The Dow Jones Industrial Average rallied even as other indexes struggled amid excellent Salesforce earnings. Tesla CEO Elon Musk hyped the Cybertruck while an analyst issued a warning. Fellow Magnificent Seven stocks Nvidia, Meta Platforms and Microsoft also fell.
A number of stocks attempted breakouts despite the mixed action. Embraer, MongoDB and Cheniere Energy tested entries.
Encouraging Inflation Data Emerges Ahead Of Powell
There was some more positive data Thursday to support interest rate doves. Headline inflation was flat month over month and up 3% on the year. Economists had expected it to rise 0.1% compared to last month, with an annual increase of 3.1%. Core PCE, the Fed's preferred gauge of inflation, was in line with economists' expectations. The core number excludes volatile food and energy prices.
Further, first-time unemployment claims rose to 218,000 vs. 211,000 in the previous week. This was below expectations. But continuing claims vaulted to 1.93 million, up 86,000 on the previous week — the highest level since Nov. 27, 2021. Both these metrics are positive for those in the camp of cutting rates because they show both prices and the labor market cooling off.
Federal Reserve Chair Jerome Powell is getting set to take part in an economic discussion in Atlanta Friday. It remains to be seen whether Powell will opt to take a more dovish stance or try to strike a more hawkish tone amid diving Treasury yields.
For the day, Treasury yields rose. The 10-year Treasury note moved up 6 basis point to 4.33% while the 30-year gained 5 basis points to 4.5%. The five-year yield rose 6 basis points to 4.28% while the two-year gained 5 basis point to finish at 4.7%.
Nasdaq Dips But Growth Stocks Jump
The tech-heavy Nasdaq lagged despite rallying off lows, closing down 0.2%. EV stock Lucid was among the laggards as it skidded 3.2%.
The S&P 500 managed to reverse high to close up 0.4%. Phillips 66 was turning in an eye-catching gain of 5.5%. Shares broke out of a cup base with a 125.19 buy point in heavy volume on news that activist investor Elliott Investment Management has acquired a roughly $1 billion stake in the company.
Most of the S&P 500 sectors closed higher. Health and industrials fared best in the stock market today. Consumer discretionary and communication services were the worst laggards.
Small caps gained, with the Russell 2000 rising 0.3%. Leading stocks were the clear outperformers though, with the Innovator IBD 50 ETF surging 1.7%.
Dow Jones Today: Salesforce Stock Surges
The Dow Jones Industrial Average was outperforming today, largely thanks to one superstar performer. It ended the session up 520 points, or 1.5%.
Salesforce soared more than 9.4% after it posted an earnings beat and turned in strong guidance. The stock surged past a cup base, MarketSmith analysis shows.
And while many people may have expected Microsoft to take the honor, Salesforce is actually the best performer on the Dow Jones year-to-date thanks to a lift of about 87%. It is a member of the IBD Leaderboard Watchlist.
A few other stocks turned in noteworthy gains. UnitedHealth popped 3.4% while Boeing finished up 3.2%.
Intel lagged most on the Dow Jones today as it fell 0.5%. Walmart and Chevron also lagged.
Elon Musk Hypes 'Bulletproof' Cybertruck
Tesla stock closed lower despite the excitement surrounding its Cybertruck event. The firm's CEO Elon Musk hyped the event on social media before taking to the stage itself in Austin, Texas.
"We have a car here that experts said was impossible, that experts said would never be made," Musk said onstage during the presentation. "I think it's our best product, I think it's the most unique thing on the road. And finally, the future will look like the future."
During the presentation a video was shown touting the vehicles bulletproof capabilities, with a man shooting various firearms, including a Tommy gun, at a Cybertruck.
"In movies you sometimes see the hero or heroine hiding behind the car door while being shot with bullets. It doesn't actually work unless you're driving a Cybertruck," Musk said.
As if that was not enough, Musk also said that the windows were "rock proof."
According to Musk, the vehicle can tow over 11,000 pounds and can accelerate from 0 to 60 miles per hour in 2.6 seconds.
Wedbush analyst Dan Ives, who rates TSLA as outperform with a 310 target, was impressed.
"This event was 4 years in the making for Musk & Co. and in our opinion was a historical moment for Musk and Tesla to finally unveil this vehicle," he said in a research note. "Customers were on location to receive their new Cybertrucks with production now ramping into year-end/2024."
Ives estimated Tesla will churn out 2,000-3,000 units this quarter with the first 10,000-unit quarter to come in the first half of 2024.
"The unique Cybertruck design was made for durability and passenger protection ... ," he added.
Despite the excitement, Tesla stock finished the day down 1.7%, near session lows. It remains way shy of a double-bottom base entry of 278.98. But while TSLA has seen its gains for the year cool, it remains up more than 120% so far in 2023.
Analyst Gives Cybertruck Price Warning
One thing investors and consumer alike were keen to discover is what the actual price of the Cybertruck would be. Starting next year, the high-end Cyberbeast will be available at $99,990 and the all-wheel drive model will retail for $79,990, according to Tesla's website. The lowest spec model, the rear-wheel drive version, costs $60,990 but will not be available until 2025. The website also said the price will likely be less after "probable savings."
Deepwater Asset Management managing partner Gene Munster believes the vehicle will be a "sideshow" for the next couple of years and said it is priced too high to gain mass adoption.
"Eventually pricing has to come down. If they want to gain market share, if they want this to be a real vehicle, they have to bring pricing down. If they don't it's going to be the Model S or X all over again," he said. "The light truck market is a big market so I think their ambitions are to eventually bring price down. I suspect that's probably going to be in a couple of years once they get production volumes up which improve efficiencies that allow them to not only lower the price but to meet the demand that's out there."
According to Munster, 2026 will be the year when it "begins to get more exciting" and until then it will be a slow build.
Magnificent Seven: Nvidia Stock Lags
Tesla stock was not the only member of the so-called Magnificent Seven taking a tumble.
Nvidia actually lagged the most out of the group, the AI chip leader falling 2.9%.
The Leaderboard stock has now fallen below the 21-day exponential moving average. It has also reversed below a buy zone from a 476.09 entry.
Google parent Alphabet fell 1.8% while Meta Platforms stock also lagged with a drop of 1.5%. Amazon.com fell 0.2% while Microsoft ended nearly flat.
Apple was the only member that moved higher, though it only rose 0.3%. It remains shy of a 198.23 entry for now.
Futures: Tesla Skids On Cybertruck Details
Outside Dow Jones: Three Stocks Test Entries
While there are possible signs of some market rotation, the current uptrend means investors should be tracking breakouts.
Brazilian aerospace stock Embraer has pulled above a consolidation pattern buy point of 17.14. This is a first-stage pattern.
Overall performance is excellent, with its IBD Composite Rating coming in at a best-possible 99. Earnings popped 34% in the most recent quarter.
MongoDB briefly cleared a weekly cup base entry of 439, though it reversed back below this level. It remains actionable from a cup-with-handle entry of 412.57 on its daily chart.
The database software stock also has a perfect Composite Rating. It is also among the top 2% of stocks in terms of price performance over the past 12 months.
Cheniere Energy is just below a buy zone after briefly clearing a very long cup base buy point of 182.35. This is a first-stage base.
Both earnings and stock price performance are stout. But while EPS is seen soaring 512% this year it is then seen falling 72% in 2024.
Please follow Michael Larkin on X, formerly known as Twitter, at @IBD_MLarkin for more analysis of growth stocks.
