Dow Jones futures fell slightly Wednesday night, along with S&P 500 futures and Nasdaq futures. The stock market rally showed slim gains on Wednesday, with the S&P 500 and Nasdaq composite hitting record highs. Crude oil prices and Treasury yields continued to slide, with the Fed minutes offering few surprises.
PayPal (PYPL) rose 1.5% to 297.13, breaking out of a cup-with-handle base with a 296.11 buy point. PYPL stock had topped a 277.96 early buy point on June 17. Upwork (UPWK) now has a handle on its cup base, along with Apple supplier Qorvo (QRVO).
On the downside, chips retreated while many highly valued growth stocks that had rebounded from spring lows lost ground, including EV makers Tesla (TSLA) and Nio (NIO). Both have key news still due this week.
Finally, the latest red-hot meme stock is Newegg Commerce (NEGG), which shot up 148% to 67.57. NEGG stock is up 522% just since June 29. But Newegg is 234% above its 10-day moving average, extremely extended even by meme stock measures.
NEGG stock fell 14% in extended action.
Meanwhile, “old” meme stocks such as AMC Entertainment (AMC), GameStop (GME) and Clover Health (CLOV) have lost considerable ground over the past few weeks. AMC stock sank 9.8% on Wednesday. GME stock slid 4.5% and CLOV stock 2.8%.
Dozens of states filed an antitrust lawsuit vs. Alphabet (GOOGL) related to its Google Play app store. Two other state lawsuits take aim at Google’s search and ad technology. The Justice Department is targeting Google’s dominant search business. Google stock lost a fraction late.
Dow Jones Futures Today
Dow Jones futures fell 0.2% vs. fair value. S&P 500 futures declined 0.15%. Nasdaq 100 futures lost 0.1%.
Stock Market Rally Wednesday
The stock market rally closed slightly higher on the major indexes, though small caps and several sectors lost some ground.
The Dow Jones Industrial Average rose 0.3% in Wednesday’s stock market trading. The S&P 500 index also rose about 0.3%. The Nasdaq composite closed one point above breakeven. The small-cap Russell 2000 fell 0.9%, undercutting its 50-day moving average. The small-cap index has a number of banks and energy companies, while AMC stock is a relatively large weight now.
Apple stock rose 1.8% to 144.57, now just above the 5% buy zone. Microsoft stock edged up 0.8% and Amazon stock 0.6%, both slightly extended from their 5% chase zones.
Crude oil futures fell 1.6% to $72.20 a barrel. Late Monday, U.S. crude oil prices hit a six-year high of $76.98. The 10-year Treasury yield slid 5 basis points to 1.32%, the lowest level since February. Intraday, the benchmark yield undercut 1.3%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) retreated 2%, while the Innovator IBD Breakout Opportunities ETF (BOUT) edged down 0.1%. The iShares Expanded Tech-Software Sector ETF (IGV) was just above break-even, with MSFT stock a major holding. The VanEck Vectors Semiconductor ETF (SMH) fell 1.4%.
SPDR S&P Metals & Mining ETF (XME) climbed 1.8% and Global X U.S. Infrastructure Development ETF (PAVE) 1.3%. U.S. Global Jets ETF (JETS) retreated 1.8%. SPDR S&P Homebuilders ETF (XHB) gained 1.7%. The Energy Select SPDR ETF (XLE) slumped 1.6% and the Financial Select SPDR ETF (XLF) edged up 0.1%.
Fed Meeting Minutes
Federal Reserve policymakers were getting closer last month to discussing scaling back asset purchases, according to newly released Fed minutes from the June meeting. Some members “expected the conditions for beginning to reduce the pace of asset purchases to be met somewhat earlier than they had anticipated at previous meetings.”
Fed chief Jerome Powell had already said that the June meeting was the “talking about talking about” Fed meeting, suggesting that taper talk might start at the late July or September meetings, with actual tapering a few months after that.
Tesla Stock, China EV Sales
Early Thursday, the China Passenger Car Association will release China EV sales for June. BYD Co. (BYDDF), Nio and peers Xpeng (XPEV) and Li Auto (LI) have already reported June delivery figures. But the CPCA report will give investors insight into Tesla’s China sales. Tesla has already reported record global deliveries for the second quarter.
Tesla stock fell 2.3% to 644.65 on Wednesday, nearing its 50-day and 200-day lines. A move above Friday’s high of 700 might offer an aggressive entry, but 780.89, above the April short-term high, may be the first quasi-legitimate opening.
Nio stock tumbled 8.45% to 46.04, its fourth straight loss after a sharp run-up. Shares could have a 55.23 handle buy point after Thursday. Nio is holding its annual Nio Day on Friday, with EV product announcements or updates expected.
BYD stock dipped 0.7% to 28.46, finding support just above its 21-day line. The electric-car, bus and battery maker already has a cup-with-handle buy point of 31.40.
Li Auto stock sank 4.6% to 32.03. Like Nio stock, the China EV play is likely to have a handle after Thursday. But the base is 66% deep. An extended handle, or even a short base within the larger consolidation, would be more attractive than a tiny handle.
XPEV stock skidded 5.9% to 41.47, after Xpeng debuted a secondary listing on the Hong Kong exchange. Shares are forming a handle-like pattern, but it’s below the midpoint of a very deep base.
Market Rally Analysis
Stepping back, the stock market rally had an OK day, which might be just right. The Nasdaq is still 5.5% above its 50-day moving average while the big-cap Nasdaq 100 is now 6.8% above that level.
The Nasdaq opened with a modest gain, with many tech stocks flashing buy signals or extending breakouts. Anyone taking advantage likely saw their positions go negative, slightly, within minutes. That’s because almost immediately, the Nasdaq retreated, turning modestly lower before moving back to roughly breakeven for most of the session.
However, the S&P 500 and Dow Jones closed near session highs, as crude oil prices and Treasury yields pared losses.
With Apple, Amazon and Microsoft leading the way, gains in the major indexes can mask underlying weakness. Many growth stocks, especially highly valued names like Palantir (PLTR), Tesla, Nio and ARK-style stocks, have been pulling back after hefty rebounds.
A tumbling 10-year Treasury yield has clearly contributed to tech stocks’ advance over the last several weeks. With a booming economy and inflation heating up, it’s hard to see how that continues, though one could have made that case for weeks. But if Treasury yields rise sharply, techs could struggle.
Crude oil prices have reversed lower from early morning gains for two straight days, despite a seemingly bullish backdrop of no OPEC production hike. That may be a sign that crude oil has topped in the short run. Energy stocks may need to take a breather if that’s the case. But so far, most leading energy stocks, such as Denbury Resources (DEN), have held key support.
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