Dow Jones futures rose overnight, with S&P 500 futures and Nasdaq futures focused on Nvidia and Cisco earnings.
Stock market gains retreated amid weakness Target (target) earnings and holiday guidance, and micron technology (Mu) reduce production plans for memory chips. The bond market highlights the risk of a brighter recession as short-term interest rates remain elevated while 10-year Treasury yields continue to fall.
NVDA shares edged higher in trading the next day after mixed earnings and guidance.
CSCO shares rose 4% on extended action. Cisco Surpasses Fiscal First Quarter Views Earnings-led Cisco shares fell 1.1% on Wednesday, trading between the 50-day and 200-day timeframes. IBD Leaderboard Strains Arista Networks (ANET) rose slightly in Cisco’s revenue.
SQM earnings are still due tonight. SQM shares fell 2.6% on Wednesday and more than 10% this week on concerns over lithium prices. The Chilean lithium and fertilizer giant cup base at 115.82 point of purchase. It may be working on the handle.
Chinese e-commerce giant Alibaba (baba) and US department store chains Macy’s (M.) When Coles (KSS) is scheduled for early Thursday. BABA shares fell slightly on Wednesday, but he surged 11% on Tuesday. Shares of Macy’s and his KSS plunged Wednesday after Target’s holiday warning.
dow jones futures today
Dow Jones futures rose slightly relative to fair value. S&P 500 futures slightly higher. Nasdaq 100 futures rose 0.1%. CSCO stock is a constituent of the Dow Jones, S&P 500, and Nasdaq, but Nvidia has a greater weight than his S&P 500 and Nasdaq constituents.
The 10-year Treasury yield rose 3 basis points to 3.72%.
Crude oil futures fell 1%.
Republicans have regained control of the House of Representatives, according to multiple media outlets. But it’s a very thin majority, far less than expected before Election Day.
stock market rally
The stock market rally faltered on Thursday, with small-cap and tech stocks leading the decline.
The Dow Jones Industrial Average fell 0.1% on Wednesday. stock market tradingThe S&P 500 Index gained 0.8%. The Nasdaq Composite fell 1.5%. Small-cap Russell 2000 fell 1.8%.
US oil prices fell 1.5% to $85.59 a barrel. Natural gas futures rose 2.8%.
US Treasury yield curve shows recession risks
The 10-year Treasury yield fell 11 basis points to 3.69%, its lowest level since early October, down from 4.15% just a week ago. Benchmark US Treasury yields are currently below the current 3.75% to 4% Fed Funds rate range, and the Fed is expected to raise rates by 50 basis points to 4.25% to 4.5% next month.
Two-year Treasury yields, which are more closely related to Federal Reserve (Fed) policy, were flat at 4.36%, while three-month rates were at 4.23%. The steepening of the yield curve inversion between 3-month and 10-year Treasuries is the highest since a brief period in late 2019. This points to a heightened risk of recession, or that economic growth in 2023 is negligible at best.
Fed Chairman Jerome Powell and some of his colleagues have suggested a recession may be needed to keep inflation under control, but other policymakers say a soft landing is likely. I’m watching it.
Amid a still-strong labor market and a report of strong retail sales in October, the yield curve is unprecedentedly inverted.
In between best ETFsInnovator IBD 50 ETF (FFTY) fell 1.7% as the Innovator IBD Breakout Opportunities ETF (game) lost just over 1%. iShares Expanded Tech Software Sector ETF (IGV) lost 2.1%, with many cloud software names having issues with their sessions. VanEck Vectors Semiconductor ETF (SMH) fell 3.6% and included Nvidia shares and key components of Micron.
SPDR S&P Metals & Mining ETF (XME) fell just over 2%, while the Global X US Infrastructure Development ETF (pave) fell 0.5%. US Global Jets ETF (jet) gave up 2.4%. SPDR S&P Homebuilders ETF (XHB) retreated by 1.4%. Energy Select SPDR ETF (XLE) fell 2%, while the Financial Select SPDR ETF (XLF) 0.5% immersion. Healthcare Select Sector SPDR Fund (XLV) ended just below breakeven.
Nvidia Earnings Missed Third Quarter Views, but earnings did not decline as much as had been feared. Demand for chips for data centers remains strong. Gaming revenue plummeted, but not as much as feared. The chip giant fell slightly short of fourth-quarter sales.
Nvidia shares rose 2% in brisk overnight trading. Shares fell 4.5% to 159.10 on Wednesday. However, NVDA’s share price has soared since hitting a bear market low of 108.13 on October 13, and we hope business will improve going forward. The chip giant is well above the 50-day line, but he’s still below the 200-day line.
I see no buy points on Nvidia stock. Ideally, the stock should rise above his 200-day line and establish a new base.
Tesla shares fell 3.9% to 186.92 on Wednesday. Although above his two-year low of 177.12 set on Nov. 9, TSLA shares are reaching resistance at his 10-day moving average. The EV giant has not closed above the 21-day line since Sept. 21.
Other megacaps struggled, apple (AAPL), microsoft (MSFTMore) and Google’s parent alphabet (Google) is above the 50-day moving average, but even Facebook’s parents meta platform (meta) is above the 21-day line.
Meanwhile, other EV stocks look as good or worse than Tesla. Also, CEO Elon Musk’s reign on Twitter could be weighing on his TSLA stock in a number of ways.
Musk will testify on Wednesday in a lawsuit over Tesla stock options in 2018, worth about $50 billion in his fortune. He has hinted that he won’t stay as CEO of his Twitter forever.
Market rally analysis
Stock market gains are definitely set to pause or retreat, and that’s what happened Wednesday.
The Dow Jones paused just below the August short-term high, holding the 200-day line comfortably. The S&P 500 looks pretty normal, but it’s not far from the 200-day line, so it’s slowing down.
The Nasdaq is still well above the 50-day line, but below its October short-term high. The Russell 2000 has broken below his 200-day line and below Monday’s intraday low.
Meanwhile, several stocks that had given buy signals in the last few sessions fell again on Wednesday. Growth strategies broadly stalled while defensive stocks rallied and defensive growth stocks held on, but many retailers tumbled on Target’s earnings miss.
Wednesday’s action will soon be forgotten if the market rallies in the near future. But if the Nasdaq falls below his 50-day bar, putting more pressure on major stocks, we’d be worried.
Markets are understandably focused on Fed policy, but there are other concerns. Still, the cumulative impact of this year’s Fed rate hikes is hurting the economy. And the impact will continue for months after the rate hikes finally come to an end.
An inverted yield curve reflects heightened recession risks.
Even now, the combination of high inflation and weakening demand has hit hard.Target revenue showed that, while rivals walmart (WMT) provided strong results and guidance. Inflation may taper off next year, but that doesn’t mean the outlook for corporate earnings and stocks is rosy.
what to do now
Wednesday’s action provides a reason why investors should be cautious about adding exposure too quickly. If the market pulls back, like Wednesday, buying a large number of new positions in one day can backfire. We recommend adding exposure gradually, assuming the market is rising and your position is moving forward.
Equity market gains are still good, but there are big swings, sector rotations, and unexpected trends in earnings. It is not yet clear which stocks or sectors will lead. So try not to focus too much on any particular sector or theme.
However, you should update your watchlist regularly and cast a wide net.
Early entry is still important. Traditional buy points haven’t worked particularly well, especially when they’re well above his 50-day line.
An investor may want to make a partial profit even if the stock made an immediate profit. This gives you the confidence to hold your remaining stocks longer and protects your portfolio, which is a round trip of stocks.
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