Dow Jones Falls and S&P 500 are approaching a key level; Meta flirts with a buy signal as Tesla declines
The Dow fell modestly early on Wednesday, with the S&P 500 and the Nasdaq nearing a key level. Meanwhile, Roku and GitLab were early winners, while Meta stock pulled back from an early buy signal.
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The stock market rally gave way to modest gains on Tuesday as Treasury yields rebounded. Major indices didn’t fall too hard thanks to big stocks like Microsoft (msft), Meta platforms (dead) especially Tesla (Tesla). But the market breadth was noticeably weaker as the Dow Jones and Russell 2000 fell below the 50-day line.
Meta stocks, Tesla and MSFT, along with General Electric (General Electric) and MongoDB (MDB) It is traded near the point of purchase.
The first movers
early Wednesday, year (ROKU) said it would cut 10% of staff and raise its third-quarter revenue forecast to a range of $835 million to $875 million from its previous target of $815 million. Analysts had expected $829 million. Streaming media operations also experience a lower adjusted loss in EBITDA, or EBITDA. Roku stock gapped up more than 10%.
Late Tuesday, software makers Zscaler (xxx) f Asana (ASAN) reported earnings, along with the software developer platform GitLab (catch).
ZS stock fell more than 2% on Wednesday, despite Zscaler’s better-than-expected earnings and strong outlook. Zscaler formed a volatile consolidation with entry around 162.67 or 164.29. ZS stock rose 275% to 162.74 on Tuesday.
Asana stock fell 12% even though earnings beat estimates. The work management software maker has a combined purchase point of 26.27. ASAN 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 nearly 6% thanks to GitLab’s surprise earnings and revenue that outpaced 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 near the top of this article discusses market action and analytics on Tuesday inspiration (Oracle) Tol brothers (TOL) and GE stock.
Dow Jones today
The Dow Jones fell by 0.2%. The Standard & Poor’s 500 Index fell by 0.3%, and the Nasdaq fell by 0.3%.
The Dow Jones index falls further below the 50-day line. The S&P 500 is approaching this key level, while the Nasdaq is not far from a 50-day test.
The 10-year Treasury yield decreased slightly to 4.26%. The price of crude oil fell.
At 10 a.m. ET, the ISM Services Index will be released. Economists expect a decline of 0.3 points to 52.4, but it is still above the neutral 50 level.
At 2pm EST, the Federal Reserve will release the Beige Book report on economic conditions.
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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 was flat Wednesday morning. Shares rose 1.5% on Tuesday to 333.55, moving above the 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 stock dealt with the early entry, and is skewed to the upside. Shares rose 1.3% to 300.12 on Tuesday, finally closing above the 50-day level after running into 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.
Tesla stock fell 2% Wednesday morning, back below 50 a day ago. The shares bounced off the 21-day moving average on Tuesday and just regained the 50-day moving average with a gain of 4.7% 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 shares rose on Wednesday morning. On Tuesday, General Electric fell by 1.2% to 112.88, coming 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 stock is down a bit. On Tuesday, MDB rose 0.3% to 394.13, holding the 50-day line. On Friday, shares rose on strong earnings, reaching $414 for 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
Tuesday’s 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.
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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 viable, including Tesla, Meta, GE, and a number of 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.
Moreover, read the big picture every day to stay updated on the market trend, stocks and leading sectors.
Please follow Ed Carson on X/Twitter @IBD_ECarson For stock market updates and more.
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