Dow Jones futures fell modestly Thursday morning, along with S&P 500 futures and Nasdaq futures, as Treasury yields rose solidly to recent highs. Tesla, Crocs and CSX were among the notable earnings movers. Former President Donald Trump is launching his own social media company, and it’s going public
The stock market rally closed narrowly mixed on Wednesday, with the Dow Jones hitting an all-time high. Bitcoin soared to record levels, though pulled back somewhat early Thursday.
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Former President Trump has formed a social media company, a long-speculated move. Trump Media & Technology Group will go public via a SPAC merger with Digital World Acquisition (DWAC). Trump Media & Technology will have a social media site Truth Social, as well a subscription-based video-on-demand service TMTG+.
DWAV stock soared premarket.
Trump’s access to key social media networks has been restricted since the Jan. 6 assault on the Capitol.
Tesla Leads Key Earnings
Tesla (TSLA), Lam Research (LRCX) and CSX (CSX) reported earnings late Wednesday.
In premarket action, Tesla stock fell slightly despite beating earnings views. LRCX stock fell modestly on mixed results. CSX stock rose on strong earnings, after closing just above a buy point on Wednesday.
IBM (IBM) and Tenet Healthcare (THC) also reported late. IBM stock fell solidly on weak revenue. THC stock rallied on strong results, though Q4 EPS guidance was a little light.
Early Thursday, Crocs (CROX) reported earnings more than doubled in Q3, easily beating. CROX stock jumped 11% in premarket action, signaling a move back above the 50-day line, offering an early entry. Shares fell 4.5% on Wednesday, hitting resistance at the 50-day.
Union Pacific (UNP) topped profit estimates early Thursday. Nucor (NUE) met EPS views while Freeport-McMoRan (FCX) topped on profit but missed on sales.
In premarket trade, UNP stock edged lower after closing Wednesday just below a buy point.
NUE stock fell 2% before the open. FCX stock sank 2%, near a short-term resistance level.
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Democrat Tax Shift?
Democrats reportedly may ditch a plan to raise tax rates on the wealthy, businesses or capital gains. That’s due to the continued opposition on tax-rate hikes from Sen. Krysten Sinema, D-Ariz. That could further complicate how to pay for the reconciliation spending package, which is already getting scaled back. Senate Democrats need all 50 members to agree on the same tax-and-spending plan.
Of course, it’s unclear what the final package will be. Other reports said some tax hikes are still on the table. But investors and analysts at the very least may ratchet down Democrat tax-hike expectations.
Bitcoin Price
The Bitcoin price rose 1% vs. 24 hours earlier to below $65,000 after hitting a record $66,974.77 on Wednesday. The ProShares Bitcoin Strategy ETF (BITO), which tracks Bitcoin futures, rose 3.2% to 43.28 in its second day of trading. BITO options began Wednesday. Bitcoin-related stocks powered higher once again.
Tesla stock is on IBD Leaderboard.
Dow Jones Futures Today
Dow Jones futures fell 0.3% vs. fair value. S&P 500 futures lost 0.3%. Nasdaq 100 futures dipped 0.4%. IBM stock is on the Dow, S&P 500 and Nasdaq. Tesla and LRCX stock are S&P 500 and Nasdaq giants.
The 10-year Treasury yield rose to 1.675%, right at five-month highs. Crude oil prices edged lower. Copper futures fell sharply after big recent gains.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
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Stock Market Rally
The stock market rally closed narrowly mixed after several days of gains.
The Dow Jones Industrial Average rose 0.4% in Wednesday’s stock market trading. The S&P 500 index climbed 0.4%. The Nasdaq composite lost a fraction. The small-cap Russell 2000 advanced 0.7% to its best close since Sept. 3.
Netflix (NFLX) and ASML (ASML) were earnings drags on the Nasdaq on Wednesday. PayPal (PYPL) tumbled on reports that it’s in talks to buy Pinterest (PINS).
The 10-year Treasury yield was essentially flat, ending at about 1.64%. December crude oil futures, now the near-month contract, climbed 1.2% to $83.42 a barrel.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 0.6%, while the Innovator IBD Breakout Opportunities ETF (BOUT) popped 1.1%. The iShares Expanded Tech-Software Sector ETF (IGV) dipped 0.2%. The VanEck Vectors Semiconductor ETF (SMH) sank 0.4%. LRCX stock is an SMH component.
SPDR S&P Metals & Mining (XME) rose 0.8% and Global X U.S. Infrastructure Development (PAVE) gained 1.2%. The U.S. Global Jets ETF (JETS) sank 0.65%. SPDR S&P Homebuilders (XHB) advanced 1.4%. The Energy Select SPDR ETF (XLE) and the Financial Select SPDR ETF (XLF) both ended 0.8% higher.
Reflecting stocks with more-speculative stories, the ARK Innovation ETF (ARKK) retreated 0.75% and the ARK Genomics ETF (ARKG) declined 0.9%. Tesla stock remains the No. 1 holding across ARK Invest ETFs.
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Tesla Earnings
Tesla earnings beat views comfortably. Revenue rose sharply but slightly missed the FactSet analyst estimate. Sales edged past some other consensus forecasts. Regulatory credits unexpectedly fell for a second straight quarter, to $279 million.
The U.S.-based EV maker announced earlier this month that it delivered a record 241,300 vehicles in Q3, up from 201,250 in the previous quarter and above views of 232,000
The EV giant did not offer new full-year delivery targets in the Tesla earnings release.
On 4680 battery cells, Tesla said it’s continuing to produce test battery packs, but said the 4680 project faces “unknown unknowns.” Mass-producing those batteries, with promised specs and costs, is key to making the Cybertruck, Semi and Roadster viable.
Tesla said it continues to “target” the start of Model Y production at its Austin and Berlin factories. Tesla says it’s “fabricating our first preproduction vehicles” at the Austin site. As for the Berlin plant, Tesla said it hopes to gain final regulatory approval for production by year-end. But on Thursday, a regional environment ministry said it has to repeat a citizen consultation process, which will take up most of November. In any case, it’s still unclear if the plant will be fully ready for production before 2022.
Tesla has started to roll out FSD Beta to more FSD owners but so far has decided not to recognize more FSD revenue. The Level 2 driver-assist system remains error prone.
On Friday, Tesla faces a deadline to provide wide-ranging data regarding its driver-assist systems to the National Highway Traffic Safety Administration, as part of an NHTSA probe in Autopilot crashes. The NHTSA this week has tapped Missy Cummins, an autonomous-driving expert, as a top adviser. Cummings, a former fighter pilot, has been a harsh critic of Autopilot of Full Self-Driving.
Tesla executives said they welcome NHTSA scrutiny on the earnings call. CEO Elon Musk has criticized recent regulatory appointments as biased against Tesla.
Tesla Stock
Tesla stock lost nearly 2% in premarket action. Shares rose 0.2% to 865.80 on Wednesday. TSLA stock is approaching a 900.50 buy point from a deep cup base, according to MarketSmith analysis. But with Tesla stock on track for a ninth straight weekly gain, it has the look of being extended. That doesn’t mean shares can’t continue to run higher though.
The Tesla stock rally comes as China EV rivals such as BYD Co. (BYDDF) and Xpeng (XPEV) break out or flash other buy signals.
Lam Research Earnings
Lam Research earnings topped views, but revenue missed.
LRCX stock fell 3% in extended trade. Shares dipped 0.9% to 565.50 on Tuesday. Lam Research stock is stuck below its 50-day and 200-day lines, trending lower since the start of June.
CSX Earnings
CSX earnings steamed past estimates. Revenue also topped forecasts.
CSX stock climbed 4% overnight. Shares rose 1% to 34.46 on Wednesday, closing just above a 34.43 double-bottom base buy point.
Kansas City Southern (KSU), Canadian Pacific (CP) and Canadian National Railway (CNI) have already reported. CNI stock broke out Wednesday.
Market Rally Analysis
The stock market rally closed narrowly mixed, off session highs. But the Dow Jones is at record levels, while the S&P 500 is on the cusp of joining the blue-chip index.
The Nasdaq composite had rallied for five straight sessions, so a fractional loss is no big deal.
Taking a pause isn’t a surprise and may be healthy. Some stocks that had run up to traditional buy points looked extended. But if they could take a break, the likes of Tesla stock, ServiceNow (NOW) and Generac (GNRC) might appear more attractive.
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What To Do Now
The stock market rally remains in good shape. There are plenty of quality stocks in buy range or setting up from a variety of groups. So you can continue to build up your portfolio, so long as you’re not overexposed.
But don’t just buy anything that’s moving. Keep building your watchlists so you can spot the most-promising setups across an array of sectors. Growth looks strong, but so do financial, energy and fertilizer stocks, with steel and medical services firms coming on.
And don’t forget about earnings season. It’s highly risky to buy a stock just before earnings, and investors may want to take whole or partial profits on holdings with tiny gains.
Next week, Apple (AAPL), Microsoft (MSFT), Amazon.com (AMZN), Facebook (FB) and Google parent Alphabet (GOOGL) are all on tap, headlining an enormous wave of earnings reports. Earnings and guidance will move stocks, sectors and the broader market rally.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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