Dow Jones futures fell slightly overnight, along with S&P 500 and Nasdaq futures. Investors will look to the November jobs report on Friday morning.
A Tesla Semi truck delivery event takes place on Thursday night with You’re here (TSLA) rival BYD is set to release soaring electric vehicle sales figures.
The stock market rally showed solid action on Thursday, with mixed hints but consolidating Wednesday’s huge gains on comments from Fed Chief Jerome Powell. Thursday’s PCE inflation report, the Fed’s favorite price gauge, showed weaker-than-expected monthly increases as headline and core inflation cooled slightly once again.
Ultimate beauty (ULTA) headlined earnings reports Thursday night. ULTA stock was little changed overnight after reporting strong earnings and raising its forecast. Shares of the beauty retailer are already at record highs, extended to points of purchase. Veeva systems (VEEV) beat fiscal Q3 views, but the Q4 forecast was slightly below the consensus midpoint. VEEV stock fell slightly in extended trade. Stocks closed above the 200-day line, just around early entry.
Meanwhile, the giant Dow caterpillar (CAT) continues to look strong, with CAT shares just below a buy point. Cybersecurity manager Palo Alto Networks (PANW) and Marriott International (MAR) also emit flashing buy signals.
Boeing stock is on SwingTrader. Caterpillar was Thursday’s IBD stock of the day.
Dow Jones Futures Today
Dow Jones futures fell slightly relative to fair value, along with S&P 500 futures. Nasdaq 100 futures fell 0.2%.
Dow Jones futures, Treasury yields and more will likely swing on November’s jobs report, due out at 8:30 a.m. ET.
Remember that overnight action on futures contracts on Dow Jones and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Report on the work
Economists expect the November jobs report to show a gain of 200,000 non-farm payrolls, from 261,000 in October. Pay attention to the household survey, which showed jobs down 328,000 in October. The unemployment rate, according to the household survey, should remain at 3.7%, while the activity rate should increase to 62.3%.
Other labor data this week generally pointed to a gradual slowdown. Initial unemployment insurance claims fell unexpectedly, but continuing claims rose again. ADP reported a sharp slowdown in private sector hiring last month, while October’s JOLTS survey found a slight drop in job openings.
Tesla Semi-Delivery Event
A Tesla Semi truck delivery event is set to begin at 5:00 p.m. PT, though the EV giant often starts big reveals and announcements late.
Tesla CEO Elon Musk will hand out Tesla Semi EVs to PepsiCo (PEP) Thursday evening. Speaking of delay, the Tesla Semi was first unveiled six years ago and was supposed to go into production in 2020.
Investors are still unsure of Tesla Semi’s precise specs, including lineup and price. This will be important as the Tesla Semi goes up against the large electric vehicles already in the market from Volvo, Nicholas (NKLA), BYD (BYDDF) and more.
Another big question is what Tesla Semi production will be in the coming months.
Meanwhile, Tesla is now offering discounts of $3,750 for the Model 3 and Model Y in the US this month. The idea is to encourage people to get delivered now. On January 1, new US tax credits of $7,500 come into effect, subject to certain price and income limits, causing many potential buyers to wait. The tax credits are expected to apply to most Model 3 sedans and Model Y crossovers, although the government has yet to provide clarity.
Tesla stock closed at 194.70 on Thursday. On Wednesday, TSLA stock jumped 7.7%, resuming its 21-day line, amid the big market rally and as Chinese electric vehicle stocks soared.
Tesla vs. BYD: Which electric giant is the best buy?
WORLD of sales
Chinese electric vehicle giant BYD is expected to release November deliveries on Friday or Saturday, with another record set. BYD is expected to be the No. 1 auto brand in China for the month, surpassing volkswagen (VWAGY). The VW group is likely to remain No. 1, including Audi.
BYD stock fell 2.2% to 25.07, but is still above its 50-day line. BYDDF jumped 9.9% on Wednesday, along with other Chinese electric vehicle stocks.
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Stock market rally
The stock market rally took a 30-minute dip on Thursday morning but gradually improved to a mixed performance, a solid performance after Wednesday’s big gain.
The Dow Jones Industrial Average fell 0.6% in Thursday trading, with Salesforce.com (CRM) a big negative point. The S&P 500 index fell 0.1%. The Nasdaq composite rose 0.1%. The small cap Russell 2000 was down 0.2%.
U.S. crude oil prices rose 0.8% to $81.22 a barrel.
The 10-year Treasury yield plunged 17 basis points to 3.53%, the lowest since late September. Following comments from Fed Chief Powell and the PCE inflation report, markets are poised to lock in a 50 basis point Fed rate hike on December 14, ending a streak of four meetings of 75 basis point moves. Additionally, there is now a 50% chance of a Fed rate hike of just a quarter point in February.
The dollar, moving with yields, fell to its lowest level in nearly three months.
Stocks close to buy points
CAT stock fell 0.3% to 235.69. Stocks stop around a still valid buy point of 238 from a cut base dating back to April, according to MarketSmith analysis. Investors could see 239.95 as another buying point, either as a high handle for the seven-month cut base or a traditional handle for deeper consolidation from June 2021.
Shares of cybersecurity firm Palo Alto Networks climbed 5% to 178.40, topping its 200-day line, retaking that key level for the first time since mid-September. It comes after it bounced off its 50-day intraday line on Wednesday, brushing aside a big profit selloff among its peers. CrowdStrike (CRWD). Investors might view PANW stocks as having a large double-bottom base with a buy point of 193.01. But stocks are already actionable by erasing the 200-day line and a descending trendline from the April peak.
MAR stock fell 0.1% to 165.19, remaining above the buy point of 164.99 from a low from Aug. 16. On Wednesday, Marriott stock rebounded from its 200-day line, rising 2.5% in heavy volume.
Among the top ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) climbed 1.1%, even with the sale of major CRM stocks. ETF VanEck Vectors Semiconductor (SMH) fell 0.3%.
The SPDR S&P Metals & Mining ETF (XME) fell 0.8% and the Global X US Infrastructure Development ETF (PAVE) edged up 0.1%. The US Global Jets ETF (JETS) fell 0.4%. The SPDR S&P Homebuilders ETF (XHB) climbed 1.25%. The Energy Select SPDR ETF (XLE) fell 0.3% and the Financial Select SPDR ETF (XLF) fell 0.6%. The SPDR healthcare sector fund (XLV) gained 0.3%
Reflecting more speculative stocks, ARK Innovation ETF (ARKK) rose 1.1% and ARK Genomics ETF (ARKG) climbed 0.6%. Tesla stock is a major weight in Ark Invest ETFs. Cathie Wood’s Ark also has a small position in BYD stocks.
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Market rally analysis
The stock market rally showed constructive action on Thursday, essentially holding onto Wednesday’s big gains.
The S&P 500 index rebounded intraday from a pullback towards its 200-day moving average, after finally recovering that key level on Wednesday. The Russell 2000 also maintained its 200-day line. The Nasdaq still has work to do to get back to its 200 days.
The Dow Jones gave back only part of Wednesday’s gains, thanks in large part to Salesforce. Several Dow Jones stocks, including Caterpillar, Boeing and UNH stocks, are showing strength. This reflects the broader strength of industries, financial services, healthcare services and more.
The October PCE inflation report was slightly better than expected. After Wednesday’s powerful market rally on Fed chief Jerome Powell — who, frankly, didn’t seem particularly dovish — just holding on to those gains on Thursday was constructive.
Friday’s jobs report is yet another hurdle. If the jobs data points to some loosening in the labor market, this could provide additional tailwind for equities. But a boiling job market could trigger a big sell-off.
Treasury yields and the dollar have fallen sharply over the past two days and weeks, providing a tailwind for equities. A rebound in yields and the greenback would not be a surprise.
Keep in mind that the market rally saw a number of large gains in one day, followed by sideways or slippery action. It is therefore difficult for investors to make progress, even if the indices have tended to rise in recent weeks.
Time the Market with IBD’s ETF Market Strategy
What to do now
There were reasons to buy or stick with Wednesday’s big move. Investors could have added some exposure on Thursday, but the jobs report is a big question mark.
A Friday market rally on the November jobs report could trigger a number of buying opportunities. But don’t cheat on promising stocks before the big news. Instead, work on your watchlists to be ready for action. But also be prepared to reduce your exposure if the market or your holdings head sharply lower.
Read The Big Picture every day to stay in tune with market direction and top stocks and sectors.
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