Dow Jones futures await Fed’s discretionary inflation report; Tesla was up late on Elon Musk’s pledge

Dow Jones futures were lower after hours, along with S&P 500 futures and Nasdaq futures. The Federal Reserve’s preferred inflation gauge took a knock on Friday morning, while Tesla stock rose late on Elon Musk’s comments.




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The stock market suffered heavy losses on Thursday, wiping out much of Wednesday’s gains amid negative corporate news and economic data and dovish comments from billionaire investor David Tepper. Major indices broke key levels as several leading stocks retreated. Stocks made similar losses, but the final declines were more significant.

Nvidia (NVDA), Lam Research (LRCX) and other chip stocks suffered heavy losses as a memory-chip maker Micron technology (IN) reported missed visions, less guidance and staffing, and additional capital expenditure reductions.

The Tesla (D.S.L.A) dissolution continued. In addition to company-specific factors, Tesla shares fell on Thursday along with other automakers Carmax (KMX) cited vehicle affordability issues for its big quarterly miss. TSLA shares rose of late after Elon Musk signaled no new share sales until 2023.

Other megacaps showed weakness, and Apple headed back toward bear market lows Amazon.com (AMZN) already there. Microsoft (MSFT) broke major support.

Investors should stay mostly cash, reduce already moderate exposure and avoid new purchases.

Third-quarter GDP growth was revised higher than forecast, along with the reported inflation rate. Initial jobless claims were higher, but lower than expected. A November index of leading economic indicators fell 1%, strengthening arguments for a slowdown next year.

PCE inflation data

On Friday, the Commerce Department will release the consumer spending index for November. Inflation data is part of the monthly income and expenditure report.

The PCE price index is expected to rise 0.2% and core prices should rise 0.2% compared to October. The PCE inflation rate should be 5.5%, up from 6% in October. Core PCE inflation is expected to ease from 5% to 4.6%.

The PCE inflation rate has been the central bank’s preferred price measure for some time. Recently, Federal Reserve Chairman Jerome Powell said he is closely monitoring the prices of PCE services, excluding housing.

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Personal income should be up 0.3% and consumer spending up 0.2% in November. Americans have been dipping into savings and increasing debt payments in recent months.

Dow Jones Futures Today

Dow Jones futures lost 0.1% and fair value. S&P 500 futures fell 0.1% and Nasdaq 100 futures fell 0.2%, even as TSLA shares provided some encouragement.

The 10-year Treasury yield rose 2 basis points to 3.69%.

Crude oil futures rose about 1%.

The PCE inflation rate figures will be released at 8:30 am ET. November’s durable goods data will also be released at that time, while November’s new home sales will be released at 10 a.m. ET.

Remember that it is an overnight operation Dow futures The next routine elsewhere doesn’t necessarily translate into actual trading stock market session.


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Stock market rally

The rally in the stock market started off weak and continued to decline till mid-afternoon. Major indices pared losses after that, but suffered more damaging losses.

The Dow Jones industrial average fell more than 1% on Thursday Stock market trading. The S&P 500 index fell 1.45%, with Tesla shares and LRCX the worst performers. The Nasdaq composite retreated 2.2%. The small-cap Russell 2000 yielded 1.3%.

Apple shares retreated 2.4% to 132.23, not far from its June-bear market low of 129.04. Fellow Dow Jones titan Microsoft traded 2.55% below its 50-day line after holding that key level since early November. Amazon shares fell 3.4%, paring its March 2020 Covid outage.

Nvidia fell 7% but found support at its 50-day line.

US crude was down 1% at $77.49.

The 10-year Treasury yield fell 1 basis point to 3.67%. Two-year Treasury yields, which are more closely linked to central bank policy, rose modestly. Markets still expect quarterly point rate hikes in February and March.

ETFs

Among growth ETFs, the iShares Expanded Technology-Software Sector ETF (IGV) fell 1.9%, with MSFT stock being a key component. VanEck Vectors Semiconductor ETF (SMHDown 4.15%. Nvidia stock, LRCX and Micron were notable SMH holdings, but chip weakness was widespread.

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Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKK) dropped 3.4%, falling to a new five-year low. ARK Genomics ETF (A.R.K.Gretreated 1.1%. TSLA stock is a key player across ArkInvest, but especially ARKK.

SPDR S&P Metals & Mining ETF (XME) lost 1.75%. US Global Jets ETF (JETSretreated 2.1%. SPDR S&P Homebuilders ETF (XHBdecreased by 0.9%. Energy Select SPDR ETF (XLE2.3% and fund choice SPDR ETF (45) gave 0.9%. Health Care Select Sector SPDR Fund (XLVdecreased by 0.1%.


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Tesla stock

Tesla shares fell 8.8% to 125.35 on Thursday, hitting their lowest point since September 2020, as heavy selling continued. Tesla doubled its year-end delivery discount in the U.S. to $7,500 late Wednesday. This comes as CarMax’s affordability concerns hit automakers and dealers in droves. TSLA stock has lost nearly 36% in December alone.

However, Tesla’s Elon Musk said in a Twitter space call on Thursday night that “under no circumstances will I sell shares next year… and I will not sell shares until 2024-2025.”

Musk has sold nearly $39 billion worth of Tesla shares since the stock peaked in November 2021, including another batch in mid-December. He’s said several times that he’s done selling for now, but he’s never been so sure.

However, Musk made it clear that he will not tone down his politically charged tweets. “I will not suppress my opinions to raise the stock price.”

TSLA shares rose more than 2% in overnight trading.

Market rally analysis

Stock market bulls were in a dour mood on Thursday, with major indexes falling on economic data and corporate news.

The S&P 500 Index, which retook its 50-day line on Wednesday, sold off Tuesday’s intraday lows. So did the Nasdaq, but both ended above Tuesday’s lows.

The Dow Jones edged off Monday’s intraday lows but closed above the 50-day line.

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While shares of Apple, Amazon, Microsoft, and especially Tesla look dire, it’s not just the megacap selloff. Invesco S&P 500 Equal Weight ETF (RSP) fell 1.1% on Thursday, below its 50-day line.

The SMH chip ETF broke below its 50-day line and moved to a multi-month best above its 200-day moving average a few days later on December 13. Unlike the S&P 500, the SMH closed lower on Tuesday.

Apart from some defensive or defensive growth names, leading stocks were hit hard again on Thursday. Some metals and mining stocks are still looking OK on the weekly chart.

The stock market boom is under pressure and hanging on.


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What to do now

After opening on December 13, the market action continues to deteriorate as trends turn decisively negative.

Market exposure should be thin, limited to working positions. Even then, investors may want to take some profit or exit some trades with a profit.

At some point, the market will rally like it did on Wednesday. Don’t get carried away by a strong open or even a strong session.

Investors should work on their watch list. Focus on stocks that hold key levels like strong relative strength or the 50-day line, and it can get confusing if the charts aren’t great right now.

According to Big picture Each day should be in sync with the direction of the market and the leading stocks and sectors.

Follow Ed Carson on Twitter @IBD_ECarson For stock market updates and more.

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