Dow Jones futures rose slightly early Thursday, while S&P 500 futures and Nasdaq futures retreated as Treasury yields pushed above 4%. Tesla Investor Day failed to impress while Salesforce.com, Snowflake and other software earnings headlined a busy overnight session.
The stock market rally suffered further damage Wednesday as the 10-year Treasury yield hit 4% intraday. Some leading stocks flashed buy signals on news. But the S&P 500 and Nasdaq headed lower.
Apple fell back below its 200-day line as International Data Corp. now sees global smartphone sales falling slightly again in 2023 vs. its prior forecast for a modest bounce.
Tesla Investor Day opened with expectations for major announcements. Despite speculation of a new EV being unveiled, Tesla executives said at the event that a next-generation platform or vehicle will come at a "later date." CEO Elon Musk's "Master Plan 3" involved the world making a huge push for clean energy.
Late into the event, CEO Elon Musk confirmed that Tesla will build a Mexico plan.
Tesla stock tumbled early Thursday as Investor Day had few headlines. Several EV-related chip plays also sold off on Tesla comments, including Aehr Test Systems, On Semiconductor and STMicroelectronics.
Notable software makers Salesforce.com, Splunk, Box, Okta and Snowflake reported late Wednesday. CRM stock and OKTA were big winners overnight, while SNOW stock, Box and Splunk retreated.
Dow Jones Futures Today
Dow Jones futures rose 0.2% vs. fair value. CRM stock is a Dow component. S&P 500 futures retreated 0.4% and Nasdaq 100 futures fell 0.75%. TSLA stock is a big Nasdaq 100 component.
The 10-year Treasury yield rose 6 basis points to 4.05%, above the key 4% level.
Crude oil futures rose slightly. Copper prices sank 2%.
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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Tesla Investor Day
Tesla Investor Day took place Wednesday evening.
The EV giant had said weeks ago that it would release more details about a next-generation EV platform at Tesla Investor Day, raising speculation that Tesla would unveil a low-cost model and perhaps give some idea when production might begin.
Executives said Tesla aims to cut assembly costs by 50% in its next-generation vehicle platform and reduce the factory footprint by 40%.
But Tesla didn't unveil any next-gen vehicle, saying that it will come at a "later date."
During the Q&A segment, Musk confirmed that "Giga Mexico" is coming. Mexico's president had said Tuesday that Tesla would make the announcement on Investor Day.
Tesla said the Mexico plant will build the upcoming next-gen vehicle. But that suggests a hypothetical lower-cost EV won't arrive until 2025 or beyond. Even now, a cheaper Tesla would face competition from a slew of rivals, especially in China.
Tesla says it aims to cut silicon carbide by 75% for their next-generation drive unit. That's not good news for silicon carbide plays such as On Semiconductor, Wolfspeed, STMicroelectronics and Aehr Test Systems. All four EV chip stocks tumbled early Thursday.
Meanwhile, Tesla plans to cut out rare earths from its electric motors. MP Materials tumbled on that news. Musk downplayed getting into lithium mining. Sigma Lithium, which had soared recently on a report that Tesla might make a bid, fell solidly early Thursday.
Many of Tesla's plans, from Mexico to in-house operations, could also serve to minimize the EV giant's reliance on China.
Tesla Stock
TSLA stock skidded 8% early Thursday following Tesla Investor Day, signaling a move below the 21-day line. Tesla stock retreated 1.4% to 202.77 Wednesday.
Shares arguably have a cup-with-handle pattern going back to early November. That would suggest a 217.75 buy point. But investors should probably wait for TSLA stock to clear its 200-day line, currently around 221.
Key Earnings
CRM stock spiked 16% in premarket trade after Salesforce earnings topped views and the software giant gave bullish guidance and doubled its buyback to $20 billion. Salesforce stock rose 2.3% to 167.35 on Wednesday, extending a bounce from the 200-day line and moving above the 21-day line. CRM stock is now signaling a gap-up above a cup-with-handle buy point of 178.94.
SNOW stock fell 8% in extended action as Snowflake earnings beat Q4 views but the data analytics firm guided low on Q1 and full-year revenue. Snowflake also announced a $2 billion share buyback plan.
SPLK stock declined 4% early Thursday as Splunk earnings beat, and the database and security software firm guided low on Q1 and full-year revenue. Splunk stock lost 2 cents Wednesday to 102.48, holding the 21-day in a cup-with-handle base, according to MarketSmith. The buy point is 110.05.
BOX stock plunged 11% overnight as Box topped earnings views, but guided low. The software storage firm has been working on a new flat base on top of a prior flat base. The relative strength line for BOX stock is at a multiyear high.
OKTA jumped 16% in premarket action as the cybersecurity firm beat Q4 views and guided in line for fiscal 2024 revenue. Okta stock is set to gap back above its 200-day, which now roughly coincides with a still-valid 74.28 bottoming-base buy point. Shares edged up 0.2% to 71.44 on Wednesday, holding the 50-day.
Stock Market Rally Wednesday
The stock market rally had a mixed session, but with a generally negative bent.
The Dow Jones Industrial Average edged higher in Wednesday's stock market trading. The S&P 500 index fell 0.5%. The Nasdaq composite sank 0.7%. The small-cap Russell 2000 rose 0.1%.
Apple stock, a Dow Jones, S&P 500 and Nasdaq component, fell 1.4% to 145.31, back below the 200-day and hitting a one-month low. Microsoft, Nvidia and Tesla stock also were big cap negatives Wednesday.
The 10-year Treasury yield jumped 8 basis points to 3.99%, hitting 4% at various times. U.S. manufacturing reports for February came in below views, still signaling modest contraction. But China manufacturing and service sector gauges jumped.
Copper prices rose 1.7%.
U.S. crude oil prices climbed 0.8% to $77.69 a barrel.
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Market Rally Analysis
The stock market rally had a mixed Wednesday, closing off session lows. But the major indexes are struggling around key levels.
The S&P 500 fell further from its 50-day line and nearly touched its 200-day Wednesday morning. The Nasdaq dropped back below its 200-day line, with the 50-day not far below that.
The Russell 2000 nudged higher despite resistance at the 21-day line for a third straight session.
The laggard Dow Jones hit its worst level since early November intraday, before it eked out out a gain.
Leading stocks offered reasons to be hopeful.
First Solar and Axon Enterprise gapped out on earnings. Freeport-McMoRan, Wednesday's IBD Stock Of The Day, flashed a buy signal as a key mine reopened and copper prices rebounded.
Most leaders continued to set up or hold up. But can that continue if broader trends don't improve?
The market rally is under pressure. The major indexes can't afford to lose much more ground. On the upside, the S&P 500 has to regain its 50-day line, while the 21-day line is a key test for the S&P 500, Nasdaq and Russell 2000.
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What To Do Now
Leading stocks have been resilient in the pullback, with more flashing buy signals in recent days. But if the market continues to struggle, recent buy signals and breakouts would likely turn into fake-outs.
Investors should not be looking to raise exposure until the S&P 500 and Nasdaq reclaim their 21-day lines. If you wait and the market does improve, some leading stocks will pass you by initially, but there will plenty of other opportunities.
So look for stocks that are actionable, but also those that are setting up.
On the flip side, if the market or your individual holdings deteriorate, you'll want to move further to the sidelines.
Be prepared, stay engaged and be flexible.
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