Dow Jones futures rose slightly after hours, along with S&P 500 futures and Nasdaq futures. Tesla (TSLA) surged of late as Elon Musk was bullish after mixed Q4 earnings. service now (now and Lam Research (LRCX) also reported after the shutdown. dow jones heavyweights purlin (CVX) announced a huge buyback, with CVX stock showing a potential buy signal.
joint rent (URI), steel dynamics (stld) and IBM (IBM) also reported with teradine (TER) also on tap tonight.
The stock market rally fell on Wednesday morning Microsoft (MSFT) and boeing (BA) were among the losers related to early earnings. Major indices tested key levels or moved lower but recovered well by closing at or near intraday highs for the fourth straight session. One major reason: Boeing reversed slightly higher and MSFT stock declined.
URI Stock is on the IBD leaderboard watchlist. United Rentals, Lam Research and STLD stocks are on IBD Big Cap 20.
dow jones futures today
Dow Jones futures advanced 0.1% versus fair value, with CVX stock and IBM both blue chips. S&P 500 futures rose 0.2% and Nasdaq 100 futures rose 0.3%. Tesla stock, LRCX, NOW and STLD stocks are S&P 500 and Nasdaq 100 heavyweights.
Beginning Thursday, investors will get a first read on fourth-quarter economic growth. The GDP report will also include the quarterly PCE price index, which should provide a strong signal for the December PCE inflation reading on Friday morning. Also taking a look at durable goods orders, new home sales and jobless claims on Thursday.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
Tesla’s earnings came in slightly above analyst expectations, which came down significantly over the past few weeks. According to FactSet, the revenue has just been missed. Tesla identifies $324 million in full self-driving revenue.
Automotive gross margin fell to 25.9% from 27.9% in Q3 and 30.6% from a year ago. He was unanimously down. Gross margins are expected to decline significantly in 2023 following a wide-ranging cut in prices worldwide earlier this month.
CEO Elon Musk was upbeat on the conference call. They are now producing double the orders after the price cut, he said. But the question is how strong will demand remain in the coming weeks and months. Musk said the goal is for two million deliveries for 2023.
Tesla has delivered 1,313,851 EVs in 2022, producing 1,369,611. Highest delivery of output in the last three quarters.
Tesla said the Cybertruck will begin production later this year. It said it would provide further details about the upcoming vehicle at its March 1 investor day. It could be a smaller, cheaper EV or a new Model 3 with lower production costs.
Late Tuesday, Tesla said it would invest $3.6 billion in its Nevada Gigafactory to mass-produce the Semi vehicles and 4,680 batteries. But most of the announcement echoed key features of Tesla’s unfinished plans from 2014.
TSLA stock jumped 5% in extended trading. Shares rose 0.4% to 144.43 in Wednesday’s regular session, hitting the 50-day/10-week line after rising from bear-market lows on Jan. 6.
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chevron stock buyback
The Dow Jones energy giant said late Tuesday that Chevron would buy back $75 billion of its CVX stock. This represents 20% of the outstanding shares. Chevron will increase its quarterly dividend by 6% to $1.51 per share.
The oil major will report earnings early Friday.
CVX stock rose more than 2% to above 183, rebounding from the 50-day line. The shares have a buy point of 189.78 from a shallow cup base. But investors can use the move above Monday’s high of 182.55 as an entry.
other major income
ServiceNow earnings topped while revenue was in line. The business software giant also provided bullish subscription revenue guidance. After trimming early losses, the stock now fell marginally after hours. Shares rose 1.2% to 448.77 on Wednesday after breaking below the 200-day line intraday.
Lam Research’s earnings beat estimates for the quarter. LRCX stock fell marginally in extended action. Shares closed up 0.2% at 448.40 on Wednesday. Lam Research stock is trading on a downside bias, mostly above the 50-day and 200-day lines. A buy point is 504.65, but a move above Monday’s high will provide a slightly lower entry.
Terradyne’s earnings were among the most watched, but guidance disappointed as well. TER stock fell of late. The stock rose 0.4% to 103.44 on Wednesday, just above the 200-day line.
LRCX and TER earnings follow ASML earnings ahead of Wednesday’s open KLA Corporation (KLAC) due late Thursday night.
Steel Dynamics earnings top view. Shares of STLD closed with gains after hours. Shares closed up 2.2% at 110.41 on Wednesday. Steel Dynamics stock tried to clear a short consolidation last week with 113.22 buy point but pulled back.
Nucor’s earnings are due Thursday morning. NUE stock closed up 1.7% at 156.67. Nucor stock is near the 160.03 cup-with-handle buy point.
United Rentals missed earnings while it was in the revenue line. But the heavy-equipment rental giant gave bullish guidance through 2023. URI stock gained strength in overnight action. Shares fell 0.3% to 392.48 on Wednesday, moving back from the 374.01 buy point in a consolidation at the edge of the buy zone through late 2021. URI earnings and guidance could be important for heavy equipment makers such as Kamla (cat).
IBM’s earnings topped views only while revenue beat it. IBM stock fell modestly after hours. The stock fell 0.5% to 240.61 on Wednesday. IBM stock has formed a flat base with a 153.31 buy point after a strong two-month run, but is currently trading below the 50-day line.
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stock market rally
The stock market rally had a rough start but once again recovered slightly, closing near the day’s best levels.
The Dow Jones Industrial Average rose a share in Wednesday’s stock market trading. The S&P 500 closed just below break-even. The Nasdaq Composite fell 0.2%. The small-cap Russell 2000 climbed 0.3%.
US crude oil prices rose 2 cents to $80.15 a barrel. Natural gas fell 5.9% to its lowest level since June 2021.
The 10-year Treasury yield fell 1 basis point to 3.46%.
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.2%, while the Innovator IBD Breakout Opportunities ETF (BOUT) declined 0.3%. The iShares Extended Tech-Software Sector ETF (IGV) fell 0.2%, with Microsoft stock and NOW as key components. VanEck Vectors Semiconductor ETF (SMH) rose 0.1%. LRCX Stock is a SMH Holding
Reflecting stocks with more speculative stories, the ARK Innovation ETF (ARKK) rose 0.1% and the ARK Genomics ETF (ARKG) rose 0.5%. Tesla stock is a major holding in Arc Invest’s ETF. Cathy Wood’s ark is loading.
The SPDR S&P Metals & Mining ETF (XME) rose 1.25%, and the Global X US Infrastructure Development ETF (PAVE) was flat. US Global Jets (JETS) climbed 1.1%. The SPDR S&P Homebuilders (XHB) climbed 0.4%. The Energy Select SPDR ETF (XLE) settled just below break-even, and the Financials Select SPDR ETF (XLF) rose 0.8%. The Health Care Select Sector SPDR Fund (XLV) gained one portion.
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stock market rally analysis
The stock market rally saw a sell-off on Wednesday morning, but it made a decent comeback. Major indices closed near highs for the fourth straight session.
The S&P 500 fell 1.7% intraday, trading below its 200-day line and near its 50-day line intraday. But the benchmark indices closed essentially flat.
The Nasdaq Composite and Russell 2000 bounced comfortably above their 50-day lines. The Dow Jones fell below the 50-day line intraday, but once again closed above it.
Dow giants Microsoft and Boeing skidded at the open but bounced back little changed. Several cloud-related names that had held on to Microsoft guidance pared losses.
Major stocks showed generally healthy action, including chip gear, travel, medical and housing stocks. That’s saying something when one of the biggest complaints with major stocks is that a slightly longer pause or pullback over the past week would have been useful.
Several recent breakouts have pulled down buy points but may still work, such as SLB (SLB), impinj (PI) and medspace (MEDP). Meanwhile, some other stocks that were boosted from lower bases could be forging handles in longer consolidations like Boeing and others. Shift4Payments (Four).
The overall market rally action was encouraging. The major indices still need to decisively clear their late 2022 highs, but they are trending towards those levels.
Earnings season remains active with Tesla and Service Now weighing in in overnight trading.
Several key economic reports will move markets Thursday, Friday and next week, in addition to earnings ahead of the February 1 Fed meeting announcement.
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What should we do now
Just because the major indexes and many major stocks found support on Wednesday doesn’t mean they’ll continue to do so. A few weeks from now, it may seem clear whether investors should increase risk or head for the exits. But it is not clear now.
So be cautious about adding exposure and stick to the rules of cutting losses.
Definitely work on your watchlist. Cast a wide net: A wide range of sectors are showing strength, which in itself is a sign of an uptick in the market.
Read The Big Picture every day to stay in sync with market direction and key stocks and sectors.
Please follow Ed Carson on Twitter @IBD_ECarson For stock market updates and much more.
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