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Dow Jones futures rose slightly on Thursday night, as did S&P 500 and Nasdaq futures, with a possible vote on Tesla’s infrastructure bill and deliveries. The stock market made another attempt at a lackluster rebound on Thursday, reversing lower and closing again at the session low, although Congress avoided a government shutdown.
X
Retailers were the big losers on Thursday, amid weak profits from CarMax (KMX) and Bed bath and beyond (BBBY). But there were still widespread losses.
Among the titans of technology, Apple (AAPL) and Facebook (FB) start to live below the 50 day line, while Amazon.com (AMZN) is below the 200 day line. Microsoft stock and parent company Google Alphabet (GOOGL) are starting to get comfortable below the 50 day line, looking a lot like the Nasdaq composite.
Break (BREAK), Nvidia (NVDA) and AMD (AMD) rebounded towards their 50-day lines, but all closed below this key level.
You’re here (TSLA) could signal third quarter shipments as early as Friday, with a buzz around a solid number. Nio (NIO) will likely release September sales on Friday, with Xpeng (XPEV) and Li Auto (LI) also possible on this day. Chinese electric vehicle and battery giant WORLD (BYDDF) will likely report back next week.
Tesla stock fell but remains in a buy zone. Nio, Xpeng and Li Auto stocks are all close to their multi-month lows. BYD stock has fallen in recent weeks, but is still near record highs. China’s four shares of electric vehicles rose on Thursday.
Tesla, Snap, Nvidia, Microsoft, Google and Microsoft (MSFT) are listed on the IBD rankings. Google and Microsoft stocks are among the long-term IBD leaders. Google stock is also on the IBD 50.
Government shutdown avoided
The Senate and the House have approved a short-term funding bill. He goes straight to the White House for President Joe Biden’s signature, avoiding a partial government shutdown within hours. Congress has yet to approve an increase in the debt ceiling to avoid a government default, with Republicans insisting Democrats pass it themselves. Treasury Secretary Janet Yellen said this week that October 18 was the deadline, although the Congressional Budget Office suggests that late October or early November is the deadline for a default.
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Vote Infrastructures?
But the fate of the bipartisan $ 1,000 billion infrastructure bill is uncertain. House Speaker Nancy Pelosi continued to say Thursday afternoon that the House will vote on the package tonight. But many progressives promise to oppose the deal. First, they want meaningful progress, or outright passage, of yet another partisan tax and spending bill. With Democrats holding only a three-seat majority in the House and only a handful of Republicans likely to support the infrastructure bill, the odds of a high-profile defeat appear high. Pelosi could therefore withdraw the infrastructure bill at the last minute, unless it aims to send a message to some of its members.
Thursday night’s reports suggested the House would vote, if necessary, after 9 p.m. ET.
Dow Jones Futures Today
Futures contracts on Dow Jones increased by a fraction from fair value. S&P 500 and Nasdaq 100 futures rose 0.1%.
The 10-year yield fell from Thursday’s close to just under 1.5%.
Keep in mind that overnight action on futures contracts on Dow and elsewhere doesn’t necessarily translate into actual trades during the next regular trading session.
Join the IBD experts as they analyze the exploitable stocks in the stock market rally on IBD Live
Thursday stock exchange
The stock market opened higher but struggled to advance, closing near session lows for a third consecutive session.
The Dow Jones Industrial Average fell 1.6% in Thursday’s stock trading. The S&P 500 Index fell 1.2%. The Nasdaq composite was down 0.4% after trading higher for much of the session. Small cap Russell 2000 lost 0.9%.
The 10-year Treasury yield fell 1 basis point to 1.53%, remaining near recent peaks. Crude oil prices rose slightly, while natural gas prices rose again sharply.
Apple and Microsoft shares fell almost 1%. Facebook, Google and Amazon stocks lost only a fraction. All are down sharply for the week.
Growth ETF
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) slipped 0.4%, while the Innovator IBD Breakout Opportunities (BOUT) ETF fell 2.2%. The iShares Expanded Tech-Software Sector (IGV) ETF closed just below the breakeven point. Microsoft is a major component, while Snap stock is also a credit. The VanEck Vectors Semiconductor (SMH) ETF fell 0.1%, with Nvidia and AMD shares helping to boost SMH.
Reflecting more speculative historical stocks, ARK Innovation ETF (ARKK) climbed 0.7% and ARK Genomics ETF (ARKG) climbed 1.15%, but both are at their lowest for several months. Tesla shares are the main asset among ARK Invest ETFs.
Sector ETFs
The SPDR S&P Metals & Mining ETF (XME) edged up 0.2% while the Global X US Infrastructure Development ETF (PAVE) declined 2.2%. The US Global Jets ETF (JETS) was down 1.7%. SPDR S&P Homebuilders ETF (XHB) slipped 3.2%, with homebuilders, suppliers and housing-related retailers such as RH and Williams-Sonoma all losing ground. The ETF Energy Select SPDR (XLE) lost 1.5% and the ETF Financial Select SPDR (XLF) 1.6%.
The SPDR S&P Retail ETF (XRT) fell 4.75% on Thursday. CarMax plunged 13% on its missed profit, with AutoNation slumping 6%. Both fell below buy points. BBBY stock slumped 22% to a 52-week low after missing and guiding lower supply chain issues, on the heels of Nike (DE) and HR (RH). With a Kohl’s (KSS) downgrading on supply chain issues, a large number of retailers have sold, including Macy’s (M), Williams-Sonoma (WSM), Bath and Body (BBW), Difference (GPS), Turn (RVLV) and more.
Clothing manufacturers were also big losers, especially Hanesbrands (HBI).
Tesla deliveries
The electric vehicle giant will release third-quarter deliveries and production figures as early as Friday, although they could arrive over the weekend or as late as next Tuesday. Tesla’s shipments will hit around 232,000, according to the latest upward revised analyst consensus. Tesla sold the Model Y in Europe for the first time, likely increasing sales in that region. Tesla exported most of its production from Shanghai in July and August, mostly to Europe, but September looks like a big number.
Chip shortages may restrict Tesla’s production, but if so, it only slows production growth so far. Meanwhile, global auto production has plunged, boosting Tesla’s demand and prices.
Tesla stock plunged 0.75% to 775.48 on Thursday, staying comfortably within the buy point range of 764.55.
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Nio deliveries
Nio typically reports monthly sales on the first day of the following month, so expect numbers on Friday. Xpeng and Li Auto could also follow suit. Nio and Li Auto cut their quarterly delivery targets, citing chip issues. Nio and Xpeng both reported weaker sales in August than in July.
Nio and Xpeng make electric vehicles, while Li Auto’s Li One has a small gasoline engine to extend range.
BYD, which has ramped up production, is expected to easily overtake the combined sales of Nio, Xpeng and Li Auto for September.
Additionally, Nio started selling its ES8 in Norway on Thursday, joining rivals Xpeng and BYD in this key electric vehicle market.
Nio stock rose 1.4% on Thursday. XPEV stock rose 2.9% and Li Auto climbed 2.2%. All three are close to recent lows and below key moving averages. BYD stock climbed 2.8%, approaching its 50-day rising line.
Market analysis
The S&P 500, after an indoor day on Wednesday, underestimated Tuesday’s low and moved closer to an undercut point of its September 20 low. It was the worst fence since August 19.
The Dow Jones is still above its September 20 low, but it never recovered its 50-day line last week. The Russell 2000 came back below its 200 day line.
The Nasdaq composite tried to rebound but faded just above its August 19 low. With the collapse of tech giants like Apple and the pullback of key industries like chips and software, the Nasdaq has lost its bullish momentum.
The FFTY is now down 8.2% for the week.
The major indices are all below their 50-day moving averages, with a downward trend in recent weeks. The 21-day Nasdaq line is set to break above its 50-day line, with the S&P 500 already experiencing this short-term bearish cross.
Flagship actions, with a few exceptions such as Reached (UPST) or Tesla stock, are trying to hang up or are badly damaged.
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What to do now
Investors have little or no reason to increase their exposure. When the stock market lives below the 21 and 50 day line, not good things happen. The general trend remains weak. Could Thursday’s low be the lowest and will the market rally return to all-time highs from here? Sure, but we could also be on the cusp of a market correction.
Most of the money comes from strong uptrends in the market. Making big bets against long odds is a big loss strategy.
Keep your exposure light, focusing on stocks that work or pay off in the long run. Focus on building your watchlists and preparing for the next lucrative deal.
Read The Big Picture every day to stay in tune with the 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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