Dow Jones futures fell slightly early Friday, along with S&P 500 futures and Nasdaq futures. Investors will turn to the November jobs report on Friday morning.
A Tesla Semi truck delivery event was held Thursday evening with Tesla (TSLA) arch-rival BYD will announce a boom in EV sales.
The stock market rally saw solid action on Thursday, with indexes mixed but consolidating Wednesday’s massive gains following comments from Fed chief Jerome Powell. Thursday’s PCE inflation report, the Fed’s favorite price gauge, showed smaller-than-expected monthly increases, with headline and core inflation cooling slightly again.
Ultra beauty (ULTA) headlined earnings reports on Thursday evening. Shares of ULTA were little changed overnight after reporting strong earnings and raised guidance. The beauty retailer’s stock is already at a record high, boosted by buy points. Veeva Systems (VEEV) beat estimates for fiscal Q3, but guidance for Q4 was slightly below the consensus midpoint. VEEV shares fell modestly in extended trading. Shares closed above the 200-day line, right around an early entry.
Meanwhile, the Dow giant Caterpillar (CAT) continues to look strong, with CAT shares just below a point of purchase. Cyber Security Leader Palo Alto Networks (PANW) and Marriott International (March) also flash buy signals.
Dow Jones futures today
Dow Jones futures fell a fraction vs. fair value. S&P 500 futures sank 0.1%. Nasdaq 100 futures were down 0.3%.
The yield on the 10-year Treasury note rose 2 basis points to 3.55%.
Dow futures, Treasury yields and more will change on the November jobs report, due out at 8:30 am ET.
Economists expect the November jobs report to show nonfarm payrolls increased by 200,000, down from 261,000 in October. Note the household survey that showed jobs fell by 328,000 in October. The unemployment rate, based on the household survey, is expected to remain steady at 3.7%, with the labor force participation rate reaching 62.3%.
Other labor data this week generally pointed to a gradual slowdown. Initial jobless claims unexpectedly fell, but ongoing claims rose again. ADP reported a sharp slowdown in private sector hiring last month, while the October JOLTS survey reported a modest decline in job vacancies.
Tesla Semi Delivery Event
A Tesla Semi model truck delivery event began shortly after 5:00 PM PT.
Tesla CEO Elon Musk will hand over some Tesla Semi EVs to PepsiCo (PEP) on Thursday night. Speaking of late, the Tesla Semi was first introduced six years ago and was supposed to go into production in 2020.
Musk says the Tesla Semi, which will use the same Plaid powertrains as the high-end Model S, has a range of 500 miles on a single charge. Investors will be looking for accurate price, range and payload specifications. This will be important as the Tesla Semi goes up against the big EVs already on the market from Volvo, Nicholas (NKLA), BYD (BYDDF) and more.
Another big question is what Tesla Semi production will be like in the coming months. Musk did not clarify this issue.
Meanwhile, Tesla is already offering discounts of $3,750 on the Model 3 and Model Y in the US this month. The idea is to encourage people to accept delivery now. on Jan. 1, new US tax credits of $7,500 go into effect, subject to certain price and income limits, leaving many potential buyers waiting. The tax credits should apply to most Model 3 sedans and Model Y crossovers, although the government has yet to provide clarity.
Tesla also halved the 8,000 yuan ($1,133) insurance subsidy for December purchases as planned, but is now offering free charging and other benefits that reportedly exceed 15,000 yuan
Tesla shares closed flat at 194.70 on Thursday. On Wednesday, TSLA shares jumped 7.7%, retracing their 21-day high, amid a big rally in the market and after EV shares in China jumped.
Chinese EV giant BYD is expected to release November deliveries on Friday or Saturday, eyeing another record. BYD is expected to be China’s no. 1 car brand for the month, overtaking Volkswagen (VWAGY). VW Group is likely to remain No. 1 including Audi.
BYD shares fell 2.2% to 25.07 but are still above their 50-day line. BYDDF jumped 9.9% on Wednesday, along with other Chinese EV stocks.
Stock market rallies
The stock market rally had a 30-minute dip on Thursday morning, but gradually improved to a mixed, steady performance after Wednesday’s big increase.
The Dow Jones Industrial Average fell 0.6% on Thursday Exchange Tradingwith Salesforce.com (CRM) a big minus. The S&P 500 was down 0.1%. The Nasdaq Composite rose 0.1%. The small-cap Russell 2000 fell 0.2%.
U.S. crude oil prices rose 0.8% to $81.22 a barrel.
The yield on the 10-year Treasury note fell 17 basis points to 3.53%, the lowest level since late September. Following comments from Fed chief Powell and the PCE inflation report, markets are close to locking in a 50 basis point Fed rate hike in December. 14, ending a four-match streak of 75 basis point moves. In addition, there is now a 50-50 chance of the Fed raising interest rates by just a quarter point in February.
The dollar, moving with yields, fell to its lowest level in nearly three months.
Stocks near points of purchase
CAT shares were down 0.3% at 235.69. Shares are resting around a still valid buy point of 238 from a cup base going back to April, according to MarketSmith analysis. Investors could see 239.95 as another buy point, either as a high handle to the seven-month cup base, or as a traditional handle to a larger consolidation beginning in June 2021.
Shares of cybersecurity firm Palo Alto Networks rose 5% to 178.40, jumping above their 200-day line, regaining that key level for the first time since mid-September. This comes after it rebounded from its 50-day line intraday on Wednesday, ignoring a big sell-off in earnings compared CrowdStrike (CRWD). Investors could be looking at PANW stock as a big one double bottom base with 193.01 points to buy. But the stock can now be taken by a clear of the 200-day line and a downtrend line from the April peak.
MAR shares were down 0.1% at 165.19, remaining above a 164.99 buy point from an August low. 16. On Wednesday, Marriott shares rebounded from their 200-day line, rising 2.5% on heavy volume.
SPDR S&P Metals & Mining ETF (XME) fell 0.8%, and the Global X US Infrastructure Development ETF (PAVING) rose 0.1%. US Global Jets ETF (STREAMS) decreased by 0.4%. SPDR S&P Homebuilders ETF (XHB) rose 1.25%. Energy Select SPDR ETF (XLE) was down 0.3%, and the Financial Select SPDR ETF (XLF) sank by 0.6%. Select Healthcare Sector SPDR Fund (XLVadvanced 0.3%
Reflecting the more speculative stocks of history, the ARK Innovation ETF (ARKK) rose 1.1% and the ARK Genomics ETF (ARKG) rose 0.6%. Tesla stock is a major weight in Ark Invest’s ETF. Cathie Wood’s Ark also has a small position in BYD stock.
Market Rally Analysis
The stock market rally showed constructive action on Thursday, essentially holding on to Wednesday’s big gains.
The S&P 500 recovered intraday from a pullback to its 200-day moving average after finally regaining that key level on Wednesday. The Russell 2000 also held its 200-day line. The Nasdaq still has work to do to get back to its 200 days.
The Dow Jones gave up only a fraction of its gains on Wednesday, thanks in large part to Salesforce. Several Dow Jones stocks, including those of Caterpillar, Boeing and UNH, are showing strength. This reflects broader strength in industrials, finance, healthcare and more.
October’s PCE inflation report was slightly better than expected. After the market’s strong rally on Wednesday against Fed chief Jerome Powell — who frankly didn’t sound particularly gloomy — just holding on to those gains on Thursday was constructive.
Friday’s jobs report is another hurdle. If employment data points to some slowdown in the labor market, that could provide an additional headwind for stocks. But a hot job market could trigger a big selloff.
Treasury yields and the dollar have fallen sharply over the past two days and the past few weeks, providing a big headwind for stocks. A recovery in yield and the greenback would not be a surprise.
Note that the market rally had a number of large one-day gains followed by sideways or sliding action. That makes it difficult for investors to make headway, even as indexes have been rising over the past few weeks.
What should we do now
There were reasons to buy or wait for Wednesday’s big move. Investors could add some exposure on Thursday, but the jobs report is a big question mark.
A market rally on Friday based on the November jobs report could trigger a number of buying opportunities. But don’t cheat on promising stocks before big news. Instead, work on your watch lists to be ready to act. But also be prepared to reduce exposure if the market or your holdings head sharply south.
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