Dow futures fell slightly early Wednesday, along with S&P 500 futures and Nasdaq futures. Roku and GitLab were early winners.
The stock market rally gave way to modest gains on Tuesday as Treasury yields rebounded. Major indices haven’t fallen too hard thanks to big stocks like MSFT. Meta platforms (dead) especially Tesla (TSLA), but market breadth was noticeably weak. The Dow Jones and Russell 2000 fell below the 50-day line.
Microsoft (MSFT), Meta and Tesla stocks, plus General Electric (General Electric) and MongoDB (MDB) It is traded near the point of purchase. META stock could make a big signal at the open on Wednesday.
The first movers
early Wednesday, year (ROKU) said it would cut 10% of staff and raise its revenue guidance for the third quarter to $835 million — $875 million from its previous target of $815 million. Analysts had expected $829 million. Streaming media playback also sees a lower EBITDA loss. Roku shares rose before the opening.
Late Tuesday, software makers Zscaler (xxx) f Asana (ASAN) reported earnings, along with the software developer platform GitLab (catch).
ZS stock fell slightly early Wednesday, despite Zscaler’s better-than-expected earnings and strong guidance. Zscaler formed a volatile consolidation with entry around 162.67 or 164.29. ZS stock rose 275% to 162.74 in the regular session on Tuesday.
ASAN stock fell sharply in an extended move after Asana’s earnings beat estimates. The maker of work management software has a consolidated buy point of 26.27, but investors can use the trend line entry above 23 as an early entry. Asana stock rose 5 cents to 21.64 on Tuesday, just below the 50-day line. Asana earnings may be important to peers Monday.com (MNDY) f smart paper (SMAR), with the latest report on Thursday.
GTLB stock jumped in overnight trading thanks to GitLab’s surprise earnings and revenue that exceeded views. Shares rose 1.2% to 49.74 on Tuesday. GitLab stock has a buy point of 54.60 from the cup on a larger consolidation.
META stock is on the IBD leaderboard. Microsoft stock is on IBD’s list of long-term leaders. MDB and Zscaler shares are in IBD 50.
The video embedded in the article discussed and analyzed the market action on Tuesday inspiration (Oracle) Tol brothers (TOL) and GE stock.
Dow jones futures today
Dow futures were below fair value by 0.2%. S&P 500 futures were down 0.2%, and Nasdaq 100 futures were down 0.2%.
The 10-year Treasury yield decreased slightly to 4.24%.
Crude oil fell.
Remember that pre-market actions in Dow futures and elsewhere do not necessarily translate into actual trading in a regular stock market session.
Join IBD experts as they analyze leading stocks and the market on IBD Live
stock market rally
The stock market rally felt the impact of higher Treasury yields on Tuesday, although the Nasdaq in particular resisted the sell-off.
The Dow Jones Industrial Average fell 0.6% in stock market trading Tuesday. The S&P 500 fell 0.4%, with TSLA stock being the best performer. The Nasdaq Composite fell 0.1%. Small share of Russell 2000 fell 2.1%.
US crude oil prices rose 1.3% to $88.69 a barrel, as Saudi Arabia said it would extend its voluntary production cut by 1 million barrels per day until the end of the year. Crude oil futures rose 9.9% in an eight-session winning streak.
The 10-year Treasury yield rose 9 basis points to 4.27%, after a similar gain on Friday.
With US bond yields rising and increasingly weak economic data from China and Europe, the dollar saw another strong session.
Exchange Traded Funds
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) fell 0.5%. The iShares Expanded Tech-Software Sector ETF (IGV) was up 0.45%, with Microsoft stock a major component. The VanEck Vectors Semiconductor ETF (SMH) rose 0.2%.
Reflecting more speculative stocks, ARK Innovation ETF (ARKK) rose 0.9% while ARK Genomics ETF (ARKG) fell 1.8%. Tesla stock is the #1 stock in Ark Invest’s ETFs.
The SPDR S&P Metals and Mining Fund (XME) fell 1.3%, and the Global X US Infrastructure Development Fund (PAVE) fell 2.7%. The US Global Jets ETF (JETS) was down 1.7%. The SPDR S&P Homebuilders ETF (XHB) was down 3.9%. The Energy Select SPDR ETF (XLE) rose 0.5% and the SPDR Healthcare Sector Fund (XLV) shed 1%.
The SPDR Selected Industrial Sector Fund (XLI) was down 1.7%, and GE shares were an important component of XLI.
The Financial Select SPDR ETF (XLF) fell 1%. The SPDR S&P Regional Banking Fund (KRE) lost 2.3%.
Top five Chinese stocks to watch right now
Stocks near buy points
Microsoft stock rose 1.5% on Tuesday to 333.55, moving above its 50-day moving average for the first time in a month. But it was not a decisive move above this key level and volume on Tuesday was light. With more power, the tech giant in the Dow could be doable. MSFT stock has a consolidated buy point of 336.78, according to MarketSmith analysis.
META rose 1.3% to 300.12, finally closing above the 50-day level after hitting resistance there for several sessions. Investors can use the move above Friday’s high of 301.74 as an early entry. The internet giant is on track to gain a base with a buy point of 326.29 this weekend.
Early Wednesday, shares of Meta were up 1%, to about 303.
Tesla stock bounced off the 21-day moving average and just regained the 50-day moving average with a 4.7% rally to 256.49. Shares fell 5.1% on Friday after Tesla unveiled the Model 3 upgrade in China but also slashed prices for the Model S, Model X and fully autonomous driving. Investors can use last week’s high of 261.18 as an early entry for TSLA stock, which has an official buy point of 299.29.
GE fell 1.2% to 112.88, falling below the 21-day line and just above the 50-day/10-week line. General Electric has a buy point of 117.96 points from a flat bottom, its first real consolidation since the January breakout. Investors can use 115.85 as an early entry for GE shares.
MongoDB rose 0.3% to 394.13, holding the 50-day line. On Friday, shares rose on MongoDB’s strong earnings, reaching $414 on the day. But MDB closed up 3% at 392.88, near session lows. The database software company has a buy point of 439, but investors can use Friday’s high as an early entry from the 50-day trend line.
Market rally analysis
The stock market rally showed resilience to rising Treasury yields, at least on the surface. Shares of Tesla and other corporate giants limited losses in major indexes.
But the breadth of trading was thin, especially in light of the relatively small losses incurred by the major indexes. The losers lead the winners roughly 3-to-1 on the NASDAQ and 7-to-2 on the New York Stock Exchange. New lows beat new highs.
The Russell 2000 fell back below the 50-day line. The Invesco S&P 500 ETF (RSP) fell 1.2%, much worse than the S&P 500, after closing below 50 on Friday.
The Dow Jones fell slightly below the 50-day level.
There is still some space between the Nasdaq and S&P 500 above the 50 day line, but not by much.
Energy stocks performed well while the broad technology sector held up well. But the housing plays were tough, with homebuilders and related names among the biggest losers on Tuesday. Steel, industrial and travel companies also declined.
Clearly, stocks are taking their opposite cues from Treasury yields. If yields continue to rise, then the market rally is likely to run into trouble.
Time the market with IBD’s ETF market strategy
What are you doing now
With the losers dominating Tuesday, there weren’t a lot of buying opportunities, a shift from last week.
But many stocks are about to become actionable, including Tesla, Meta, GE, but also others. Make sure they are on your watchlists.
Be prepared to keep adding exposure, but don’t get caught up in an optimistic mindset. You must be prepared to roll back if the market or a particular position falters.
Read the big picture every day to stay on top of the market trend, leading stocks and sectors.
Please follow Ed Carson on X/Twitter @IBD_ECarson For stock market updates and more.
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