Dow Jones futures fell slightlyWednesday morning, along with S&P 500 futures and Nasdaq futures, amid weak China economic data.
Overnight, Tesla cut Model Y prices substantially in several European countries. That follows China price cuts on Friday. TSLA stock fell slightly.
Interactive Brokers and Charles Schwab reported mixed earnings.
The stock market rally retreated Tuesday after a solid bounce last week. The 10-year Treasury yield rebounded above key levels.
While losers easily trumped winners, Nvidia and Advanced Micro Devices rallied on bullish analyst reports, with a number of other leading tech growth stocks also doing well.
Microsoft closed with a higher valuation than Apple for the first time in two years.
Elastic, Samsara, Cadence Design Systems, Rambus and MercadoLibre flashed buy signals Tuesday.
Nvidia stock is on IBD Leaderboard. Nvidia and MELI stock are on SwingTrader. Microsoft and CDNS stock are on IBD Long-Term Leaders. Nvidia, Microsoft and IOT are on the IBD 50. Nvidia, MercadoLibre and MSFT stock are on the IBD Big Cap 20.
The video embedded in the article discussed Tuesday's market action and analyzed RMBS stock, Elastic and Cadence Design Systems.
China Economic Data
China's Q4 GDP rose 5.2% vs. a year earlier, just below views for 5.3%. Full-year GDP climbed 5.2%. December retail sales grew 7.4% vs. a year prior, missing forecasts for 8%. Industrial production climbed 6.8%, slightly beating targets for 6.6%. Unemployment was 5.1%, with unemployment for those aged 16-24 was 14.9%.
Along with ongoing deflation, the latest economic data spurred fresh calls for stimulus. But on Tuesday, Premier Li Qiang gave strong signals that there would be no major stimulus.
Hong Kong's Hang Sang plunged 3.7% Wednesday continuing a long downtrend. U.S.-listed Chinese stocks sold off.
Dow Jones Futures Today
Dow Jones futures fell 0.4% vs. fair value. S&P 500 futures declined 0.4% and Nasdaq 100 futures retreated 0.5%.
The 10-year Treasury yield edged up to 4.08%.
Crude oil futures fell 2%.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Interactive Brokers Earnings
IBKR stock fell modestly before the open as Interactive Brokers earnings missed Q4 views with revenue in line. Shares slipped 1.3% to 87.18 on Tuesday. Interactive Brokers stock is near an 89.72 buy point from a cup-with-handle base.
SCHW stock edged lower after Schwab earnings slightly topped but revenue fell short. SCHW stock fell 1.4% to 64.31 on Tuesday, continuing to pull back from a 68.80 cup-base buy point after briefly breaking out in mid-December. Schwab stock is around the automatic sell rule, but is trying to find support at the 10-week line.
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Stock Market Rally
The stock market rally saw modest losses to start the holiday-shortened week.
The Dow Jones Industrial Average fell 0.6% in Tuesday's stock market trading, with Boeing continuing to weigh on blue chips. The S&P 500 index sank 0.4%, with AMD stock the biggest advancer. The Nasdaq composite dipped 0.2%.
Nvidia stock rose 3.1% to a fresh record high. AMD stock leapt 8.3%, closing in on its December 2021 all-time high. Both are well above buy points.
Microsoft stock edged up 0.5% to 390.27, still in range of a 384.30 buy point from a flat base, base-on-base formation. Apple stock fell 1.2% to 183.63, testing its 200-dy line after the Dow tech titan did a rare discount on new iPhones in China. MSFT stock now boasts a $2.9 trillion market cap, above Apple's $2.856 trillion for the first time since late 2021.
It was a bad day for market breadth, a common theme in 2024 so far.
The small-cap Russell 2000 slumped 1.2%, nearing its 10-week line.
The Invesco S&P 500 Equal Weight ETF fell 0.7%, below its 21-day moving average.
The First Trust Nasdaq 100 Equal Weighted Index ETF declined 0.3% vs. the Nasdaq 100's near-flat performance. But it's still holding the 21-day line, as tech growth names still fare well. However, homebuilders, industrials and financials showed some weakness.
The 10-year Treasury yield jumped 11.5 basis points to 4.06%, closing above the 200-day line for the first time in a month. Fed Gov. Christopher Waller on Tuesday pushed back on aggressive rate cuts, joining other central bankers around the world.
U.S. crude oil prices dipped 0.4% to $72.40 a barrel. Natural gas futures plunged 12.5%.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF closed just below break-even, with Microsoft stock a major holding. ESTC stock and Samsara are also in IGV. The VanEck Vectors Semiconductor ETF popped 1.6%. Nvidia stock is the largest SMH component, with AMD also a big holding. CDNS stock is in both IGV and SMH.
Reflecting more-speculative story stocks, ARK Innovation ETF fell 1.3% and ARK Genomics ETF slumped 2.6%. TSLA stock is a major component across Ark Invest ETFs.
SPDR S&P Metals & Mining ETF skidded 2.6%. U.S. Global Jets ETF sank 1.4%. SPDR S&P Homebuilders ETF slipped 0.75%. The Energy Select SPDR ETF retreated 2.4% and the Health Care Select Sector SPDR Fund gave up 0.6%.
The Industrial Select Sector SPDR Fund fell 1%. The Financial Select SPDR ETF declined 0.7%.
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Stocks In Buy Areas
Samara stock rose 1.6% to 33.63. IOT stock rebounded from the 21-day and the top of a prior cup base. Shares also cleared Friday's peak and broke a downtrend within an emerging new base, at least intraday.
Elastic stock popped 4.15% to 116.58, bouncing from the 21-day line and breaking a downtrend. ESTC stock has a 118.24 buy point from its latest flat base.
MercadoLibre stock edged up 0.85% to 1,672.67, closing above a 1,660 flat-base buy point. Shares jumped 7.8% last week, flirting with that entry on Friday. MELI stock, which had early entries last week, is only 5.5% above its 10-week line.
Rambus stock leapt 4.4% to 68.87, but well off its intraday peak of 71.93, a record high. The chipmaker's shares rebounded from the 50-day line and broke a short downtrend. RMBS stock also moved back above a prior 68.54 buy point that investors could view as still valid.
Cadence Design Systems stock rallied 3.4% to 277.56, moving off its 50-day and 21-day lines, offering an early entry for the electronics design software maker. CDNS stock is just below a 279.32 flat-base buy point, according to MarketSmith analysis.
Tesla Price Cuts
Tesla cut Model Y prices in Germany, France and some other European countries by 4%-9%. On Friday, the U.S. EV giant reduced China prices for the Model 3 and Model Y.
Tesla stock fell 1.8% before Wednesday's open. Shares rose 0.5% to 219.91 in Tuesday's market trading, reversing higher after skidding to 212.18 intraday.
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What To Do Now
The stock market rally still looks healthy. The weak breadth is something to note, especially if leadership narrows and struggles. Tech growth leaders are faring well. Some continue to flash buy signals, such as Elastic, though many actionable names pared early moves Tuesday.
Investors should be significantly exposed. Whether you make incremental buys, take partial profits or both depends greatly on your exposure levels and your investing style. Follow your rules.
Keep working on watchlists, as stocks continue to set up.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Threads at @edcarson1971, X/Twitter at @IBD_ECarson and Bluesky at @edcarson.bsky.social for stock market updates and more.
