Dow Jones futures fell early Friday, along with S&P 500 and Nasdaq futures, as investors await November’s jobs report before market open.
A Tesla Semi Truck Delivery event was held Thursday evening with Tesla (TSLA) rival BYD releasing November booming EV sales overnight.
The stock market rally showed solid action on Thursday, with the indices mixed but consolidating Wednesday’s huge gains on comments from Fed chief Jerome Powell. Thursday’s PCE inflation report, the Fed’s preferred price gauge, showed lower-than-expected monthly increases with a slight cooling in headline and core inflation once again.
Ulta beauty (ULTA) headlined earnings reports Thursday night. ULTA stock traded slightly overnight after posting strong gains and increased guidance. The beauty retailer’s shares are already at record highs, extended by outlets. Veeva systems (VEEV) beat third-quarter fiscal views, but fourth-quarter guidance was slightly below the consensus midpoint. VEEV shares declined modestly in extended trade. The shares closed above the 200-day line, right around an early entry.
Meanwhile, giant Dow caterpillar (CAT) continues to look strong, with CAT shares just below a buy point. Cyber security leader Palo Alto networks (PANW) e Marriott International (MAR) buy signals are also flashing.
Boeing shares are on SwingTrader. Caterpillar was the stock of the day on Thursday’s IBD.
Dow Jones Futures today
Dow Jones futures fell 0.1% from fair value. S&P 500 futures fell 0.1%. Nasdaq 100 futures fell 0.25%.
The yield on the 10-year Treasury fell 1 basis point to 3.52%.
Dow futures, Treasury yields and more will fluctuate on the November jobs report, out at 8:30 AM ET.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular session of the stock market.
Economists expect November’s jobs report to show nonfarm payrolls rise 200,000, down from 261,000 in October. Pay attention to the household survey, which showed jobs down 328,000 in October. The unemployment rate, based on the household survey, should remain stable at 3.7%, with the labor force participation rate rising to 62.3%.
Other jobs data this week generally pointed to a gradual slowdown. Initial jobless claims unexpectedly decreased, but continuing claims increased once again. ADP reported a sharp slowdown in private sector hiring last month, while the October JOLTS survey reported a modest drop in vacancies.
Tesla Seed Delivery Event
Tesla CEO Elon Musk has delivered some semi-EVs to Tesla PepsiCo (PEP) Thursday night. The Tesla Semi was first introduced six years ago.
Musk claims the Tesla Semi has a range of 500 miles on a single charge. But there wasn’t much clarity on Tesla’s costs or which Tesla Semi production will go forward. This will be important as Tesla Semi tackles large EVs already on the market from Volvo, Nicholas (NKLA), BYD (BYDDF) and more.
Meanwhile, Tesla is offering $3,750 off Model 3 and Model Y in the US this month. The idea is to encourage people to take over now. On January 1, new US tax credits of $7,500, subject to certain price and income limits, go into effect, spurring many potential buyers to wait. The tax credits are expected to apply to most Model 3 sedans and Model Y crossovers, though the government hasn’t provided clarity yet.
Tesla also halved an 8,000 yuan ($1,133) insurance subsidy for December purchases, as expected, but now offers free top-ups and other perks that reportedly exceed 15,000 yuan.
Tesla stock was up a fraction Friday morning after closing unchanged Thursday at 194.70. TSLA stock was up 7.7% on Wednesday, resuming its 21-day line, during the big market rally and as China’s electric vehicle stocks soared.
Tesla vs. BYD: Which electric vehicle giant is the best buy?
Chinese electric vehicle giant BYD sold 230,427 new energy vehicles in November deliveries, up 153% from a year earlier and up 5.8% from October. This includes 229,942 personal vehicles and 485 commercial units, including trucks. Of these personal vehicles, approximately 113,915 were all-electric or battery electric vehicles (BEVs), up 147% from November 2021. Plug-in hybrids were up 164% to 116,027.
BYD’s total sales easily outpace Tesla’s deliveries and are rapidly closing the gap in BEV sales.
BYD should be the car brand No. 1 in China for the month, surpassing Volkswagen (VWAGY). The VW group will probably remain number 1, including Audi.
BYD stock fell 2.2% to 25.07 on Thursday, but still above its 50-day line. BYDDF rose 9.9% on Wednesday, along with other Chinese EV stocks.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock market rebound
The stock market rally had a 30-minute dip on Thursday morning but gradually improved to become mixed, a solid performance after Wednesday’s big gain.
The Dow Jones Industrial Average fell 0.6% in the stock market on Thursday, with Salesforce.com (CRM) a big negative. The S&P 500 index fell 0.1%. The Nasdaq Composite was up 0.1%. The small-cap Russell 2000 fell 0.2%.
U.S. crude prices rose 0.8% to $81.22 a barrel.
The yield on the 10-year Treasury fell 17 basis points to 3.53%, the lowest since the end of September. In the wake of comments from Fed Chief Powell and the PCE inflation report, markets are close to locking in a 50 basis point hike in Fed rates on Dec. 14, ending a four-meeting streak of 75 basis point moves . Furthermore, there is now a 50% chance of a Fed rate hike by just a quarter of a point in February.
The dollar, moving with yields, plunged to its lowest level in nearly three months.
Actions near purchase points
CAT stock fell 0.3% to 235.69. Stocks are stalling around a still-valid 238 buy point from a cup base going back to April, according to MarketSmith’s analysis. Investors could see 239.95 as another buy point, either as a high handle for the seven-month base cup or as a traditional handle for a broader consolidation starting in June 2021.
Shares of cybersecurity firm Palo Alto Networks rose 5% to 178.40, breaching its 200-day line, retaking that key level for the first time since mid-September. This comes after it bounced off its 50-day intraday line on Wednesday, shrugging off a big sell-off in peer earnings CrowdStrike (CRWD). Investors may see PANW stock as having a large double-bottom basis with a buy point of 193.01. But the stock is already usable after breaking above the 200-day line and a downward trendline from its April peak.
MAR stock fell 0.1% to 165.19, remaining above the buy point of the 164.99 handle from a low base since Aug. 16. Marriott stock rebounded off its 200-day line on Wednesday, rising 2.5% in heavy volume.
Among the best ETFs, the iShares Expanded Tech-Software Sector (IGV) ETF was up 1.1%, despite a sell-off in major CRM stocks. The VanEck Vector Semiconductor (SMH) ETF was down 0.3%.
SPDR S&P Metals & Mining ETF (XME) fell 0.8% and Global X US Infrastructure Development ETF (PAVE) was up 0.1%. The US Global Jets ETF (JETS) fell 0.4%. SPDR S&P Homebuilders ETF (XHB) was up 1.25%. The Energy Select SPDR ETF (XLE) fell 0.3% and the Financial Select SPDR ETF (XLF) fell 0.6%. Health Care Select Sector SPDR Fund (XLV) advanced 0.3%
Reflecting more speculative stocks, ARK Innovation ETF (ARKK) was up 1.1% and ARK Genomics ETF (ARKG) was up 0.6%. Tesla shares are heavily weighted in Ark Invest’s ETFs. Cathie Wood’s Ark also holds a small position in BYD stock.
Five top Chinese stocks to watch now
Analysis of market rallies
The stock market rally showed constructive action on Thursday, essentially maintaining Wednesday’s big gains.
The S&P 500 rebounded intraday from a pullback to its 200-day moving average, after finally resuming that key level on Wednesday. The Russell 2000 also held its 200 day line. The Nasdaq still has work to do to get back to its 200 days.
The Dow Jones gave up only a portion of Wednesday’s gains, largely due to Salesforce. Several Dow Jones stocks, including Caterpillar, Boeing and UNH, are showing strength. This reflects broader strength in industrials, finance, healthcare and more.
The PCE inflation report for October was slightly better than expected. After Wednesday’s powerful market rally on Fed Chief Jerome Powell – which frankly didn’t look particularly dovish – just holding onto those gains on Thursday was constructive.
Friday’s jobs report is another hurdle. If employment data points to some weakness in the labor market, it could provide an additional boon for equities. But a warm job market could trigger a major sell-off.
Treasury yields and the dollar have fallen sharply over the past couple of days and weeks, providing a major tailwind for equities. A rebound in yields and the greenback wouldn’t be a surprise.
Keep in mind that the market rally had a series of big one-day gains, followed by sideways or sliding action. This has made it difficult for investors to make progress even though the indices have been on an upward trend in recent weeks.
Time The Market with IBD’s ETF Market Strategy
what to do now
There were reasons to buy or resist Wednesday’s big move. Investors could have added a little exposure on Thursday, but the jobs report is a big question mark.
A market rally on Friday’s November jobs report could trigger a series of buying opportunities. But don’t cheat on promising stocks before big news. Instead, work on your checklists so you’re ready to take action. But also be prepared to reduce exposure if the market or your holdings head sharply lower.
Read The Big Picture daily to stay abreast of market direction and major stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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