Dow Jones futures fell slightly early Thursday, while S&P 500 futures and Nasdaq futures rose, buoyed by lower Treasury yields and Tesla, wich headlined big earnings along with ServiceNow.
Tesla stock spiked as earnings unexpectedly rose and the EV giant predicted higher deliveries for the full year. Elon Musk was upbeat on the earnings call.
Striking Boeing workers rejected the latest contract offer Wednesday night.
The stock market fell sharply Wednesday as Treasury yields continued to climb, though the major indexes did pare losses somewhat. Megacap techs faltered after buoying the Nasdaq in the prior two sessions. Dow giant Apple fell modestly on reports of weaker iPhone 16 demand.
Nvidia fell back into a base and slashed weekly gains. Alphabet, Amazon.com and Meta Platforms also retreated.
Meta stock and Nvidia are on IBD Leaderboard. Nvidia stock is on SwingTrader and the IBD 50.
Dow Jones Futures Today
Dow Jones futures fell 0.1% vs. fair value. IBM and Honeywell declined on mixed earnings reports. Boeing also retreated.
S&P 500 futures climbed 0.5%. Nasdaq 100 futures jumped 0.9%. Tesla and ServiceNow stock are S&P 500 and Nasdaq giants.
The 10-year Treasury yield fell several basis points to 4.19%.
Crude oil futures rose slightly, well off overnight highs.
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 Earnings
Tesla earnings unexpectedly rose 9% in the third quarter, snapping a four-quarter string of year-over-year declines. Revenue but came in slightly below forecasts.
Gross margins jumped, fueled by strong Tesla Energy margins and a record-low cost of goods sold. Regulatory credits were high at $739 million, though below Q2's $890 million. FSD revenue recognition also may have helped.
Tesla's CFO said the EV maker may not be able to sustain Q3's margins in Q4.
Plans for new vehicles, including more affordable models, remain on track for start of production in the first half of 2025, Tesla reported Wednesday.
Notably, Tesla expects to report higher deliveries for the full year, which will require a big gain in Q4. Tesla has ramped up incentives in the past few days, with 0% financing and higher inventory discounts.
On the Tesla earnings conference call, CEO Elon Musk said he expects vehicle deliveries will rise 20%-30% in 2025. He also pegs Q2 2025 as the internal target for Full Self-Driving unsupervised to be safer than a human driver.
Tesla said it's testing a ride-hailing service with employees, using a human safety driver. That hit shares of Uber and Lyft.
Later, Musk conceded that Tesla EVs with Hardware 3.0 might not be able to achieve true self-driving.
Musk said that the upcoming "affordable" EV will cost less than $30,000, "with incentives." But if that assumes the $7,500 IRA tax credit, that suggests the list price will be below $37,500, but perhaps not much more.
Tesla stock soared 14% in premarket action, signaling a move back well above the 50-day line. Investors could view this as an aggressive entry within a deep, steep handle. Tesla has a 264.86 buy point from a cup-with-handle buy point, according to MarketSurge.
Shares fell 2% to 213.65 on Wednesday, hitting the lowest levels since early September. TSLA stock has tumbled 18% in October as of Wednesday, on negative reactions to Q3 deliveries data and the Oct. 10 robotaxi event.
ServiceNow Earnings
ServiceNow earnings topped Q3 views, with the software giant guiding just above views.
NOW stock rose slightly in premarket action, back above the 21-day. Shares declined 1.1% to 907.68 on Wednesday, below the 21-day line and nearing the 10-week.
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Stock Market Rally
The stock market rally fell solidly in the latest session. The Dow Jones Industrial Average sank 0.95% in Wednesday's stock market trading. The S&P 500 index declined 0.9%. The Nasdaq composite fell 1.6%. All the major indexes fell below their 21-day moving averages intraday, but closed above that key level. All remain near record highs.
The Russell 2000 fell 0.8%, closing below its 21-day line. Small caps tested the 50-day before paring losses.
U.S. crude oil prices fell 1.35% to $70.77 a barrel.
The 10-year Treasury yield rose four basis points to 4.24%, hitting a three-month high intraday. The benchmark yield is up 17 basis points this week, racing from the 52-week low of 3.6% set on Sept. 17. Rising yields finally appear to be taking a toll on the broader stock market rally, especially with megacap techs joining the retreat.
Apple stock fell 2.2% Wednesday on an analyst report that iPhone 16 orders have been cut by around 10 million units for the next few quarters. The Dow giant unveiled a beta version of some Apple Intelligence features, though key artificial intelligence tools are still weeks or months away.
Nvidia stock slumped 2.8% on Wednesday. Meta sank 3.15%, Amazon shed 2.6% and Google stock lost 1.4%.
Uncertainty over earnings season, the presidential election and more also may be hitting investors.
Sentiment has been very bullish with the major indexes hitting new highs heading into big risk events. Altogether, the market retreat isn't a surprise.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF gave up 2.1%. The iShares Expanded Tech-Software Sector ETF slumped 1.45%, with ServiceNow a notable component. The VanEck Vectors Semiconductor ETF was down 1.1%, with Nvidia stock a major holding.
Reflecting more-speculative story stocks, ARK Innovation ETF tumbled 2.95%. Tesla is a major holding across Ark Invest's ETFs. Cathie Wood also has built up a big Nvidia stock stake.
SPDR S&P Homebuilders ETF fell 0.4%. The Energy Select SPDR ETF and the Health Care Select Sector SPDR Fund both lost 0.5%. The Industrial Select Sector SPDR Fund declined 0.3%. The Financial Select SPDR ETF dipped 0.1%.
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What To Do Now
The stock market rally suffered sharp losses, with the major indexes undercutting some key levels but still looking relatively healthy. However, Treasury yields are starting to bite while a barrage of news is coming over the next two weeks.
Perhaps the rally will emerge stronger than ever after earnings, economic data and the election. Or perhaps the market will sell off or at least whipsaw in the near term.
Investors should assess their portfolios. How much exposure are you comfortable with given so many risk events on the horizon. Do you have too much exposure to a specific sector or to speculative plays? Are your individual holdings looking damaged? Do they have sufficient cushion for upcoming earnings?
Investors can continue to make incremental buys, but the risks of being shaken out or shaken down are higher. Standing pat or paring back may be a safer course.
A market pause or pullback could create a bevy of new buying opportunities. So keep your watchlists up to date.
Keep your emotions in check, both on the upside and downside.
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.
