Dow Jones lost 400 points on hot inflation, Tesla FSD recovered; DoorDash runs on earnings
Dow Jones futures fell after hours, along with S&P 500 futures and Nasdaq futures. Application Materials and DoorDash are the main earnings after closing.
The stock market rally backed off on Thursday amid the sizzling wholesale inflation report. The Dow Jones and other major indexes cut their losses initially, but then fell back to session lows on the back of a hawkish statement from Fed President St. Louis James Bullard and the sell-off in Tesla stock is heating up. Tesla (TSLA) is recalling more than 362,000 vehicles due to a Full Self-Driver defect that can cause a crash.
But the top stocks continue to perform well overall.
Application materials (amateurs), HubSpot (CENTER), DoorDash (DASH), Dropbox (DBX), medical shockwave (SWAV), Texas sugar house (TXRH) And Vale (VALUE) are notable earnings reports after Thursday’s closing bell.
Deere (DE) reported early Friday.
Dow Jones Futures Today
Dow Jones futures contract fell below fair value. S&P 500 futures fell 0.1%. Nasdaq 100 futures fell 0.25%.
Remember that action overnight in future index and other places that don’t necessarily translate into actual transactions the next time stock market meeting.
AMAT stock rose slightly at the end of the session when Beat the earnings of Applied Materials financials view Q1, while the chip equipment maker’s Q2 guidance topped the midpoint. Applied Materials shares fell 3.4% to 115.41 on Thursday. That’s back under 116.19 cup base buy point, although AMAT could get it back on Friday.
HUBS stock spiked after hours, signaling a breakout as HubSpot earnings easily beat. The marketing software maker fell 1.5% to 361.93 on Thursday. HubSpot stock has a cup base with a handle with a buy point of 399.65, according to MarketSmith Analysis.
DASH stock appeared overnight DoorDash reported a larger-than-expected loss. But revenue outperformed while the food delivery app giant also offered an upbeat outlook and announced a $750 million acquisition. Shares of DoorDash rose 1.9 percent to 66.89 on Thursday. DASH stock recently bottomed out as it recaptured the 200-day line.
DBX stock fell slightly in the long run as Dropbox earnings just beat. Dropbox stock fell 0.9% on Thursday to 23.96, just below the 24.19 of cup with handle buy points.
SWAV stock spiked toward the end of the action as Shockwave earnings squashed views while revenue matched. Shares of Shockwave fell 4 cents on Thursday to 191.24, not far from the 50-day moving average but still some distance from the 200-day moving average.
TXRH stock fell sharply in overnight trading, signaling a move below a recent buy point on missed Texas Roadhouse earnings and sales. TXRH stock rose 0.8% on Thursday to 105.15, still in range from 101.85 flat sole entrance.
Brazilian mining giant Vale was little changed after reporting fourth-quarter results. Vale shares closed up 0.2 percent to 17.09. Shares recently rallied 12% from 17.19 cup with handle buy points. Investors can use a move above the 50-day line, which roughly coincides with the previous buy point, as an entry.
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Stock market recovers
The stock market rally opened lower on the back of a hot producer price index and lower-than-expected jobless claims. That continues the trend of generally strong economic data, including Tuesday’s CPI inflation report. The major indexes fell to lows, but faded again in the last hour of trading. Bullard’s rate hike comments on the Fed and TSLA stock could be the catalyst for the late afternoon slide.
The Dow Jones Industrial Average fell 1.3% on Thursday stock market trading. The S&P 500 index fell 1.4%. The Nasdaq composite fell 1.8 percent. The Russell 2000 small-cap index fell nearly 1%.
US crude oil prices fell 0.1% to $78.49 per barrel.
Copper prices rose 2.8%.
The yield on the 10-year Treasury note rose 3 basis points to 3.84%, after touching 3.87% on the day. The 10-year Treasury yield is at its highest in 2023, up from a Feb. 2 low of 3.33%.
Louis Fed’s Bullard said on Thursday afternoon that he is willing to raise rates by 50 basis points. Bullard is one of the Fed’s more hawkish policymakers and the most eager to make big moves. But markets are still pricing in 1/4 point moves in February and March, while leaning another point in June or July.
Among the growth ETFs, the Innovator IBD 50 ETF (FFTY) fell 2.4%, while the Innovator IBD Breakout OPPORTUNITY ETF (HOUR) decreased by 1%. iShares Expanded Tech-Soft Sector Sector ETF (IGV) decreased by 2.5%. VanEck Vectors Semiconductor ETF (SMH) gave up 2.7%. AMAT stock is a notable stock that SMH is holding.
Reflecting more speculative stocks, the ARK Innovation ETF (ARKK) lost 2.8% and the ARK Genomics ETF (ARKG) 2.9%. Tesla stock is the primary stock held on Ark Invest ETFs.
SPDR S&P Metals & Mining ETF (XME) rebounded 1% and the Global X US Infrastructure Development ETF (PAY THE ROAD RED) decreased by 1%. US Global Jets ETF (jet plane) decreased by 1.8%. SPDR S&P Homebuilders ETF (XHB) decreased by 1.2%. Energy Select SPDR ETF (XLE), Financial Options SPDR ETF (XLF) and the Healthcare Sector SPDR Fund (XLV) all withdrew 1%.
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Tesla FSD recall
The National Highway Traffic Safety Administration reported Thursday that the Tesla Full Self-Driver allows a vehicle to “exceed the speed limit or pass through intersections in an illegal or impractical manner.” anticipating (that) increases the risk of collision.”
NHTSA said about 362,758 Tesla vehicles may be affected. Tesla, which appears to have objected to some of the findings, will execute the recall via an over-the-air software patch.
CEO Elon Musk has criticized calling the move a recall, saying it is “outdated and completely wrong!”
NHTSA is conducting a wide-ranging investigation into Tesla’s FSD and Autopilot driver assistance systems, including crashing into stationary vehicles and virtual braking. The Justice Department is conducting a criminal investigation into Tesla’s self-driving car claims. But there is no timeline for when those investigations might end or whether regulators will take any action against Tesla.
Musk has claimed for years that Tesla will achieve fully autonomous driving “within this year”. But even FSD Beta is only a Level 2 driver assistance system.
Tesla shares fell 5.7% to 202.04 on Thursday. The stock fell slightly initially, but selling increased at the close. It’s unclear whether TSLA stock is driving the overall market down or vice versa.
But the stock is still up 2.6% for the week and has nearly doubled from its January 6 bear market low of 101.81. TSLA stock has approached the 200-day moving average, a clear resistance area.
Tesla shares fell slightly after closing in positive trade.
Analysis of market recovery
The stock market rally has alternated between resilience and strength in February despite mixed earnings and economic data.
The major indexes were down on Thursday, but all are continuing to trade within a recent range since early February. The Dow Jones has dipped below the 21-day line, but is still holding the 50-day line.
A longer pause for the market rally would be fine.
Some other stocks give buy signal, such as Albemarle (ALB), Iridic (IRDM) And Cisco system (CSCO). Many other recent momentums are holding up well, including global foundry (GFS), Network Arista (NET) And monster beverage (MNST).
There are some notable losers, including Shopify (SHOP) And Grill (TOST) on income. But the general trend is favorable.
Lots of other leaders are setting in. If the market rally breaks out of the recent pause, many of these names are likely to break out or trigger early entries.
Keep in mind that a stock market rally can shift from a “half-full” mentality to a sell-off in the face of uneven or ugly earnings reports and economic data. The rally in Treasury yields and the dollar could start to become a bigger problem.
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What to do now
Investors need to get ready, build their watchlist, do some extra work on the potential big winners who are on the cusp of buying. Doing this preparatory work means you can focus on the best stocks, with a balanced head. It will help you avoid buying expansion.
Don’t get too focused, be ready to cut your losses and be cautious when it comes to income. These rules will help protect you from a bearish gap, such as TOST stock on Thursday.
Read Big picture every day to stay in sync with market trends and top stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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