Dow Jones futures rose modestly after hours, along with S&P 500 futures and Nasdaq futures, with FedEx (FDX) and Nike (NKE) earnings lead to the cost.
The stock market rallied modestly on Tuesday, snapping a four-day losing streak.
Meanwhile, apple ( AAPL ) flirted with undermining its bear market low, a day after Amazon.com (AMZN) did.
Tesla ( TSLA ) continued to plunge. The TSLA share has now completed the gains since the share split in August 2020.
On the positive side, oilfield services play a role Schlumberger (SLB), Halliburton (HAL) and ProFrac ( ACDC ) is showing strength, with Schlumberger stock and ACDC stock flashing early buy points on Tuesday.
The video embedded in the article discussed Tuesday’s market action and analyzed SLB stock, Halliburton and ProFrac.
Nike, FedEx revenue
Dow Jones giants Nike and FedEx reported earnings late Tuesday, also providing some sense of the holiday shopping season.
Nike revenue and sales topped views, but inventory rose 43% year-over-year. Margins fell due to recession. NKE shares rose 13% after hours, signaling a move back above the 200-day mark. Shares rose 0.2% to 103.21 on Tuesday.
FedEx earnings topped views, but earnings fell short. FDX shares rose 5% in extended trading. Shares closed down 2.6% at 164.35, below the 50-day line.
Dow Jones Futures today
Dow Jones futures rose 0.6% relative to fair value, with NKE shares providing a boost. S&P 500 futures rose 0.55%. Nasdaq 100 futures rose 0.7 percent.
The 10-year government yield rose 4 basis points to 3.72%.
Keep in mind that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular session.
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Stock market rally
The stock rally erased the opening losses and closed slightly higher.
The Dow Jones Industrial Average rose 0.3% in Tuesday’s trading. The S&P 500 climbed 0.1%, with Tesla shares the worst performer. The Nasdaq composite rose 1 point. The small-cap Russell 2000 advanced 0.5%.
Apple stock fell as low as 129.89, within 1% of its June bear market low of 129.04. The shares went back down 7 cents to 132.30. Amazon shares rose 0.3% after undercutting Monday’s recent bearish session.
The US crude oil price rose 1.2% to $76.09 a barrel. Natural gas prices fell 9% after falling more than 11% on Monday.
The 10-year Treasury yield rose 10 basis points to 3.68%, after rising 10 basis points on Monday. The Bank of Japan turned slightly hawkish on Tuesday, allowing Japan’s 10-year yield to rise as high as 0.5%.
The 2-year yield, more closely tied to Fed policy, was essentially flat at 4.27%.
On Friday, investors will get the November PCE inflation report, with economists expecting another notable drop in headline and core inflation.
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF ( IGV ) rose 0.5%. VanEck Vectors Semiconductor ETF ( SMH ) fell 0.6%.
Reflecting more speculative stock stocks, the ARK Innovation ETF ( ARKK ) was down 0.2%, hitting a new five-year low. ARK Genomics ETF (ARKG) rose 0.8%. Tesla is a large holding across Ark Invest’s ETFs.
The SPDR S&P Metals & Mining ETF ( XME ) rose 2.6% and the Global X US Infrastructure Development ETF ( PAVE ) gained 0.4%. The US Global Jets ETF (JETS) rose 0.4 percent. The SPDR S&P Homebuilders ETF ( XHB ) yielded 0.55%. The Energy Select SPDR ETF (XLE) rose 1.5% and the Financial Select SPDR ETF (XLF) gained 0.4%. The Health Care Select Sector SPDR Fund (XLV) closed fractionally lower.
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Shares close to buy points
Oil services companies are rising, even with crude oil prices near one-year lows, perhaps in anticipation of stronger prices in 2023. Exxon Mobil (XOM) and Chevron (CVX) recently released its investment plans for next year, suggesting strong demand for services firms like Halliburton, Schlumberger, ProFrac and more.
SLB shares rose 3.9% to 51.76, moving back above the 50-day and 21-day moving averages and arguably breaking a tight downward sloping trendline, making a case for an early entry. Schlumberger stock is back in a still valid buy zone from a deep cup base. The SLB share is set to have a new base with a buy point of 56.14 after this week.
Fellow oil services giant Halliburton bounced above its 21-day line, up 3.8% to 37.42, still close to its 50-day line. HAL stock has a 40.09 buy point from a 47% deep cup handle, according to MarketSmith analysis. It does not have an obvious early entry. The handle will be long enough to be its own base after this week.
ProFrac stock jumped 6.9% to 23.23, back above the 50-day and 21-day lines and breaking a recent downtrend, much like SLB stock. It can serve as an early entry. ACDC stock should see another consolidation with a buy point at 27.10 after this week. The ProFrac share was listed at 18 per share. It has had three bases since then, with the eruptions not operating for long.
Tesla shares plunged 8.1% to 137.80, hitting another two-year low. The electric car giant’s shares have fallen 67% from their peak in November 2021 and 29% in December alone.
Tesla stock has now stumbled its progress since its 5-for-1 stock split in August 2020. (TSLA stock split 3-for-1 in August 2022 as well.)
Tesla China sales declined for the second week in a row, according to weekly registration data. That’s despite ever-increasing year-end incentives, which are set to end on January 1 along with China’s EV subsidies.
Elon Musk’s Twitter saga raises concerns of significant damage to the Tesla brand. Many long-term notable TSLA bulls are increasingly critical of Musk.
Evercore and Daiwa Capital Markets cut TSLA stock price targets on Tuesday, both citing Twitter. Oppenheimer downgraded Tesla on Monday.
Tesla stock failed to rally on Monday despite Elon Musk saying he would step down as Twitter chief after asking Twitter users about the issue.
Stocks continued to fall on Tuesday, even as the major indexes and many leading stocks tried to take a stand. The large volume selling in recent weeks suggests that large institutions are offloading or splitting their TSLA stock holdings.
Late Tuesday, Musk said he would step down as Twitter chief as soon as he found a successor, and that he would run the software and server teams.
At some point, Tesla stock could bounce back and go up again, but that could be months or even years away.
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Market rally analysis
After a strong sell-off from the peaks on 13 December, the stock market rally ended its losing streak, just barely.
The major indexes appeared to be oversold and arguably “due” for a bounce. They got one, although it wasn’t much.
The Dow Jones found support at its 50-day line, but the other key indexes made no notable technical moves.
The share price rise is still under pressure.
AAPL stock bounced out of a near-bear market, but that doesn’t mean it will continue to do so.
Many leading stocks found support at key levels. But whether they will hold and recover strongly depends to a large extent on the overall market.
Energy names may be a partial exception, given how they trade on underlying crude oil or natural gas prices. Oil services companies like SLB shares and coal producers like Consolidated Energy are doing better right now.
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What to do now
It is not a good time to buy stocks. While the major indexes held their ground and some top stocks did not fall apart, the market recovery remains weak.
The S&P 500 regaining the 50-day line would seem like a minimal sign of strength, with the 200-day and December highs much bigger tests.
Even if the market recovers, Tesla’s continued meltdown on Tuesday shows that not all stocks will follow suit.
If you feel compelled to play this market, take pilot positions and be ready to take quick profits and cut losses.
Continue to look for stocks to hold and find support at key levels. Shares with strong relative strength in weak markets can be leaders in the next advance.
Read The Big Picture every day to stay in sync with market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock exchange updates and more.
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