPS and sales targets.
FDX stock rebounded to edge up 0.8% to 154.41 on Thursday, after hitting a fresh two-year low intraday.
Costco Wholesale reported earnings late Thursday.
Costco earnings and sales narrowly topped fiscal fourth-quarter views. The warehouse giant said there are no plans to hike membership fees right now, despite some speculation that an announcement could come Thursday. Most of Costco's profit comes from membership fees.
COST stock fell modestly early Friday. Shares dipped 1.2% to 487.17 in Thursday's session, hitting a two-month low.
Dow Jones Futures Today
Dow Jones futures declined 1.1% vs. fair value. S&P 500 futures fell 1.2% and Nasdaq 100 futures slumped 1.2%.
Futures are signaling that the Dow Jones will undercut its June lows. The S&P 500 and Nasdaq are racing toward those lows, but aren't quite there.
The 10-year Treasury yield leapt 7 basis points to 3.78%, which would be a 12-year high. But that's off morning highs of 3.82%.
Crude oil futures fell more than 3%. Copper futures tumbled 4%.
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 Thursday
The stock market fell sharply intraday, led by techs and small caps, as Treasury yields spiked higher. The Dow Jones turned positive in the afternoon, but faded again into the close.
The Dow Jones Industrial Average slid 0.4% in Thursday's stock market trading. The S&P 500 index lost 0.85%. The Nasdaq composite retreated 1.4%. The small-cap Russell 2000 skidded 2.3%.
U.S. crude oil prices edged up 0.7% to $83.49 a barrel, well off morning highs. U.S. natural gas prices tumbled 8.9% to a two-month low.
The 10-year Treasury yield spiked 20 basis points to 3.71%, the highest since February 2011.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF skidded just over 3%. The iShares Expanded Tech-Software Sector ETF gave up 1.5%. The VanEck Vectors Semiconductor ETF lost 2.8%.
SPDR S&P Metals & Mining ETF dipped 0.4%. SPDR S&P Homebuilders ETF shed 2.1%. The Energy Select SPDR ETF was down 0.4%. The Health Care Select Sector SPDR Fund rose 0.5%.
Reflecting more-speculative story stocks, ARK Innovation ETF slumped 4.3% and ARK Genomics ETF 2.8%. Tesla stock is a major holding across Ark Invest's ETFs.
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CELH Stock
Celsius stock tumbled 8.5% on Thursday to 89.90, breaking below its 50-day line for the first time in three months and undercutting the low of its recent consolidation. That's after CELH stock sank 3.9% on Wednesday. The energy drinks leader is entitled to take a breather after tripling from early May to late August. In another couple of weeks, CELH stock could have a new base, with a 118.29 buy point.
Its relative strength line is just below record highs. The risk is that this relative winner turns into an absolute loser.
Shockwave Stock
SWAV stock plunged 9.1% to 258.84 on Thursday, sinking to its 50-day moving average. On Wednesday, shares of the medical products firm fell 1.85% after reversing lower from an intraday high 300.96. Perhaps this is where Shockwave stock can find support and rebound bullishly.
ENPH Stock
Enphase stock slumped 6.9% to 283.63, knifing below its 21-day line and testing its 10-week line for the first time since July. On Wednesday, shares dipped just 15 cents but after hitting 318.49 intraday. This could be a place for Enphase stock to find its footing. The RS line for Enphase stock has just dipped after hitting new highs for weeks.
ON Stock
On Semiconductor stock fell nearly 5% to 64.96, breaking below its 50-day line for the first time in two months and just undercutting recent lows. Intraday Wednesday, ON stock rose to 71.77, briefly flashing various buy signals before reversing lower for a 0.2% loss.
Tesla Stock
Tesla stock sank 4.1% to 288.59, below its 200-day line and finding support at its 50-day line. On Wednesday, shares sank 2.6%, reversing lower from 313.80 intraday. This could be a healthy shakeout, assuming TSLA stock can hold around current levels. At Friday's close, its recent short consolidation will be a proper base within a much-larger pattern. The buy point would be 314.74, but on a weekly chart will have a handle with a slightly lower entry of 313.90.
Meanwhile, Tesla appears to be having demand issues in China, partly due to stepped-up Shanghai production. With the BYD Seal deliveries just a few weeks in and the Nio ET5 kicking off on Sept. 30, the China EV market bears close watching for TSLA stock investors.
Tesla Vs. BYD: Which EV Giant Is The Better Buy?
Stock Market Analysis
The stock market correction continues to worsen, with the Dow Jones and other major indexes moving closer to their June lows, definitely losing sight of their 50-day moving averages.
Could the stock market get a bounce? Sure.
Treasury yields might need to cool off somewhat for equities to rebound. It wouldn't be surprising for yields to pause or even pull back over a few days or even weeks. But the underlying forces pushing up Treasury yields remain.
The Fed is raising rates aggressively, and it's going to keep raising rates and leave them high even as policymakers send stronger signals that the U.S. risks a clear-cut recession in 2023.
That's just a difficult environment for stocks. Perhaps if inflation starts to rapidly cool, markets might start to back off rate hike forecasts. But that will be weeks away. And inflation might cool because the economy is weakening further.
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What To Do Now
The stock market correction is getting worse. There is a very real danger that the major indexes break to fresh lows. Holdout stocks such as Shockwave, Celsius, Tesla and Enphase are coming under growing pressure.
Investors should not get excited by a strong market open, an intraday rally, or even a day or two of solid gains. That can be hard, because some of the stocks mentioned in this article will likely make big moves when the market bounces.
Still, investors should wait for real signs of market strength via a follow-through day. Even then, there would be good reasons to be cautious.
Keep working on watchlists. Focus on relative strength, even if the charts look damaged.
Eli Lilly and other drugmakers, along with some biotechs, are showing some strength.
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Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
