Dow Jones futures rose after hours, while S&P 500 futures and Nasdaq futures rose. Tesla Investor Day kicks off as Salesforce.com, Snowflake and other software earnings headline a busy overnight session.
The stock market rally took further damage on Wednesday as the 10-year Treasury yield hit 4% on the day. Some blue-chip stocks are flashing buy signals on the news. However, the S&P 500 and the Nasdaq headed lower.
apple (AAPL) fell back below the 200-day line as International Data Corp. now sees global smartphone sales falling slightly again in 2023 against its previous forecast of a modest rebound.
Tesla Investor Day opened with expectations for major announcements, but so far there haven’t been any. Despite speculation about the introduction of a new electric car, Tesla (TSLA) executives at the event said that a next-generation platform or vehicle would come at a “later date.” CEO Elon Musk’s “Master Plan 3” envisioned the world making a major push for clean energy.
Tesla is still expected to confirm the upcoming Model 3 upgrade and announce plans to build an EV factory in Mexico.
Tesla stock fell slightly overnight as the investor day continued.
Notable software makers Salesforce.com (CRM), splink (SPLK), Box (Box), Octa (OKTA) And snowflake (snow) reported late Wed. CRM stock and OKTA were big overnight winners, while SNOW, Box and Splunk stocks fell.
Dow jones futures today
Dow futures rose 0.45% against fair value. CRM stock is a component of Dow. S&P 500 and Nasdaq 100 futures tilted higher. TSLA stock is a component of the large Nasdaq 100.
The Labor Department will release initial weekly jobless claims data at 8:30 a.m. ET Thursday.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
Tesla Investor Day
The big presentations for Tesla Investor Day take place after closing Wednesday at the Austin EV Factory.
Musk began by emphasizing the need for a “sustainable future,” with his Master Plan 3 touting the world’s need to invest heavily in clean energy. That plays into Tesla’s bid to expand its energy storage business.
The EV giant said weeks ago that it would release more details about its next-generation EV platform at Tesla Investor Day, with much speculation that Tesla will reveal a lower-cost model and possibly give an idea of when production will start.
But Tesla hasn’t unveiled any next-generation cars, saying that will come “at a later date.”
Instead, the executives said, Tesla aims to cut assembly costs by 50% in its next-generation vehicle platform and reduce its factory footprint by 40%.
Tesla says it aims to cut silicon carbide by 75% for its next-generation drive unit. This is not good news for silicon carbide drivers such as on semiconductors (on), wolfspeed (wolf) And Aehr Test Systems (AEHR). All three EV chip stocks have fallen of late.
Tesla talked about driver assistance systems, 4,680 battery production and energy storage, but in relatively vague terms, with few numbers or details.
Tesla will offer unlimited home charging for electric cars at $30 per night later this year.
Tesla is still expected to confirm a Model 3 upgrade is coming this year, as well as when production will begin. Reportedly, the focus is on lowering the cost of production, which could help Tesla lower prices while maintaining decent profit margins. There are also reports that an upgrade to the Model Y is coming.
Mexico’s president said on Tuesday that Tesla will announce plans to build a new electric car factory in Mexico.
Tesla and Musk appear to be boosting targets to produce 20 million electric vehicles annually by 2030.
TSLA stock fell more than 3% after hours as Tesla Investor Day continued without major news. Tesla shares fell 1.4% to 202.77 in the regular Wednesday session, settling above the 21-day line.
The stock arguably has a cup pattern with a handle back to early November (or a very low handle on a base starting in September). This may indicate 217.75 buy points. But investors may have to wait for TSLA stock to clear its 200-day line, currently just above 221.
CRM stock rose in late trading after Salesforce earnings topped views and the software giant gave bullish guidance and doubled buybacks to $20 billion. Salesforce stock rose 2.3% to 167.35 on Wednesday, extending its rebound from the 200-day line and moving above the 21-day line. CRM stock is now pointing to gap higher above a cup handle buy point of 178.94.
SNOW stock fell sharply under extended measures as Snowflake’s earnings beat fourth-quarter opinions, but the company led lower first-quarter revenue and full-year revenue. The data analytics company also announced a $2 billion share buyback plan. Snowflake rose 12 cents to 154.50, just between the 200-day and 21-day lines. Investors can see 178.80 as a buy point from a chaotic handle to a bottom base.
SPLK stock fell modestly after hours as Splunk’s profit comfortably outperformed and the database and security software company tumbled first-quarter earnings and full-year revenue. Splunk stock lost 2 cents to 102.48, holding a 21-day streak at the base of a cup by handle, according to MarketSmith. The official buy point is 110.05.
BOX stock fell overnight as Box’s earnings topped with balanced revenue, but the software storage company was lower. Shares rose 0.7% to 33.58 on Wednesday, moving away from the 21-day line, extending its bounce off the 10-week line. The box stock was running on a new flat base on top of a previous flat base. The line of relative strength of BOX stock is at a multi-year high.
OKTA jumped in the late trade as the cybersecurity firm beat its fourth-quarter view and guidance for fiscal 2024 revenue. Okta stock is set to return above its 200-day line, which now roughly coincides with a still valid 74.28 buy-bottom point. Shares rose 0.2% to 71.44 on Wednesday, holding it for 50 days.
The stock market rose on Wednesday
The stock market rally had a mixed session, but was still negatively tilted overall.
The Dow Jones Industrial Average rose in the stock trading session on Wednesday. The S&P 500 fell 0.5%. The Nasdaq Composite sank 0.7%. Small cap Russell 2000 rose 0.1%.
Apple stock, which is a constituent of the Dow Jones, S&P 500 and Nasdaq, fell 1.4% to 145.31, backing away from the 200-day line and reaching a one-month low. Microsoft (MSFT), nvidia (NVDATesla stocks were also big negatives on Wednesday.
The 10-year Treasury yield jumped 8 basis points to 3.99%, reaching 4% at various times during the day. US manufacturing reports for February came in below views, still pointing to a moderate contraction. But the indexes of China’s manufacturing and service sectors rose strongly, indicating that China’s economic reopening is gaining momentum.
Meanwhile, more Fed officials indicated support or openness to a 50 basis point rate hike. The odds are still in favor of a quarter-point rate hike in March, May and June, with markets split on a fourth hike in July.
Despite higher Treasury yields, the US dollar fell on Wednesday, as strong Chinese data fueled risk appetite abroad.
Copper prices rose 1.7%.
US crude oil prices rose 0.8% to $77.69 a barrel.
Exchange Traded Funds
Among the ETFs, the Innovator IBD 50 ETF (fifty(up 0.4%, while the Innovator IBD Breakout Opportunities ETF)fit) gained 1.45%. iShares Expanded Technology and Software ETF (IGV) fell 0.8%. CRM inventory is one of IGV’s most important assets. VanEck Vectors Semiconductor Corporation (SMH) rose 0.1%, with NVDA stock holding a core.
SPDR S&P Metals & Mining ETFs (XME(up just over 2% and the Global Infrastructure Development Fund (ETF) in the USA)cradle) an advance of 0.6%. US Global Gates Foundation ETF (Planes) rose 0.2%. SPDR S&P Homebuilders ETF (XHB) declined 0.8%. Energy Defined Fund SPDR ETF (xle(Return 2% and the Financial Select SPDR ETF)XLF) decreased by 0.1%. SPDR Health Care Sector Selection Fund (XLV) decreased by 0.2%
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Market rally analysis
Wednesday saw the stock market rally mixed, closing at session lows. But the major indices are struggling around key levels with the 10-year Treasury yield at 4%.
The S&P 500 fell more than the 50-day line and nearly touched 200 on Wednesday morning. The Nasdaq fell back below the 200-day line, with the 50-day not much lower.
The Russell 2000 edged higher despite resistance at the 21-day moving average for the third consecutive session.
The lagging Dow hit its worst level since early November on the day, just above 200 a day, before making gains.
After a weak close on Monday and Tuesday followed by a slump on Wednesday, the major indexes are back at or below where they closed on Friday.
Leading stocks provided reasons for optimism.
Most leaders continued to establish or hold out, with modest gains or losses. But can this continue if the general trends do not improve?
The market rally is under pressure. The leading indices can’t afford to lose more ground. On the upside, the S&P 500 should regain the 50-day line, while the 21-day line is a major test for the S&P 500, Nasdaq, and Russell 2000.
The direction of the 10-year Treasury yield likely has a lot to do with the fate of the market rally. The ISM Services Index on Friday could be important, but the February jobs report won’t be out until the following Friday.
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What are you doing now
Some gaps work, but others don’t. Blue-chip stocks have been resilient in the decline, with more blinking buy signals in recent days. But if the market continues to suffer, the recent buy signals and breakouts will likely turn fake.
Investors should not look to increase their overall exposure until the S&P 500 and Nasdaq regain the 21-day lines. If you wait and the market improves, you will pass some blue-chip stocks, but there will be plenty of other buying opportunities.
So look for actionable stocks, but also stocks that are trending up.
On the flip side, if the market or your individual holdings deteriorates, you will need to move further into the margin.
Bottom line: be prepared, stay engaged, and be flexible.
Read the big picture every day to stay in sync with market trend, leading stocks and sectors.
Please follow Ed Carson on Twitter at @employee For stock market updates and more.
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