Dow futures fell slightly overnight, along with S&P 500 futures and Nasdaq futures. The Fed’s preferred inflation gauge opened Friday morning, while Tesla stock rose of late after Elon Musk’s comments.
The stock market suffered heavy losses on Thursday, reversing Wednesday’s gains and more amid negative corporate news and economic data as well as negative comments from billionaire investor David Tepper. Major indices broke key levels with several blue-chip stocks retreating. Stocks pared losses, but closing declines were still significant.
nvidia (NVDA), L Research (LRCX) And other chip stocks were big losers, such as the memory chip maker micron technology (moA loss of views, a targeted decline, and the announcement of additional cuts in capital spending.
the Tesla (TSLA) the collapse continued. In addition to company-specific factors, Tesla shares fell Thursday along with other automakers carmax (KMX) cited the vehicle’s affordability issues due to its significant quarterly misses. TSLA stock rose of late after Elon Musk indicated there would be no new stock sales until 2023.
Investors should be largely in cash, reducing already modest exposure and largely avoiding new purchases.
Third-quarter GDP growth was revised higher than expected, along with a measure of inflation in the report. Initial jobless claims rose but less than expected. The November index of leading economic indicators fell 1%, strengthening arguments for a recession next year.
PCE inflation data
On Friday, the Commerce Department will release the personal consumption expenditures price index for November. Inflation data is part of the monthly income and spending report.
The PCE price index should rise by 0.2% compared to October, with core prices also rising by 0.2%. PCE inflation should ease to 5.5% from 6% in October. Core PCE inflation is expected to slow to 4.6% from 5%.
The PCE inflation rate has been the Fed’s preferred rate measure for some time. Fed Chairman Jerome Powell recently said he’s keeping a close eye on PCE services prices excluding housing.
Personal income should rise 0.3% in November, with consumer spending rising 0.2%. Americans have been wallowing in savings and increasing credit charges in recent months.
Dow jones futures today
Dow Jones futures lost 0.2% against fair value. S&P 500 futures were down 0.2% and Nasdaq 100 futures were down 0.35%, even as TSLA stock provided a modest boost.
The 10-year Treasury yield rose 23 basis points, to 3.7%.
Crude oil futures rose about 1%.
PCE inflation figures will be released at 8:30 AM ET. Durable goods data for November will also be released at that time, with New Home Sales for November due at 10 a.m. ET.
Stock market rise
The stock market rally started out weak and continued to falter during the afternoon. Major indices pared losses afterwards but still posted devastating losses.
The Dow Jones Industrial Average fell just over 1% on Thursday Stock market trading. The S&P 500 fell 1.45%, with Tesla and LRCX the worst performers. The Nasdaq Composite fell 2.2%. Small-cap Russell 2000 shed 1.3%.
Shares of Apple fell 2.4% to 132.23, not far from the June bear market low of 129.04. Dow Jones titan Microsoft gave up 2.55%, below its 50-day line after holding that key level since early November. Amazon stock fell 3.4%, undercutting the Covid decline in March 2020.
Nvidia fell by 7%, but found support at the 50-day line.
US crude oil prices fell 1% to $77.49.
The 10-year Treasury yield fell 1 basis point, to 3.67%. The two-year Treasury yield, which is closely linked to Fed policy, rose modestly. Markets still expect interest rates to rise by a quarter point in February and March.
Exchange Traded Funds
Among the growth ETFs is iShares Expanding Technology and Software Sector Fund (IGV) down 1.9%, with MSFT stock being a major component. VanEck Vectors Semiconductor Corporation (SMH) by 4.15%. Nvidia, LRCX, and Micron stock are SMH’s notable holdings, but chip weakness has been widespread.
Reflecting more speculative stories, the ARK Innovation ETF (ARK)ark) fell 3.4%, dropping to a five-year low. ARK Genomics ETF (ARKG) decreased by 1.1%. TSLA stock is a major holding across Ark Invest, but especially ARKK.
SPDR S&P Metals & Mining ETFs (XME) lost 1.75%. US Global Gates Foundation ETF (Planes) decreased by 2.1%. SPDR S&P Homebuilders ETF (XHB) decreased by 0.9%. Energy Select SPDR ETF (xle(Cooled 2.3% and Financial Select SPDR ETF)XLF) conceding 0.9%. SPDR Health Care Sector Selection Fund (XLV) decreased by 0.1%.
Tesla stock fell 8.8% to 125.35 on Thursday, marking its lowest level since September 2020 as the high-volume sell-off continued. Tesla doubled its year-end US delivery discount to $7,500 late Wednesday. It came as CarMax affordability concerns plagued automakers and dealers far and wide. TSLA stock lost nearly 36% in December alone.
However, Tesla’s Elon Musk, on a Twitter Spaces call Thursday night, said, “I will not sell stocks next year under any circumstances… I will not sell stocks until 2024-2025.”
Musk has sold nearly $39 billion in Tesla stock since shares peaked in November 2021, including another payment in mid-December. He has stated several times that he is done with the sale at the moment, but it has never been final.
However, Musk has made it clear that he will not tone down his politically charged tweets. “I’m not going to suppress my views just to increase the share price.”
TSLA stock rose 2% in overnight trading.
Market rally analysis
The stock market rally was in a bearish mood on Thursday, with major indexes lower on the back of economic data and corporate news.
The S&P 500, which just regained its 50-day line on Wednesday, has been selling off Tuesday’s lows intraday. So did the Nasdaq, but both rallied to finish above Tuesday’s lows.
The Dow Jones just cut Monday’s lows for the day, but rebounded to close above the 50-day line.
While Apple, Amazon, Microsoft, and especially Tesla stocks look terrible, this isn’t just a huge sell-off. Invesco S&P 500 Equal Weight Fund (RSP) fell 1.1% on Thursday, returning below the 50-day line.
SMH’s chip ETF fell below its 50-day line, just a few days after jumping to its best performance in multi-months on Dec. 13, above its 200-day average. In contrast to the S&P 500, SMH closed below Tuesday’s lows.
Leading stocks took a hit again Thursday, with the exception of a few bullish or defensive growth names. Some metals and mining stocks are still looking good on the weekly chart.
The stock market is rising under intense pressure, just hanging on.
What are you doing now
Market action continues to deteriorate, with trends turning decisively negative just after the opening on December 13th.
Market exposure should be minimal and only limited to jobs that are running. Even then, investors may want to take a partial profit or simply exit some trades with a gain.
At some point, the market will bounce back like it did on Wednesday. Don’t get carried away with a vigorous opening, or even a vigorous session.
Investors should work on their watchlists. Focus on stocks with strong relative strength or holding to key levels like the 50-day line, and that gets tricky if the charts aren’t looking great at the moment.
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