Dow Jones futures fell slightly overnight, along with S&P 500 futures and Nasdaq futures. Investors will watch the November jobs report on Friday morning.
A Tesla Semi truck delivery event will take place Thursday night with Tesla (TSLA) archrival BYD set to release booming EV sales figures.
Stocks rallied in solid action on Thursday, with indexes mixed but consolidating Wednesday’s huge gain on Fed Chairman Jerome Powell’s comments. Thursday’s PCE inflation report, the Fed’s favorite price gauge, showed smaller-than-expected monthly increases with headline and core inflation cooling somewhat again.
Ulta beauty (ULTA) overall earnings reports Thursday night. ULTA stock was little changed overnight after reporting strong earnings and raising guidance. Shares of the beauty products retailer are already at record highs, extended from purchase points. Veeva Systems ( VEEV ) beat fiscal Q3 views, but Q4 guidance was slightly below the midpoint of consensus. VEEV shares fell modestly in extended trading. Shares closed above the 200-day mark, right around an early entry.
Meanwhile, the Dow giant larva (CAT) continues to look strong, with CAT stock just below a buy point. Head of Cyber Security Palo Alto Networks (PANW) and Marriott International (MAR) also flashes buy signals.
Boeing shares are on SwingTrader. Caterpillar was Thursday’s IBD Stock Of The Day.
Dow Jones Futures today
Dow Jones futures fell 0.2% relative to fair value. S&P 500 futures fell 0.35 percent. Nasdaq 100 futures fell 0.5 percent.
Dow futures, Treasury yields and more will swing on the November jobs report, due at 8:30 a.m. ET.
Keep in mind that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular session.
Economists expect the November jobs report to show an increase of 200,000 non-farm payrolls, down from 261,000 in October. Pay attention to the household survey, which showed that jobs fell by 328,000 in October. Unemployment, based on the household survey, is expected to remain stable at 3.7%, with the labor force participation rate up to 62.3%.
Other labor data this week have generally pointed to a gradual decline. Initial unemployment claims fell unexpectedly, but continued claims rose once again. ADP reported a sharp decline in private sector hiring last month, while the October JOLTS survey saw a modest decline in vacancies.
Tesla Semi Delivery Event
A delivery event featuring Tesla Semi models began shortly after 5:00 PM PT.
Tesla CEO Elon Musk will hand over a few more Tesla Semi EVs PepsiCo (PEP) Thursday night. Speaking of late, the Tesla Semi was first unveiled six years ago and was supposed to go into production in 2020.
Musk says the Tesla Semi, which will use the same Plaid drivetrains as the high-end Model S, has a range of 500 miles on a single charge. Investors will look for exact specifications on price, range and payload. It will be important as the Tesla Semi takes on large electric cars already on the market from Volvo, Nicholas (NKLA), BID (BYDDF) and more.
Another big question is what Tesla Semi production will be in the coming months. Musk did not provide clarity on that front.
Meanwhile, Tesla is now offering $3,750 in rebates for the Model 3 and Model Y in the US this month. The idea is to encourage people to take delivery now. On January 1, new US tax credits of $7,500 take effect, subject to certain price and income limits, prompting many potential buyers to wait. The tax credits should apply to most Model 3 sedans and Model Y crossovers, although the government has not provided clarity yet.
Tesla shares closed flat at 194.70 on Thursday. On Wednesday, TSLA shares rose 7.7%, retracing their 21-day line, amid the big market rally and as China’s electric car stocks rose.
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THE WORLD OF SALES
Chinese electric car giant BYD is expected to release deliveries in November on Friday or Saturday, with another record set. BYD is expected to be China’s No. 1 car brand of the month, overtaking Volkswagen (VWAGY). The VW Group is likely to remain No. 1 including Audi.
BYD stock fell 2.2% to 25.07, but it remains above the 50-day mark. BYDDF rose 9.9% on Wednesday, along with other Chinese EV stocks.
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Stock market rally
The stock had a 30-minute drop on Thursday morning, but gradually improved to mixed, a solid performance after Wednesday’s big rally.
The Dow Jones Industrial Average fell 0.6% in Thursday’s trading, with Salesforce.com (CRM) a big negative. The S&P 500 index fell 0.1 percent. The Nasdaq composite rose 0.1 percent. The small-cap Russell 2000 retreated 0.2%.
US crude oil prices rose 0.8% to $81.22 a barrel.
The 10-year Treasury yield fell 17 basis points to 3.53%, the lowest since late September. In the wake of Fed Chair Powell’s comments and the PCE inflation report, markets are close to locking in a 50 basis point Fed rate hike on December 14, ending a four-meeting streak of 75 basis point moves. Furthermore, there is now a 50-50 chance of only a quarter-point interest rate increase at the Fed in February.
The dollar, which moved with interest rates, fell to its lowest level in nearly three months.
Shares close to buy points
CAT shares fell 0.3% to 235.69. Shares are resting around a still-valid buy point at 238 from a cup base dating back to April, according to MarketSmith analysis. Investors may 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 major consolidation starting in June 2021.
Cyber security firm Palo Alto Networks’ stock climbed 5% to 178.40, jumping above the 200-day line and retracing that key level for the first time since mid-September. That comes after it bounced back from its 50-day line intraday on Wednesday, shrugging off a big earnings selloff in peers CrowdStrike (CRWD). Investors can view PANW stock as a major double bottom base with a buy point at 193.01. But stocks are already actionable from clearing the 200-day line and a downtrend line from the April peak.
MAR stock fell 0.1% to 165.19, holding above the 164.99 buy point from a bottom base that started on August 16. On Wednesday, Marriott stock bounced back from its 200-day line, rising 2.5% on heavy volume.
Among the top ETFs, the iShares Expanded Tech-Software Sector ETF ( IGV ) rose 1.1%, even as large CRM stocks were sold. VanEck Vectors Semiconductor ETF ( SMH ) fell 0.3%.
The SPDR S&P Metals & Mining ETF ( XME ) fell 0.8% and the Global X US Infrastructure Development ETF ( PAVE ) rose 0.1%. The US Global Jets ETF (JETS) fell 0.4 percent. The SPDR S&P Homebuilders ETF ( XHB ) rose 1.25%. The Energy Select SPDR ETF (XLE) fell 0.3% and the Financial Select SPDR ETF (XLF) shed 0.6%. Health Care Select Sector SPDR Fund (XLV) rose 0.3%
ARK Innovation ETF ( ARKK ), reflecting more speculative history stocks, rose 1.1% and ARK Genomics ETF ( ARKG ) rose 0.6%. Tesla stock is a major weight across Ark Invest’s ETFs. Cathie Wood’s Ark also has a small position in BYD shares.
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Market rally analysis
The share rise showed constructive action on Thursday, and mainly held on to Wednesday’s big rise.
The S&P 500 index recovered during the day from a pullback to its 200-day moving average, having retaken 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 portion of Wednesday’s gains, largely due to Salesforce. Several Dow Jones stocks, including Caterpillar, Boeing and UNH shares, are showing strength. It reflects broader strength in industry, finance, healthcare and more.
The PCE inflation report for October was slightly better than expected. After Wednesday’s sharp market rally on Fed Chair Jerome Powell — who frankly didn’t sound particularly dovish — it was constructive to just hang on to those gains on Thursday.
Friday’s jobs report is another obstacle. If the employment data points to some slack in the labor market, it could provide further tailwinds for the shares. But a hot job market can trigger a big sale.
Treasury yields and the dollar have fallen hard over the past two days and weeks, giving stocks a big tailwind. A decline in yields and the greenback would not be a surprise.
Remember that the market rally has had a series of large one-day gains, followed by sideways or sliding action. This has made it difficult for investors to make progress even though the indices have been trending higher in recent weeks.
Time the market with IBD’s ETF market strategy
What to do now
There were reasons to buy or stand pat on Wednesday’s big move. On Thursday, investors could have added some exposure, but the jobs report is a big question mark.
A market rally on Friday on the November jobs report could trigger a number of buying opportunities. But don’t cheat with promising stocks ahead of big news. Instead, work on your watchlists so you’re ready to act. But also be ready to reduce your exposure if the market or your holdings go sharply south.
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