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Dow Jones Futures Awaits Fed's Preferred Inflation Report; Tesla gets up late on Elon Musk's head

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Dow Jones futures were little changed after hours, along with S&P 500 and Nasdaq futures. The Federal Reserve’s favorite inflation gauge is available Friday morning, as Tesla stock rose late on comments from Elon Musk.


The stock market suffered heavy losses on Thursday, wiping out Wednesday’s gains and more amid negative business news and economic data as well as bearish comments from billionaire investor David Tepper. Major indices broke through key levels with many top-tier stocks retreating. Stocks pared their losses, but the closing declines were still significant.

Nvidia (NVDA), Search Lam (LRCX) and other chip stocks were big losers, as the memory chip maker Micron Technology (MU) missed sights, guided low and announced staff cuts and additional capital expenditures.

the You’re here (TSLA) the collapse continued. In addition to company-specific factors, Tesla stock also fell Thursday along with other automakers CarMax (KMX) cited vehicle affordability issues for its big quarterly misfire. TSLA stock rebounded late after Elon Musk reported no new stock sales until 2023.

Other megacaps showed weakness, with Apple once again skidding to bear market lows with Amazon.co.uk (AMZN) already there. Microsoft (MSFT) pierced the key support.

Investors would largely be expected to have cash available, which would reduce the already modest exposure and greatly increase new purchases.

Third-quarter GDP growth was revised higher than expected, as was the report’s inflation gauge. Initial jobless claims rose, but less than expected. November’s index of leading economic indicators fell 1%, bolstering the case for a recession next year.

PCE inflation data

On Friday, the Commerce Department will release the Personal Consumption Expenditures Price Index for November. Inflation data is part of the monthly income and expense report.

The PCE price index would increase by 0.2% vs. October, with core prices also up 0.2%. The PCE inflation rate is expected to decline to 5.5% from October’s 6%. Core PCE inflation is expected to slow to 4.6% from 5%.

The PCE inflation rate has been the Fed’s preferred price indicator for some time. Recently, Fed Chief Jerome Powell said he was watching prices for non-housing PCE services closely.

Personal income is expected to climb 0.3% in November, with consumer spending rising 0.2%. Americans have dipped into savings and raised borrowing costs in recent months.

Dow Jones Futures Today

Dow Jones futures fell slightly from fair value. S&P 500 futures fell 0.1% and Nasdaq 100 futures were little changed, with TSLA stock providing a modest boost.

The PCE inflation rate numbers will be released at 8:30 a.m. ET. November durable goods data will also be released at that time, with November new home sales at 10 a.m. ET.

Remember that overnight action in Make futures contracts and elsewhere does not necessarily translate into actual trading over the next stock Exchange session.

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Stock market rally

The stock market rally started weakly and continued to tumble mid-afternoon. Major indexes pared their losses afterwards, but still suffered damaged losses.

The Dow Jones Industrial Average fell just over 1% on Thursday stock market trading. The S&P 500 index fell 1.45%, with Tesla and LRCX stocks the worst performers. The Nasdaq composite fell 2.2%. Small cap Russell 2000 fell 1.3%.

Apple stock fell 2.4% to 132.23, not far from its June bear market low of 129.04. Dow Jones titan Microsoft fell 2.55% below its 50-day line after holding that key level since early November. Amazon stock slid 3.4%, nearly undercutting its March 2020 Covid crash low.

Nvidia fell 7% but found support at its 50-day line.

US crude oil prices fell 1% to $77.49.

The 10-year Treasury yield fell 1 basis point to 3.67%. The yield on two-year Treasury bills, more closely linked to Fed policy, rose slightly. Markets are still expecting quarter-point rate hikes in February and March.


Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (VIG) fell 1.9%, with MSFT stock a major contributor. The VanEck Vector Semiconductor ETF (SMH) plunged 4.15%. Nvidia, LRCX and Micron stocks are notable SMH holdings, but chip weakness was widespread.

Reflecting more specific story actions, ARK Innovation ETF (ARKK) fell 3.4% to a new five-year low. Genomic ARK ETF (ARKGfell 1.1%. The TSLA share is a major asset of Ark Invest, but especially of ARKK.

SPDR S&P Metals & Mining ETF (XME) lost 1.75%. US Global Jets ETF (JETS) fell 2.1%. ETF SPDR S&P Home Builders (XHB) decreased by 0.9%. The SPDR Energy Select ETF (xle(cooled to 2.3% and ETF Financial Select SPDR)XLF) lost 0.9%. SPDR Healthcare Sector Fund (XLV) fell 0.1%.

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Tesla Stock

Tesla stock plunged 8.8% to 125.35 on Thursday, hitting its lowest point since September 2020 as the volume selloff continued. Tesla doubled its year-end U.S. delivery discount to $7,500 on Wednesday night. This came as CarMax’s affordability issues were widely affecting automakers and dealerships. TSLA stock lost nearly 36% in December alone.

However, Tesla’s Elon Musk, in a Twitter Spaces call on Thursday evening, said: “I will not be selling stocks next year under any circumstances…I will not be selling stocks until 2024-2025.”

Musk has sold nearly $39 billion worth of Tesla stock since shares peaked in November 2021, including another batch in mid-December. Several times he said he was done selling for now, but he was never so definitive.

However, Musk made it clear that he would not tone down his politically charged tweets. “I’m not going to suppress my opinions just to drive up the stock price.”

TSLA stock rose more than 2% in overnight trade.

Market rally analysis

The stock market rally was in a bearish mood on Thursday, with major indices plunging on economic data and company news.

The S&P 500, which just recovered its 50-day line on Wednesday, sold off to undermine Tuesday’s intraday lows. The Nasdaq followed suit, but both rallied to finish above Tuesday’s lows.

The Dow Jones just topped Monday’s intraday lows but rebounded to close above the 50-day streak.

While the shares of Apple, Amazon, Microsoft, and especially Tesla look terrible, this isn’t just a massive sell-off. The Invesco S&P 500 Equivalent Weight ETF (RER) fell 1.1% on Thursday, returning below its 50-day line.

The SMH chip ETF dipped below its 50-day line, just days after hitting a multi-month high on Dec. 21. 13, above the 200-day average. Unlike the S&P 500, the SMH closed well below Tuesday’s lows.

Major stocks were hit again on Thursday, except for some defensive or defensive growth names. Some metals and mining stocks still look okay on a weekly chart.

The stock market rally is under great pressure, it is just hanging on.

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What to do now

Market action continues to deteriorate, with trends turning sharply negative since just after the December 1 open. 13.

Market exposure should be thin, limited only to positions that work. Even then, investors may want to take partial profits or simply exit certain trades with a gain.

At some point the market will rebound like it did on Wednesday. Don’t get carried away by a strong opening, or even a strong session.

Investors should work on their watchlists. Focus on stocks with high relative strength or key levels such as the 50-day line, which become difficult if the charts are not looking good right now.

Read The big picture Every day to stay in tune with market direction and major stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.


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