Futures Fall Ahead Of Big Earnings; Tesla Cuts Prices

Dow Jones futures fell slightly after hours, along with S&P 500 futures and Nasdaq futures. JPMorgan, Bank of America, UnitedHealth and Delta Air headline Friday morning earnings.




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The stock market rally showed resilience after a volatile morning following a hotter-than-expected CPI inflation report and the launch of Bitcoin ETFs. The Dow Jones hit a record high soon after the open while the S&P 500 set a 52-week best. But the major indexes reversed solidly lower, only to rebound to close essentially flat. Treasury yields reversing lower were a key factor for the afternoon market bounce.

NFLX stock reclaimed a buy point as Netflix (NFLX) sees strong growth for its add-supported tier. Microsoft (MSFT) nudged above an official buy point, continuing a strong week and nearly overtaking the market cap of fellow Dow giant Apple (AAPL).

Many other leaders advanced after holding support at key levels.

Eleven spot bitcoin ETFs began trading Thursday after the SEC granted approval late Wednesday. Bitcoin initially jumped above $49,000 before erasing gains. Meanwhile, bitcoin stocks such as cryptocurrency exchange Coinbase (COIN), bitcoin miner Marathon Digital (MARA) and bitcoin holder MicroStrategy (MSTR) reversed lower.

Tesla (TSLA) extended a recent sell-off, breaking key levels amid bad news from Hertz (HTZ) and more. Overnight, Tesla cut China prices.

Key Earnings

JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC) and Citigroup (C) kick off earnings, with BlackRock (BLK), UnitedHealth Group (UNH) and Delta Air Lines (DAL) also reporting.

JPM stock is extended from a base, but is pausing at the top of a two-year consolidation. BofA, Wells Fargo and Citigroup are around possible entries. So are UnitedHealth stock and DAL stock. BLK stock is in a buy zone.

Microsoft stock is on IBD Leaderboard and the IBD 50. Netflix stock and Microsoft are on SwingTrader. UNH stock and Microsoft are on IBD Long-Term Leaders. Netflix is IBD Stock Of The Day.

The video embedded in the article reviewed Thursday’s market action and analyzed Netflix stock, Shift4Payments (FOUR) and Samsara (IOT).

Dow Jones Futures Today

Dow Jones futures edged lower vs. fair value. S&P 500 futures retreated 0.1% and Nasdaq 100 futures declined 0.15%.

Crude oil futures rose 2%. The U.S. and U.K. are launching military attacks vs. Houthi rebels in Yemen, who have virtually shut down Red Sea shipping with drone attacks.

The Labor Department will release the December producer price index at 8:30 a.m. ET. Some key details funnel into the Fed’s favorite inflation gauge, the core PCE price index.

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 with minimal moves, but that belies a volatile session.

The Dow Jones Industrial Average edged higher in Thursday’s stock market trading, the S&P 500 lost less than 0.1%, while the Nasdaq rose less than one point.

The Dow briefly topped its all-time high on Jan. 2. The S&P 500 set a 52-week peak, less than 0.5% below its January 2022 all-time high. The Nasdaq composite topped 15,000. The major indexes then fell back, with the Nasdaq down more than 1% at the lows, before rebounding.

The small-cap Russell 2000 hit its lowest level in a month before paring losses, but closed down 0.75%, below the 21-day line.

The major indexes hit resistance at a natural level, but it’s clear the stock market rally doesn’t want to go down. Leading stocks erased gains or retreated intraday, but rebounded from support.

Treasury yields had a lot to do with Thursday’s stock market action. The 10-year Treasury yield hit 4.05% intraday, but reversed lower to close down 5 basis points to 3.97%. The two-year yield sank 11 basis points to 4.26%, the lowest close in 2024.

The December CPI report came in slightly stronger than expected early Thursday. But markets see a 71.4% chance of Fed rate cuts starting in March, up slightly vs. 66.4% on Wednesday.

U.S. crude oil prices rose 0.9% to $72.02 a barrel.

ETFs

Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) rose 0.8%, with MSFT stock a major holding. The VanEck Vectors Semiconductor ETF (SMH) climbed 0.6%.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) fell 2.4% and ARK Genomics ETF (ARKG) slumped 3.85%. COIN stock is the No. 1 holding across Ark Invest’s ETFs. Tesla stock is still a major holding.

SPDR S&P Metals & Mining ETF (XME) slipped 0.35%. U.S. Global Jets ETF (JETS) ascended 0.3%, with DAL stock a major holding. SPDR S&P Homebuilders ETF (XHB) stepped up 0.2%. The Energy Select SPDR ETF (XLE) added 0.3% and the Health Care Select Sector SPDR Fund (XLV) edged down 0.1%, with UNH stock a huge component.

The Industrial Select Sector SPDR Fund (XLI) dipped 0.2%.

The Financial Select SPDR ETF (XLF) slipped 0.4%, with JPM stock, Bank of America, Wells Fargo, BlackRock and Citigroup all significant holdings.


Time The Market With IBD’s ETF Market Strategy


Netflix Stock

NFLX stock rose 2.9% to 492.23, back above a 482.90 handle buy point. Intraday, shares reached 503.41, the highest price since January 2021. Netflix now has more than 23 million users for its ad-supported tier, a top executive said. Netflix earnings for Q4 are due Jan. 23.

Microsoft Stock

MSFT stock edged up 0.5% to 384.63, just above a 384.30 buy point from a flat base, base-on-base pattern. Microsoft stock is up 4.6% so far this week, rebounding from the 10-week line, offering early entries.

Shares hit a record 390.68 intraday.

Microsoft’s valuation briefly topped Apple’s on Thursday, but didn’t close that way. Microsoft stock has a $2.859 trillion market cap. Apple is at $2.886 trillion. AAPL stock edged down 0.4% on Thursday.

Bitcoin ETFs Start Trading

Spot bitcoin ETFs began trading Thursday following the SEC’s long-awaited approval Wednesday night.

Bitcoin surged to a two-year-high of $49,042.35 Thursday before slashing gains to end up 0.5% to $46,195.62 based on 5 p.m. ET prices.

But even though bitcoin still moved slightly higher, many bitcoin stocks reversed sharply lower.

MARA stock, which jumped to 29.18 intraday, plunged nearly 13% to 22.40. COIN stock hit 161.04, but closed down 6.7% to 141.16. MSTR stock skidded from an intraday peak of 611 to finish off 5.2% to 536.18. All of these stocks had already retreated from 52-week highs around the end of 2023 or start of 2024.

It’s possible that investors will now shift from indirect bitcoin plays to directly tracking bitcoin prices with spot ETFs. Crypto investors opting for bitcoin ETFs vs. directly trading bitcoin could hurt crypto exchange Coinbase.

Tesla Stock

Tesla stock fell 2.9% to 227.22 on Thursday, extending its weekly loss to 4.3%. Shares broke below their 200-day line for the first time since Nov. 13, after undercutting the 50-day line on Tuesday.

Tesla stock still has a 278.98 buy point from a double-bottom base, but the pattern is looking increasingly awkward.

The relative strength line is at its worst levels since late May. The RS line, the blue line in the charts provided, tracks a stock’s performance vs. the S&P 500.

On Thursday, rental car giant Hertz said it’ll unload 20,000 electric vehicles amid weak demand and high repair costs. Most of those are Tesla vehicles, which Hertz is offering at deep discounts. Broadly, the weak customer demand and high repair costs are bad news for EV demand generally and Tesla specifically.

Meanwhile, Tesla will increase worker pay broadly, Bloomberg reported Thursday.

Also, Tesla Berlin will largely shut down Jan. 29-Feb. 11, with the company claiming parts shortages due to Red Sea shipping delays. However, Tesla has an oversupply problem in Europe, with the Berlin site running well below capacity.

Overnight, Tesla announced China price cuts for the Model 3 and two Model Y variants.

TSLA stock fell 1% overnight.

Market Rally Analysis

The stock market rally showed resilience Thursday, a positive sign. Investors have had chances to add exposure and could continue to do so.

It’s important not to buy extended stocks. Being disciplined helps avoid this problem in two ways. First, following one’s rules and keeping emotions in check will prevent you from chasing. Second, sticking to running your screens will help you spot opportunities ahead of time.

Look for stocks that are holding or moving off support and showing relative strength. Steer clear of laggards, like TSLA stock right now.

Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

Please follow Ed Carson on Threads at @edcarson1971, X/Twitter at @IBD_ECarson and Bluesky at @edcarson.bsky.social for stock market updates and more.

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