Dow Jones Futures Await Fed’s Favorite Inflation Report; Tesla Rises Late On Elon Musk Pledge

Dow Jones futures rose slightly overnight, along with S&P 500 futures and Nasdaq futures. The Federal Reserve’s favorite inflation gauge is on tap Friday morning, while Tesla stock fell late on Elon Musk’s comments.




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The stock market suffered heavy losses on Thursday, erasing Wednesday’s gains amid negative corporate news and economic data as well as bearish comments from billionaire investor David Tepper. Major indexes broke key levels with many leading stocks falling behind. The stock took significant losses, but the closing decline was still significant.

Nvidia (NVDA) Lam research ( LRCX ) and other chip stocks were big losers as memory chipmakers Micron Technology (MU) Lost ideas, low leads, and reduced advertised staffing and additional capital expenditures.

of the Tesla ( TSLA ) Confusion continues. Aside from company-specific factors, Tesla stock was lower on Thursday along with other automakers Car Max (KMX) pointed to vehicle eligibility issues for this big quarter recall. TSLA stock rose slightly of late after Elon Musk hinted at no new share sales through 2023.

Other megacaps underperformed, with Apple once again heading to the bottom of the market Amazon.com (AMZN) is already there. Microsoft (MSFT) broke through key support.

Investors should be largely in cash, reduce moderate exposure to the past and avoid large new purchases.

Third-quarter GDP growth was revised higher than forecast, with the report’s inflation gauge. Initial jobless claims rose, but less than expected. A November index of leading economic indicators fell sharply, strengthening the case for a deficit next year.

PCE inflation data

On Friday, the Commerce Department will release the Personal Consumption Expenditure Price Index for November. Inflation data is part of the monthly income and expenditure report.

The PCE price index should rise 0.2% from October, with core prices also rising 0.2%. The PCE inflation rate should fall to 5.5% from 6% in October. Core PCE inflation is expected to slow to 4.6% from 5%.

The PCE inflation rate has been the Fed’s favorite rate gauge for some time. Recently, Fed Chairman Jerome Powell said he is keeping a close eye on non-housing PCE prices.

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Personal income should rise 0.3% in November, with consumer spending up 0.2%. Americans have been boosting savings and credit spending in recent months.

Dow Jones futures today

Dow Jones futures rose 0.1% versus fair value. S&P 500 futures rose 0.2% and Nasdaq 100 futures advanced 0.1% with TSLA stock suggesting little progress.

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

Crude oil futures rose 1%.

PCE inflation rate data will be released at 8:30 am ET. November durable goods data will also be released at that time, along with November new home sales at 10 a.m. ET.

Note that overnight action in Dow futures and elsewhere does not translate into actual trading in the next regular stock market session.


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Stock market rally

The stock market rally got off to a weak start and fell by mid-afternoon. The major indexes have pared losses since then but are still facing heavy losses.

The Dow Jones Industrial Average fell just over 1% in Thursday’s stock market trading. The S&P 500 index sank 1.45%, with Tesla stock and LRCX the worst performers. The Nasdaq composite retreated 2.2%. The small-cap Russell 2000 gave up 1.3%.

Apple stock rebounded 2.4% to 132.23, not far from June’s bear market low of 129.04. Fellow Dow Jones titan Microsoft dropped 2.55% below its 50-day line after holding that key level since early November. Amazon stock fell 3.4%, nearly cutting the March 2020 Covid crash low.

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

US crude fell 1% to $77.49.

The 10-year Treasury yield fell 1 basis point to 3.67%. Two-year Treasury yields, more closely tied to Fed policy, rose modestly. Markets still expect quarter-point rate hikes in February and March.

ETFs

Among growth ETFs, the iShares Expanded Tech-Software Sector ETF ( IGV ) fell 1.9%, with MSFT stocks the biggest contributor. VanEck Vector Semiconductor ETF ( SMH ) fell 4.15%. Nvidia stocks, LRCX and Micron maintained significant SMH, but chip weakness was widespread.

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Reflecting the more speculative story stocks, the ARK Innovation ETF ( ARKK ) gave up 3.4%, falling to a new five-year low. ARK Genomics ETF ( ARKG ) retreated 1.1%. TSLA stock is a great holding across Ark Investments, but especially ARKK.

The SPDR S&P Metals and Mining ETF ( XME ) lost 1.75%. The US Global Jets ETF ( JETS ) retreated 2.1%. The SPDR S&P Homebuilders ETF ( XHB ) was down 0.9%. The Energy Select SPDR ETF (XLE) shed 2.3% and the Financial Select SPDR ETF (XLF) gave up 0.9%. The Healthcare Select Sector SPDR Fund ( XLV ) declined 0.1%.


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Tesla stock

Tesla stock fell 8.8% to 125.35 on Thursday, hitting its lowest point since September 2020 as heavy volume sales continued. Tesla doubled its year-end delivery discount to $7,500 in the U.S. late Wednesday. This comes as Carmax’s affordability concerns are weighing heavily on automakers and dealers. TSLA stock lost nearly 36% in December alone.

Tesla’s Elon Musk, however, said in a Twitter space call Thursday night, “I will not be selling stock next year under any circumstances … not selling stock until 2024-2025.”

Musk has sold $39 billion worth of Tesla stock since the stock hit its peak in November 2021, including another batch in mid-December. Musk has said several times that the sale is over before any more shares are distributed.

However, Musk made it clear that he will not tone down his politically charged tweets. “I’m not going to give up my opinions just to raise the stock price.”

TSLA stock rose 1% in overnight trading.

Market rally analysis

The stock market rally was in a frenzy on Thursday, with major indexes sinking on economic data and corporate news.

The S&P 500 index, which only regained its 50-day line on Wednesday, sold off to hit intraday lows on Tuesday. So did the Nasdaq, but both rallied to finish above Tuesday’s lows.

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The Dow Jones just edged lower on Monday, but bounced back to close above the 50-day line.

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

The SMH chip ETF dipped below its 50-day line, just days after hitting a multi-month high on Dec. 13, above its 200-day moving average. Unlike the S&P 500, the SMH closed well off Tuesday’s lows.

Leading stocks were hit hard again on Thursday, despite some defensive or defensive growth names. Some metals and mining stocks still look OK on the weekly chart.

The stock market rally is under severe pressure, just hanging on.


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what to do now

Market action is deteriorating, with trends turning strongly negative after the opening on December 13.

Market exposure should be minimal, limited to positions that work. Even then, investors may want to take partial profits or simply exit some trades with profits.

At some point, the market will run like Wednesday. Don’t hang on to a strong opening, or even a strong meeting.

Investors should work on their watch list. Focus on stocks with strong relative strength or holding key levels such as the 50-day line, and panic if the charts don’t look good right now.

Read the big picture daily to stay in tune with market direction and leading stocks and sectors.

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

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