Dow Jones futures fell slightly overnight, along with S&P 500 futures and Nasdaq futures. Investors will turn to the November jobs report Friday morning.
A Tesla Semi truck delivery event is taking place Thursday night with Tesla (TSLA) archrival BYD set to release booming EV sales numbers.
The stock market rally showed solid action on Thursday, with the indexes mixed but consolidating Wednesday’s huge gains on Fed chief Jerome Powell’s comments. Thursday’s PCE inflation report, the Fed’s favorite price gauge, showed smaller-than-expected monthly increases with overall and core inflation cooling slightly once again.
Ulta Beauty (ULTA) headlined earnings reports Thursday night. ULTA stock was little changed overnight after reporting strong earnings and raised guidance. Shares of the beauty products retailer are already at record highs, extended from buy points. Veeva Systems (VEEV) beat fiscal Q3 views, but Q4 guidance was slightly below the midpoint of consensus. VEEV stock fell modestly in extended trade. Shares closed above the 200-day line, right around an early entry.
Meanwhile, Dow giant Caterpillar (CAT) continues to look strong, with CAT stock just below a buy point. Cybersecurity leader Palo Alto Networks (PANW) and Marriott International (MAR) are also flashing buy signals.
Dow Jones Futures Today
Dow Jones futures fell 0.2% vs. fair value. S&P 500 futures sank 0.3%. Nasdaq 100 futures declined 0.4%.
Dow futures, Treasury yields and more will swing on the November jobs report, due out at 8:30 a.m. ET.
Economists expect the November jobs report to show a nonfarm payrolls gain of 200,000, down from 261,000 in October. Pay attention to the household survey, which showed jobs down by 328,000 in October. The jobless rate, based on the household survey, is expected to hold steady at 3.7%, with the labor force participation rate edging up to 62.3%.
Other labor data this week has generally pointed to gradual slowing. Initial jobless claims unexpectedly fell, but continuing claims rose yet again. ADP reported a sharp slowdown in private-sector hiring last month, while the October JOLTS survey saw a modest decline in job openings.
Tesla Semi Delivery Event
A Tesla Semi model truck delivery event kicked off shortly after 5 p.m. PT.
Tesla CEO Elon Musk will hand over some Tesla Semi EVs to PepsiCo (PEP) on Thursday night. Speaking of late, the Tesla Semi was first unveiled six years ago and was supposed to enter production in 2020.
Musk says that the Tesla Semi, which will use the same Plaid drive units as the high-end Model S, has a 500-mile range on a single charge. Investors will be looking for precise specs on price, range and cargo. That will be important as the Tesla Semi takes on big-rig EVs already on the market from Volvo, Nikola (NKLA), BYD (BYDDF) and more.
Another big question is what will Tesla Semi production be in the coming months.
Meanwhile, Tesla is now offering $3,750 discounts for the Model 3 and Model Y in the U.S. this month. The idea is to encourage people to take delivery now. On Jan. 1, new U.S. tax credits of $7,500 come into effect, subject to certain price and income limits, spurring many would-be buyers to wait. The tax credits should apply to most Model 3 sedans and Model Y crossovers, though the government hasn’t provided clarity yet.
Tesla stock closed flat at 194.70 Thursday. On Wednesday, TSLA stock surged 7.7%, retaking its 21-day line, amid the big market rally and as China EV stocks soared.
China EV giant BYD is expected to release November deliveries on Friday or Saturday, with yet another record seen. BYD is expected to be China’s No. 1 auto brand for the month, overtaking Volkswagen (VWAGY). VW Group will likely remain No. 1 including Audi.
BYD stock fell 2.2% to 25.07 but it’s still above its 50-day line. BYDDF vaulted 9.9% on Wednesday, along with other China EV stocks.
Stock Market Rally
The stock market rally had a 30-minute tumble Thursday morning, but gradually improved to mixed, a solid performance following Wednesday’s big gain.
The Dow Jones Industrial Average fell 0.6% in Thursday’s stock market trading, with Salesforce.com (CRM) a big negative. The S&P 500 index dipped 0.1%. The Nasdaq composite rose 0.1%. The small-cap Russell 2000 retreated 0.2%.
U.S. crude oil prices rose 0.8% to $81.22 a barrel.
The 10-year Treasury yield plunged 17 basis points to 3.53%, the lowest since late September. In the wake of Fed chief Powell’s comments and the PCE inflation report, markets are close to locking in a 50-basis-point Fed rate hike on Dec. 14, ending a four-meeting string of 75-basis-point moves. Further, there’s now a 50-50 chance of just a quarter-point Fed rate hike in February.
The dollar, moving with yields, tumbled to the lowest level in nearly three months.
Stocks Near Buy Points
CAT stock dipped 0.3% to 235.69. Shares are pausing around a still-valid 238 buy point from a cup base going back to April, according to MarketSmith analysis. Investors could 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 larger consolidation starting in June 2021.
Cybersecurity firm Palo Alto Networks’ stock climbed 5% to 178.40, jumping above its 200-day line, retaking that key level for the first time since mid-September. That comes after it rebounded from its 50-day line intraday Wednesday, shrugging off a big earnings sell-off in peer CrowdStrike (CRWD). Investors could view PANW stock as having a big, double-bottom base with a 193.01 buy point. But shares are already actionable from clearing the 200-day line and a downward-sloping trendline from the April peak.
MAR stock dipped 0.1% to 165.19, staying above the 164.99 handle buy point from a bottoming base starting Aug. 16. On Wednesday, Marriott stock rebounded from its 200-day line, rising 2.5% in heavy volume.
SPDR S&P Metals & Mining ETF (XME) fell 0.8% and the Global X U.S. Infrastructure Development ETF (PAVE) edged up 0.1%. U.S. Global Jets ETF (JETS) dipped 0.4%. SPDR S&P Homebuilders ETF (XHB) climbed 1.25%. The Energy Select SPDR ETF (XLE) declined 0.3% and the Financial Select SPDR ETF (XLF) sank 0.6%. The Health Care Select Sector SPDR Fund (XLV) advanced 0.3%
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) rose 1.1% and ARK Genomics ETF (ARKG) climbed 0.6%. Tesla stock is a major weight across Ark Invest’s ETFs. Cathie Wood’s Ark also has a small position in BYD stock.
Market Rally Analysis
The stock market rally showed constructive action on Thursday, essentially holding onto Wednesday’s big gains.
The S&P 500 index rebounded intraday from a pullback to its 200-day moving average, after finally retaking 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-day.
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 stock, are showing strength. That reflects broader strength in industrials, financials, health services and more.
The October PCE inflation report was slightly better than expected. After Wednesday’s powerful market rally on Fed chief Jerome Powell — who frankly didn’t sound especially dovish — just holding onto those gains Thursday was constructive.
Friday’s jobs report is yet another hurdle. If the employment data points to some labor market slack, it could provide a further tailwind for stocks. But a hot labor market could trigger a big sell-off.
Treasury yields and the dollar have fallen hard the past two days and the past few weeks, providing a big tailwind for stocks. A rebound in yields and the greenback wouldn’t be a surprise.
Keep in mind that the market rally has had a number of big one-day gains, followed by sideways or sliding action. That’s made it tricky for investors to make headway even as the indexes trend higher over the past several weeks.
What To Do Now
There were reasons to buy or stand pat on Wednesday’s big move. On Thursday, investors could have added a little exposure, but the jobs report is a big question mark.
A Friday market rally on the November jobs report could trigger a number of buying opportunities. But don’t cheat on promising stocks ahead of big news. Instead, work on your watchlists so you’re ready to act. But also be ready to reduce exposure if the market or your holdings head sharply south.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
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