Dow Jones Futures: Cisco, Nvidia Move on Earnings; The key recession signal is intensifying

Dow Jones futures were slightly higher overnight, along with S&P 500 futures and Nasdaq futures focused on Nvidia and Cisco earnings.




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Stock market rally retreats to weak levels target (DGT) earnings and vacation guidance, as well Micron technology (IN) reducing memory chip production plans. As the 10-year Treasury yield continues to fall and short-term rates remain high, the bond market is flashing bright recession risks.

EV is giant Tesla (D.S.L.A) pulled back, showing weak recent performance in megacap stocks.

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Nvidia (NVDA), the lithium giant Chemical and Mining Association of Chile (SQM) and Cisco systems (CSCO) headline Wednesday night’s earnings.

NVDA shares rose modestly in overnight trade following mixed earnings and guidance.

CSCO shares rose 4% in extended action Cisco tops fiscal Q1 views and guided revenue. Cisco stock fell 1.1% on Wednesday, trading between its 50-day and 200-day lines. Share on the IBD Leaderboard Arista Networks (On the sides) Cisco saw a slight uptick in revenue.

SQM earnings are due tonight. SQM shares fell 2.6% on Wednesday, falling more than 10% this week amid lithium price concerns. Chile’s lithium and fertilizer giant A cup base with 115.82 Point to buy. It can work on a handle.

China’s e-commerce giant Ali Baba (Baba) and American supermarket chains Macy’s (M) and Coles (KSS) begins on Thursday. Baba stock fell modestly on Wednesday, but after rising 11% on Tuesday. Shares of Macy’s and KSS fell on Wednesday after Target’s holiday warning.

Dow Jones Futures Today

Dow Jones futures rose 0.2% versus fair value. S&P 500 futures rose 0.2%. Nasdaq 100 futures gained 0.3%. CSCO stock is a component of the Dow Jones, S&P 500 and Nasdaq, but Nvidia is a heavy weight in the S&P 500 and Nasdaq.

The 10-year Treasury yield rose 3 basis points to 3.72%.

Crude oil futures fell 1%.

According to multiple media outlets, Republicans have regained control of the House. But that would be a far smaller majority than expected before Election Day.

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 stock market’s rally lost ground on Thursday, as small caps and techs led the way.

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The Dow Jones industrial average was down 0.1% on Wednesday Stock market trading. The S&P 500 index gave up 0.8%. The Nasdaq composite fell 1.5%. The small-cap Russell 2000 retreated 1.8%.

US crude oil prices fell 1.5% to $85.59 a barrel. Natural gas futures rose 2.8%.

Treasury yield curve flashes recession risk

The 10-year Treasury yield fell 11 basis points to 3.69%, its lowest since early October and down from 4.15% a week ago. The benchmark Treasury yield is below the current fed funds rate range of 3.75%-4%, with the central bank expected to raise rates by 50 basis points to 4.25%-4.5% next month.

The two-year Treasury yield, which is more closely linked to central bank policy, was 4.36%, while the three-month rate was 4.23%. The steep yield curve inversion between three-month and 10-year Treasuries is the highest since late 2019. This points to recession risks or very low economic growth in 2023.

Federal Reserve Chairman Jerome Powell and some of his colleagues have signaled that a slowdown may be necessary to bring inflation under control, though other policymakers see a good chance of a soft landing.

The ever-inverting yield curve comes amid still-strong labor markets and a strong retail sales report for October.

ETFs

in the middle Best ETFsInnovator IBD 50 ETF (FFTY) fell 1.7%, while the Innovator IBD Breakout Opportunities ETF (BotLost more than 1%. iShares Expanded Technology-Software Sector ETF (IGV) lost 2.1%, with many cloud software names having a poor session. VanEck Vectors Semiconductor ETF (SMH) fell 3.6% with Nvidia stock and Micron the main components.

SPDR S&P Metals & Mining ETF (XME) fell slightly more than 2% and the Global X US Infrastructure Development ETF (sidewalkfell 0.5%. US Global Jets ETF (JETSIt gave up to 2.4%. SPDR S&P Homebuilders ETF (XHBretreated 1.4%. Energy Select SPDR ETF (XLE2% rejected and fund choice SPDR ETF (45Decreased by 0.5%. Health Care Select Sector SPDR Fund (XLV) ended up below the break.

Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKK) fell 5.15% and ARK Genomics ETF (ARKG) 3.7% Tesla stock is a major player across Arc Invest’s ETFs.


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Nvidia earnings

Nvidia Earnings Miss Q3 Views, but revenue fell less than feared. Data center chip demand remained strong. Gaming revenue fell, but not as badly as feared. The chip giant guided for slightly lower Q4 sales.

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Nvidia shares rose 2% in active trading overnight. Shares fell 4.5% to 159.10 on Wednesday. But NVDA shares have rallied since hitting a bear-market low of 108.13 on Oct. 13 on hopes that business will improve down the road. The chip giant has moved above its 50-day line, but remains below its 200-day.

Nvidia stock doesn’t have a buy point in sight. Ideally, the stock will rally above the 200-day line and form a new base.

Tesla stock

Tesla shares fell 3.9% to 186.92 on Wednesday. TSLA stock is hitting resistance at the 10-day moving average, above its two-year low of 177.12 on Nov. 9. The EV company hasn’t closed above its 21-day line since September 21.

Other megacaps are struggling, however Apple (AAPL), Microsoft (MSFT) and Google Parents letters (Google) is above their 50-day moving average, while Facebook-parents are too Meta platforms (Meta) above its 21-day line.

Meanwhile, other EV stocks are doing as well or worse than Tesla. CEO Elon Musk’s Twitter reign could weigh on TSLA stock in a number of ways.

Musk testified Wednesday in a court case related to 2018 Tesla stock options, which represent about $50 billion of his wealth. He has said that he will not remain as the head of Twitter forever.


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Market rally analysis

The stock market rally was arguably due for a pause or a pullback, and that’s exactly what happened on Wednesday.

The Dow Jones remained comfortably above the 200-day line, pausing just below its August short-term high. The S&P 500, not far from the 200-day line, looks pretty normal with a slight decline.

The Nasdaq is still clearly above the 50-day line, but below its October short-term high. The Russell 2000 fell below the 200-day line and pared Monday’s intraday lows.

Meanwhile, several stocks that had shown buy signals in the past few sessions came back lower on Wednesday. While Target’s revenue fell at several retailers, defensive names rebounded and defensive growth stocks held up, while growth broadly faltered.

If the market rallies in the future, Wednesday’s action will soon be forgotten. But if the Nasdaq breaks below its 50-day low and leading stocks come under more pressure, that could be a concern.

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While markets have focused on Fed policy, there are other concerns. However, the cumulative effect of central bank interest rate hikes this year is taking a toll on the economy. The impact will continue months after rate hikes end.

An inverted yield curve reflects rising recessionary risks.

Even now, the combination of high inflation and weak demand is taking a significant toll. Target revenue showed that despite competition Walmart (WMT) have strong results and guidance. Inflation may fade slowly in the coming year, but that doesn’t mean the outlook for corporate profits and stock prices is bright.


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What to do now

Wednesday’s move provides reason for investors to be wary of adding exposure too quickly. If the market pulls back, as it did on Wednesday, buying new positions on the same day can back off. It is best to add exposure gradually, assuming the market is rallying and your positions are progressing.

Stock market bullishness is still in good shape, but prone to large swings, sector cycles and earnings surprises. It is not yet clear which stocks and sectors will lead the way. So don’t focus too much on a particular field or theme.

But you want to keep updating your watchlists.

Early impressions are still important. Traditional buy points have not performed significantly better, especially above the 50-day line.

Investors may want to take some profit while getting a quick profit in the stock. This will give you the confidence to hold the remaining stocks for the long term and protect your portfolio from stock round-trips.

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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