Dow Jones futures rose early Thursday, along with S&P 500 futures and Nasdaq futures. The stock market rally saw a flat to lower trading session on Wednesday.
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The Nasdaq led the declines apple (AAPL), a parent from Google the alphabet (The Google) And Tesla stock extended to big weekly losses. Apple and Google stock broke below some support levels during this Tesla (TSLA) is approaching the lows of a bear market.
Tesla continued to slide Thursday on various headlines.
The sideways action over the last several weeks has been difficult to buy aggressively. Volatile markets cut off investors. It’s not the time to add exposure.
Late Wednesday, the Pentagon said so Amazon.com (AMZN), The Google, Microsoft (MSFT) And the inspiration (ORCL) won cloud computing contracts that could total a combined $9 billion through 2028. In 2019, the Department of Defense was awarded a $10 billion cloud computing contract, but canceled that deal in 2021 amid Amazon’s objections.
The four tech giants are little changed in after-hours trading.
Dow jones futures today
Dow futures rose 0.4% against fair value. S&P 500 futures rose 0.4% and Nasdaq 100 futures rose 0.45%.
The 10-year Treasury yield rose 6 basis points, to 3.47%.
Crude oil futures jumped nearly 4% after plunging to 2022 lows on Wednesday. The Keystone pipeline has been closed due to the spill.
Copper rose 1%.
Hang Seng bounced back 3.4%, resuming its recent bullish trend as local media reported that Hong Kong is considering ending the outdoor mask rule. US-listed Chinese stocks were pointing to a strong rally.
Remember to work in overnight Dow Jones futures contracts and elsewhere that does not necessarily translate into actual trading in the next regular session Stock market session.
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Stock market rise
The stock market traded slightly lower for most of the Wednesday session, closing generally in the red.
The Dow Jones Industrial Average rose less than 2 points on Wednesday Stock market trading. The S&P 500 fell 0.2%. The Nasdaq Composite Index fell 0.5 percent. Small cap Russell 2000 fell 0.3%.
US crude oil prices fell 3% to $72.01 a barrel, continuing to fall on global demand concerns. Gasoline futures fell 3.4% to a one-year low. Natural gas prices rose 4.6% after a sharp drop in five sessions.
The 10-year Treasury yield fell 10 basis points to 3.41%, hitting a nearly three-month low.
The inverse relationship between stocks and bond yields is diminishing because Treasury yields are now falling further as recession fears ease inflation pressures. And the tamed CPI report for November on December 13th will still be welcome. While a half-point rate hike looks very likely on December 14, progress on inflation should raise hopes of smaller increases in early 2023 and an early end to tightening. This would reduce the risk of a recession, or at least a hard landing.
Exchange Traded Funds
Among the growth ETFs is iShares Expanding Technology and Software Sector Fund (IGV) fell 0.5%. VanEck Vectors Semiconductor Corporation (SMH) is closed directly below the break-even point. Reflecting more speculative stories, the ARK Innovation ETF (ARK)ark(down 0.8% and the ARK Genomics ETF)ARKG) increased by 0.3%. TSLA stock is a major holding via Ark Invest’s ETF.
SPDR S&P Metals & Mining ETFs (XME(down 0.3% and the Global Infrastructure Development Fund (ETF) in the USA)cradle) lost a small part. US Global Gates Foundation ETF (Planes) decreased by 3.3%. SPDR S&P Homebuilders ETF (XHB) increased by 1.8%. Energy Defined Fund SPDR ETF (xle(Down 0.2% and Financial Select SPDR ETF)XLF) decreased by 0.4%. SPDR Health Care Sector Selection Fund (XLV) increased by 0.8%.
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Apple Stock and Google Stock
Apple stock fell 1.4% on Wednesday to 140.94, marking its lowest level since Nov. 10. So far this week, AAPL stock is down 4.65%, crossing the 50-day line. The tech giant is approaching the Dow Jones low of October 13 at 134.37 but is still far from the bear market low of 129.04 set on June 16.
Google shares fell 2.1% to 94.94, below the 50-day line. GOOGL stock is down 5.4% so far this week, erasing gains from the previous three weeks. Shares are still comfortably above their November 3 bear market lows of 83.34.
Tesla stock
Tesla stock fell 3.2% to 174.04 Wednesday, closing at a bear market low of 166.19 set on November 22. Shares are down 10.7% so far this week. TSLA stock fell more than 50% in 2022.
On Wednesday, Tesla cut China prices by 6,000 yuan for cars in stock. Besides insurance subsidies, free fees, and other goodies, Tesla is offering more than 21,000 yuan in incentives for cars in the lot. This follows price cuts in late October in China. It comes before government subsidies for electric cars expire on December 31, which should drive demand forward. This also comes amid widespread reports – denied by Tesla – of looming production cuts in Shanghai.
Sources told Bloomberg that Tesla’s Shanghai plant will reduce production shifts and delay hiring some new hires due to weak Chinese demand. It follows widespread reports recently, denied by Tesla, that the electric vehicle giant would cut Shanghai production by 20%.
Meanwhile, Tesla China chief Tom Chu has been tapped to run the Austin plant and ramp up production there, Bloomberg reported Thursday.
Bloomberg reported Wednesday evening that Elon Musk’s bankers may offer him new marginal loans backed by Tesla stock to replace some of Twitter’s high-interest debt. Banks struggled to get rid of Twitter’s debt. Musk has already put up much of his Tesla stock holdings as collateral.
TSLA stock fell modestly early Thursday.
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Market rally analysis
The stock market rally continued its decline, although the technical picture did not change significantly.
The Nasdaq tested the 50-day line, the day after it fell below the 21-day moving average. Apple, Google and Tesla stocks affected the indexes of major companies, but the underlying trend was also slightly lower.
Major indices have generally headed higher from their October 13 lows, especially the Dow Jones and the S&P 500. The market rally seemed to have gained momentum late last week, with the S&P 500 above its 200-day line and the Dow hitting a high within seven months.
But with the recent decline, the leading indices and the Russell 2000 are basically where they were in early November or late October.
Sideways markets are among the most dangerous for investors, especially when there is both up and down volatility. There is enough strength on the upside to attract buyers, but then the market swings lower for quite some time. This forces investors to either cut their losses when they are small – with a good chance that stocks will rebound – or risk a much larger decline.
The current volatile market rally has an additional hurdle. Most of the progress has come in just a few sessions of a day, so it’s hard to have even small upsides to build gains on new positions.
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What are you doing now
The stock market rally has hit resistance and is testing some key levels, but is not seriously damaged yet. If you have a modest exposure with positions that work, you don’t need to go out. Taking partial profits is not a bad idea in this market of course.
But there is a strong chance that anyone who has been buying stocks over the past several weeks when they break out or get early buy signals is falling into those holdings. In a sideways, choppy market, when stocks start to look interesting, they may be about to peak.
Investors should beware of increasing exposure until the market can clear its recent trading range, with the S&P 500 decisively above its 200-day line. That may not happen until next week’s CPI inflation report and the Fed meeting.
Even then, investors should slowly increase positions, in case the major indexes fall again after reaching short-term peaks.
But keep working on those watchlists. Industrial plays and infrastructure looks good, along with a variety of medicines. Some brokerages hover around buy points. The chip equipment names show relative strength, with a number of semiconductor plays holding up quite well.
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