Dow Jones futures jumped early Wednesday, along with S&P 500 futures and Nasdaq futures as President Donald Trump said China tariffs will "come down substantially." Tesla rose strongly overnight despite plunging earnings, with CEO Elon Musk bullish on the conference call.
The stock market had a strong gain Tuesday, aided by hopeful comments from Treasury Secretary Scott Bessent about de-escalating the U.S.-China trade war.
Netflix, Spotify, MercadoLibre, ADMA Biologics, Sprouts Farmers Market and many others are close to buy areas.
Investors should take notice, but move into the market gradually.
Netflix stock and Spotify are on the IBD Leaderboard watchlist. ADMA stock and Netflix are on the IBD 50. Sprouts stock and Netflix are on the IBD Big Cap 20. Netflix was Tuesday's IBD Stock Of The Day.
The video embedded in the article discusses Tuesday's bullish market action and analyzes Spotify stock, Sprouts and Tesla rival BYD.
Dow Jones Futures Today
Dow Jones futures rose 1.8% vs. fair value. S&P 500 futures rallied 2.3%. Nasdaq 100 futures jumped 2.75%. Tesla stock is an S&P 500 and Nasdaq giant. Futures are off Tuesday night's peak.
The 10-year Treasury yield fell several basis points to 4.29%.
Crude oil futures turned slightly lower.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Trump Won't Play 'Hardball' With China, Won't Fire Powell
Late Tuesday, President Trump told reporters that China tariffs will "come down substantially but won't be zero." Trump also said he wouldn't play "hardball" with China. The comments were the latest signal the U.S.-China trade war will cool down, and perhaps that Trump was backing off further.
Trump will meet with President Xi Jinping in early May, Reuters reported Tuesday night.
The CEOs of Walmart, Target and Home Depot warned President Trump in a Monday meeting that prices would go up and many shelves would be empty soon due to high tariffs, Axios reported Wednesday.
Trump also said he has "no intention" of firing Fed chief Jerome Powell. The president had signaled his extreme displeasure with the Powell in recent days, calling him a "loser" and implying he was thinking that he was thinking about firing him.
On Tuesday morning, Treasury Secretary Bennett reportedly told a closed-door investor summit that U.S.-China tariffs are unsustainable and he expects them to de-escalate. But he also said China trade talks haven't even begun. The U.S. has imposed tariffs of at least 145% on Chinese goods, though the Apple iPhone, PCs, servers and electronics are temporarily only facing 20% tariffs. Beijing has slapped a 125% tariff on U.S. goods coming into China.
Trump negotiators are close to "memorandums of understanding" with India and Japan, Politico reported, citing sources, but actual trade deals may be months away.
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Tesla Earnings
Early Tuesday, Tesla earnings fell more than expected. Auto revenue plunged 20% as Elon Musk brand damage took a toll and the refreshed Model Y began rolling out late in the quarter. Tesla pulled its target for delivery growth in 2025.
Tesla's auto gross margins excluding regulatory credits came in at 12.5%, the lowest since Q2 2012.
Operating income was $399 million. Regulatory credits were $595 million, meaning the core auto and energy business had an operating loss.
The EV giant, in its earnings statement, says a "pilot" robotaxi launch will take place in Austin in June. Tesla also said output will start by midyear for an "affordable" EV, with executives later saying that the cheaper EV line will "resemble" the Model Y or 3. Several reports had stated that the first cheap EV would be a stripped-down Model Y.
Elon Musk, on the earnings call, said he'll scale back his work at the Department of Governmental Efficiency (DOGE), but still a day or two a week on government work.
Tesla stock rose sharply in overnight trade, buoyed by Trump's market-friendly comments. Shares popped 4.6% to 237.97 on Tuesday. Still, TSLA stock is below all its moving averages.
Meanwhile, China EV giant BYD is expected to report this week as well. BYD recently said that Q1 net income roughly doubled, which would top Tesla for the first time and be another quarter of accelerating growth. BYD stock jumped 7.5% on Tuesday to 49.13, back above the 50-day line and breaking a trendline within an emerging consolidation.
Other Earnings
SAP earnings and guidance were strong, with the German giant kicking off major software results. SAP stock rose strongly in premarket trade. Shares edged up 0.7% on Tuesday, within a base but below key levels.
Intuitive Surgical beat earnings views, but the robotic-surgery systems maker said Trump tariffs could be "material." ISRG stock rebounded for solid gains early Wednesday after tumbling Tuesday night. Shares rose 2.2% on Tuesday, below key levels but in a base.
AT&T met earnings views early Wednesday, but revenue and wireless subscriber growth beat. AT&T stock rose modestly before the open.
GE Vernova and Boston Scientific topped views. Both stocks jumped pre-market.
Boeing reported mixed results, but looks to expand 737 Max production. The Dow giant rose solidly in premarket action, partly on Trump's China tariff comments.
Stock Market Tuesday
The stock market rally attempt showed bullish action Tuesday, with big price gains on all of the major indexes. Volume was higher Tuesday vs. the prior session.
The Dow Jones Industrial Average ran 2.7% higher in Tuesday's stock market trading. Meanwhile, the S&P 500 index jumped 2.5%. The Nasdaq composite popped 2.7%. The small-cap Russell 2000 leaped 2.7%.
Tuesday's gains followed significant recent losses. The major indexes are still below their 21-day moving averages, which have served as resistance. The violent sell-off and the whipsaw, headline-driven market raise the risk that selling could quickly resume.
A number of leading stocks flashed buy signals or moved into position, including Netflix, Spotify and Sprouts. But many charts could use more time.
U.S. crude oil prices rose 1.95% to $64.31 a barrel.
The 10-year Treasury yield fell 1.5 basis points to 4.39%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF rose 2.3%. The iShares Expanded Tech-Software Sector ETF gained 2.7%. The VanEck Vectors Semiconductor ETF advanced 2.2%.
ARK Innovation ETF jumped 3.8% and ARK Genomics ETF rallied 4.3%. Tesla stock is the No. 1 holding across ARK Invest's ETFs.
SPDR S&P Metals & Mining ETF climbed 1.3%. The Energy Select SPDR ETF gained 2.55% and the Health Care Select Sector SPDR Fund was up 1.7%
The Industrial Select Sector SPDR Fund rose 1.75%. The Financial Select SPDR ETF jumped 3.3%.
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Stocks In, Near Buy Areas
Netflix stock jumped 5.3% to 1,040.01, extending Monday's earnings move. NFLX stock ran past a 998.70 buy point in a double-bottom base.
Spotify stock bounced 5.7% to 590.85, back above the 50-day after Monday's downside reversal. SPOT stock has a 621.20 double-bottom buy point. Investors could use Tuesday's high of 598.50 as a trendline early entry. Spotify, like Netflix, is tariff-insulated and recession-resistant, but its earnings are next week.
MercadoLibre stock gained 3.5% to 2,128.33, clearing an early entry of 2,121.87. MELI stock has a traditional double-bottom buy point of 2,202, according to MarketSurge.
ADMA stock jumped 8.9% to 21.39, rebounding from the 21-day line and back above a 20.70 cup-with-handle buy point.
Sprouts stock gained 3% to 163.30. SFM stock is just below a 163.86 early entry within a cup base. Sprouts earnings are on April 30.
All of these stocks have strong relative strength lines, at or near 52-week highs.
What To Do Now
The stock market rally is showing more strength, tempered by a whipsaw environment and the major indexes below key levels.
Investors probably should have added some exposure Tuesday. But it's best to be incremental. If the market continues to show strength, you can add more positions. Be ready to exit quickly.
Futures point to follow-on buying for the market, but again driven by headlines that could reverse just as fast.
It's vital to have watchlists up to date, noting important upcoming earnings.
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 and X/Twitter at @IBD_ECarson for stock market updates and more.
