Dow Jones Futures Signal Market Rally As Nike Jumps; Tesla Stock Halts Meltdown

Dow Jones futures rose early on Wednesday, along with S&P 500 futures and Nasdaq futures, supported by Nike (NKE) and FedEx (FDX) revenue that determines the fee.




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The stock market rally snapped a four-day losing streak. Perhaps Wednesday could offer a bigger bounce. But the S&P 500 and Nasdaq remain slightly below their 50-day moving averages.

Meanwhile Apple ( AAPL ) flirted with a bear market low on Tuesday, a day after that Amazon.com (AMZN) did.

Tesla ( TSLA ) continued to fall on Tuesday, reversing all of its gains since the August 2020 stock split. Shares of Tesla rose early Wednesday after Elon Musk renewed his commitment to finding a new CEO for Twitter. Tesla is reportedly facing another layoff.

The positive side is the oil field services Schlumberger (SLB), Halliburton (HAL) and ProFrac ( ACDC ) is showing strength, with early buy points flashing in Schlumberger stock and ACDC stock on Tuesday.

A video embedded in the article discussed Tuesday’s market action and analyzed shares of SLB, Halliburton and ProFrac.

Nike, FedEx profits

Dow Jones giant Nike and FedEx reported earnings Tuesday night, giving some insight into the holiday shopping season.

Nike’s revenue and sales beat views, while stock rose 43% year-over-year. Margins decreased due to the reduction. NKE shares rose 11% in premarket trading, indicating a move back above the 200-day line. Shares rose 0.2% to 103.21 on Tuesday.

FedEx’s revenue exceeded views, but revenue was lower. FDX shares were up 4% in extended trading. Shares fell 2.6% to 164.35, below the 50-day line.

Dow Jones futures today

Dow Jones futures rose 0.7% versus the real value, and NKE shares offered gains. S&P 500 futures rose 0.5%. Nasdaq 100 futures rose 0.3%.

Crude oil futures rose 2%.

The 10-year Treasury yield decreased by 1 basis point to 3.67%.

Remember that overnight action in Dow futures and elsewhere does not necessarily mean actual trading in the next regular stock market session.


Join IBD’s experts as they analyze active stocks in the stock market rally on IBD Live


Stock market rally

A stock market rally erased early losses and closed slightly higher.

The Dow Jones Industrial Average rose 0.3% in Tuesday’s stock market trading. The S&P 500 rose 0.1%, with Tesla shares the worst performers. The Nasdaq Composite gained 1 point. The small-cap Russell 2000 rose 0.5%.

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Apple shares fell to 129.89, down 1% from a June low of 129.04. Shares retreated as much as 7 cents to 132.30. Amazon shares rose 0.3%, briefly paring Monday’s lows.

US crude oil prices rose 1.2% to $76.09 a barrel. Natural gas prices fell 9% after falling more than 11% on Monday.

The 10-year Treasury yield rose 10 basis points to 3.68% after Monday’s gain of 10 basis points. The Bank of Japan got a little dovish on Tuesday, allowing Japan’s 10-year yield to rise to 0.5%.

The 2-year yield, which is more closely linked to Fed policy, was essentially flat at 4.27%.

Investors will receive the November PCE inflation report on Friday, and economists expect another significant drop in headline and core inflation.

ETFs

Among growth ETFs, the iShares Expanded Tech-Software Sector ETF ( IGV ) rose 0.5%. VanEck Vectors Semiconductor ETF ( SMH ) fell 0.6%.

Reflecting more speculative stocks, the ARK Innovation ETF ( ARKK ) fell 0.2% to hit a new five-year low. ARK Genomics ETF ( ARKG ) rose 0.8%. Tesla is a large holding among the Ark Invest ETF.

The SPDR S&P Metals & Mining ETF ( XME ) was up 2.6% and the Global X US Infrastructure Development ETF ( PAVE ) was up 0.4%. The US Global Jets ETF ( JETS ) rose 0.4%. The SPDR S&P Homebuilders ETF ( XHB ) gave up 0.55%. The Energy Select SPDR ETF ( XLE ) bounced 1.5%, while the Financial Select SPDR ETF ( XLF ) rose 0.4%. The Healthcare Select Sector SPDR Fund ( XLV ) closed partially lower.


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Promotions near points of purchase

Oil services companies are climbing even as crude prices near one-year lows, possibly in anticipation of higher prices in 2023. Exxon Mobil (XOM) and Chevron ( CVX ) recently released its capital spending plans for next year, pointing to strong demand for services companies like Halliburton, Schlumberger, ProFrac and others.

Shares of SLB rose 3.9% to 51.76, breaking above the 50-day and 21-day moving averages and possibly breaking a strong downtrend line that suggests a premature market entry. Schlumberger shares have returned to a still valid buy zone from a deep cup base. After this week, SLB shares will have a new base with a 56.14 buy point.

Fellow oil services giant Halliburton bounced above its 21-day line, rising 3.8% to 37.42, still close to its 50-day line. According to MarketSmith analysis, the buy point for HAL shares is 40.09% of the 47% deep cup with handle base. It has no obvious early input. The handle will be long enough to become its own foundation after this week.

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Shares of ProFrac jumped 6.9% to 23.23, breaking above the 50-day and 21-day lines again and snapping a recent decline, similar to shares of SLB. This could serve as an early input. After this week, ACDC stock should see another consolidation with a buy point on 10/27. ProFrac shares went public with 18 shares. It’s been three bases since then, and the breakout doesn’t last long.

Tesla stock

Tesla shares fell 8.1% to 137.80, hitting another two-year low. Shares of the EV giant are down 67% from their November 2021 peak and 29% in December alone.

Since the 5-for-1 stock split in August 2020, Tesla stock is now up significantly. (In August 2022, TSLA shares were also split 3-for-1.)

Tesla China sales slowed for a second week in a row, according to weekly filings. This is despite the ever-increasing end-of-year incentives set to expire on January 1, along with China’s EV subsidies.

Elon Musk’s Twitter saga raises concerns of significant damage to the Tesla brand. Many longtime prominent TSLA bulls are increasingly critical of Musk.

Evercore and Daiwa Capital Markets cut their price targets on TSLA shares on Tuesday, both citing Twitter. Oppenheimer downgraded Tesla on Monday.

Tesla shares failed to gain on Monday despite Elon Musk saying he will step down as CEO of Twitter after a Twitter user poll on the issue.

Stocks continued to fall on Tuesday, even as major indexes and many leading stocks tried to hold on. The heavy selling in recent weeks suggests that large institutions are offloading or splitting TSLA stock.

On Tuesday night, Musk announced that he would step down as head of Twitter once a successor was found, and that he would lead the software and server teams.

Tesla is implementing employee freezes and will begin a new wave of layoffs in early 2023, Electrek reported, citing sources.

Tesla shares were up 1% in early trading Wednesday.

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Market rally analysis

After a sharp selloff from the December 13 highs, the stock market rally nearly ended its losing streak.

The major indices looked oversold and perhaps “due” for a bounce. They got one, though it wasn’t much.

The Dow Jones found support at the 50-day line, while other major indices did not make any significant technical changes.

The stock market rally remains under pressure.

AAPL stock rebounded from near bear market lows, but that doesn’t mean it’s going to last.

Many leading stocks found support at key levels. But whether they stick around and rebound strongly depends largely on the overall market.

Energy names could be a partial exception, given how they trade with underlying crude oil or natural gas prices. Oil services companies such as SLB shares and coal producers such as Consolidated Energy are currently doing better.


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What to do now

Not a good time to buy stocks. Although the major indexes held up and some of the top stocks did not collapse, the market rally remains weak.

The S&P 500’s retracement to the 50-day appears to be a minimal sign of strength, as the 200-day and December highs are much higher.

Even if the market recovers, Tesla’s continued slide Tuesday suggests that not all stocks will follow suit.

If you feel compelled to play this market, take pilot positions and be ready to take profits quickly and cut your losses.

Keep looking for shares and find support at key levels. Stocks with strong relative strength in weak markets can be leaders in the next advance.

Read The Big Picture daily to stay in sync with market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson stock market updates and more.

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