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Dow Jones futures rose slightly on Thursday night, as did S&P 500 futures and Nasdaq futures. The stock rally had a tough session on Thursday. The Dow Jones fell slightly as the Nasdaq stumbled suffered its worst loss since late October, as Apple stock, You’re here (TSLA) and many other technologies have tumbled areas of resistance.
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Soaring Treasury yields were the trigger, although France’s new Covid shutdown and falling crude oil prices did not help. Investors should largely avoid tech stocks while investing cautiously in other growing sectors.
FedEx (FDX) and Nike (NKE) income posted after closing.
FedEx profits were better than expected, with EPS and sales growth accelerating for a third consecutive quarter. FDX stock rose 4% in extended trade after falling 0.9% to 263.51 on Thursday.
Nike profits beat while revenues plummeted. Nike stock sank 3% overnight, suggesting a test of its 50-day lineup on Friday. The Dow Jones giant fell 1.1% on Thursday to 143.17. NKE stock has a buy point of 148.05.
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Meanwhile, some major tech and growth stocks have met resistance as the Nasdaq comes under pressure again. Some examples include Tesla’s stock, Pay Pal (PYPL), Pinterest (PINS), Nvidia (NVDA), Apple (AAPL) and Twilio (TWLO).
Volkswagen (VWAGY), who had expanded considerably in the euphoria of his big EV push, plunged 15%. Even now, VWAGY stock is 18.5% above its 10 day line.
Williams-Sonoma (WSM) erupted Thursday, up 18.5%. WSM stock moved away from a strong earnings base and outlook, as well as a rise and buyout of dividends.
PayPal and Nvidia shares are listed in the IBD rankings. AMP action is on SwingTrader. PayPal shares are on IBD Long-Term Leaders. Tesla, PayPal and Williams-Sonoma stock are on the IBD 50. PINS stock is on the Big Cap 20.
Dow Jones Futures today
Dow Jones futures contracts increased 0.2% from fair value. Futures contracts on S&P 500 rose 0.25%. Nasdaq 100 futures rose 0.3%.
Remember that an overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular trading session.
Join the IBD experts as they analyze the exploitable stocks during the stock market rally on IBD Live.
Coronavirus news
Coronavirus cases around the world have reached 122.31 million. Covid-19 deaths have exceeded 2.70 million.
Coronavirus cases in the United States have reached 30.35 million, with deaths exceeding 551,000.
The European Medicines Agency said that AstraZeneca (AZN) against coronavirus and not related to blood clots. This could pave the way for the resumption of AstraZeneca’s jabs by European nations. Even before the AstraZeneca vaccine suspensions, the EU was lagging far behind the UK and US in terms of vaccinations.
Many European countries are seeing an increase in Covid cases as a result. Paris and much of France will enter a partial lockdown from Saturday and lasting for four weeks. Italy reimposed numerous restrictions on Monday. This will keep Europe’s economic recovery in the slowdown, as the United States swiftly rolls back coronavirus restrictions.
The FDA has yet to approve the AstraZeneca vaccine, pending the results of a US trial. The Biden administration has announced that it will ship a few million stored doses to Canada and Mexico.
Stock market rally Thursday
The stock rally was on the defensive, with the Nasdaq leading the indices to close near session lows.
The Dow Jones Industrial Average closed 0.5% lower in Thursday’s stock trading. The S&P 500 index fell 1.5%. The Nasdaq composite plunged 3% in higher volume, its worst decline since a 3.7% loss on October 28.
The 10-year Treasury yield jumped 7 basis points to 1.71%. The intraday peak of 1.754% was the highest since January 2020. With GDP growth likely to increase from 6% to 8% in 2021 as the pandemic recedes as fiscal and monetary policy is at full capacity, Treasury yields rise from historic lows meaning.
US crude oil prices plunged 7.1% to $ 60 a barrel, down for a fifth straight session. US crude inventories rose again last week, the Energy Information Administration reported on Wednesday. Gasoline supplies have increased again after refinery shutdowns hit production for weeks. Meanwhile, coronavirus concerns in Europe will weigh on energy demand there.
Crude oil and solar stocks were hit hard Thursday, topping the S&P 500’s biggest losers.
Growth stocks hit resistance
Tesla stock slipped 6.9% to 653.16. It encountered resistance around the 21-day exponential moving average with the 50-day line significantly higher. TSLA stock reversed higher on Wednesday, closing just above its 21 days.
Apple stock slipped 3.4% to 120.53, also pulling out of its 21-day line. On Tuesday, Apple passed 21 days and a strong downtrend. PYPL, TWLO, PINS and Nvidia stocks fell from their 21 and 50 day lines, losing 5% -9% on Thursday.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) fell 2.7%, while the Innovator IBD Breakout Opportunities ETF (BOUT) fell 3.7%. The iShares Expanded Tech-Software Sector (IGV) ETF fell 3.5%. The VanEck Vectors Semiconductor (SMH) ETF fell 4 %%, with Nvidia stock being a major component.
Reflecting more speculative stocks, ARK Innovation ETF fell 5.8% and ARK Genomics ETF fell 4.7%. Like many of the speculative growth names they own, both ARK ETFs have pulled off their 21-day lines. Tesla stock is the largest ETF holding of ARK Investments.
Stock of the day: high-end retailer with multiple points of purchase
Analysis of stock market rallies
On Wednesday, the Nasdaq rebounded from intraday lows as the Treasury posts reduced gains after the Federal Reserve meeting and comments from Fed Chief Jerome Powell.
But Thursday’s spike in the 10-year Treasury yield caused the Nasdaq to drop below the 50-day line after three days above the key level. The Nasdaq and growth stocks may be able to handle rising Treasury yields, but skyrocketing yields not. Much like the brave Sir Robin in Monty Python’s “Holy Grail”, the Nasdaq quickly shouts “run away” and flee at the first sign of trouble.
The Nasdaq closed below its 21-day line for the first time since March 10 and undermined Wednesday’s intraday lows.
Bottom line: The composite is basically still in a fix. As long as the Nasdaq is below its 50 day line – as well as resistance near last week’s highs – The. This is especially true for those who are stuck below key levels, such as Tesla, Apple, and Twilio, with many others in much worse shape.
But even the technologies that erupted or flashed early entries – such as Materials applied (AMAT), MKS Instruments (MSKI) and other chip names – are at the mercy of the Nasdaq.
If you have long-term positions or pilot positions in a few technologies, that’s okay, but for now investors should focus on what works.
Dow Jones looks strong, for now
Outside of technology, the stock rally still looks healthy. The Dow Jones hit a new intraday high, with the S&P 500 and Russell 2000 nearby. The games of reopening the real economy / economy continue to explode, prolong gains or at least hold on.
If the Nasdaq starts heading towards its recent lows, the market as a whole is likely to weaken, as the Dow did in early March. Indeed, on Thursday the slide in the Nasdaq, along with energy prices, triggered large losses in the S&P 500 and ultimately pulled the Dow Jones down.
So don’t feel like you have to be heavily invested. Don’t go chasing after actions that are extended to buy zones.
As always, stay flexible and engaged.
Read The Big Picture every day to stay in tune with 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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