Dow Jones futures edged higher overnight, along with S&P 500 futures and Nasdaq futures.
The stock market rally had a mixed session Thursday, with the Dow Jones lagging and the Nasdaq leading, both on various earnings reports. Tesla (TSLA) was a huge winner, while ServiceNow (NOW) also was strong.
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Nvidia (NVDA) edged higher, right around a buy point.
Treasury yields fell modestly Thursday, but the strong rebound remains intact.
There were a number of earnings gap ups. Tesla stock spiked higher within a base while Pegasystems (PEGA) stock, Celestica (CLS), LendingClub (LC) and ServiceNow gapped out of bases. All were potentially actionable, but they were aggressive moves. Gap ups are powerful but they’re also tricky, especially now.
Investors may want to be cautious in the near term, given the huge earnings, presidential election and much more over the next two weeks.
Western Digital (WDC), ResMed (RMD), Deckers (DECK) and Texas Roadhouse (TXRH) reported after the close. Western Digital, ResMed and Deckers jumped overnight on earnings. Texas Roadhouse edged lower. Universal Health Services (UHS) fell slightly on its results Thursday night. Hospital peer HCA Healthcare (HCA) is due early Friday.
ServiceNow stock is on SwingTrader. Celestica stock is on the IBD 50. Celestica also was Thursday’s IBD Stock Of The Day.
Dow Jones Futures Today
Dow Jones futures were just above fair value. S&P 500 futures and Nasdaq 100 futures rose 0.1%.
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 was divided as big names moved on earnings and other news.
The Dow Jones Industrial Average fell 0.3% in Thursday’s stock market trading, with IBM (IBM), Honeywell (HON) and Boeing (BA) falling on news. The S&P 500 index climbed 0.2% and the Nasdaq composite rose 0.8%, fueled by Tesla and ServiceNow.
The Dow Jones fell from its 21-day moving average, nearing the 10-week line. The S&P 500 and Nasdaq rose from that key level, but traded within Wednesday’s range.
The small-cap Russell 2000 edged up 0.2%, again hitting resistance at the 21-day line and not far from the 50-day. The Russell isn’t far from a two-year high, though.
The Invesco S&P 500 Equal Weight ETF (RSP) rose a fraction, just below its 21-day line again and lagging the S&P 500. The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) climbed 0.3%, but hit resistance at the 21-day. That underperformed the Nasdaq 100’s 0.8% advance.
In addition to Tesla, ServiceNow and the other earnings gap ups, Viking Therapeutics (VKTX) surged above very early entries on obesity drug news. Goosehead Insurance (GSHD) staged a powerful upside reversal following earnings.
But generally leading stocks had a quiet session.
U.S. crude oil prices reversed lower, falling 0.8% to 70.19 a barrel.
The 10-year Treasury yield fell four basis points to 4.2%. The 10-year yield is still up 13 basis points for the week and 80 basis points since hitting a 3.6% low intraday on Sept. 17.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.8%. The iShares Expanded Tech-Software Sector ETF (IGV) popped 1.1%, with ServiceNow stock’s 5.4% gain a big driver. The VanEck Vectors Semiconductor ETF (SMH) climbed 0.4%, with dominant holding Nvidia edging up 0.6%.
ARK Innovation ETF (ARKK) jumped 3.6%. Tesla stock is a major holding across Ark Invest’s ETFs. Cathie Wood also has built up a big NVDA stock stake.
SPDR S&P Metals & Mining ETF (XME) declined 0.4%. SPDR S&P Homebuilders ETF (XHB) edged up 0.3%. The Energy Select SPDR ETF (XLE) edged down 0.1%. The Health Care Select Sector SPDR Fund (XLV) and the Industrial Select Sector SPDR Fund (XLI) fell 0.7%. The Financial Select SPDR ETF (XLF) was just above break-even.
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Tesla Stock
Tesla stock spiked 21.9% to 260.48 on Thursday, its best one-day gain since 2013. That followed a surprise Q3 earnings gain, rebounding margins and CEO Elon Musk predicting deliveries will rise in 2024 and then another 20%-30% in 2025.
Shares gapped far above the 50-day line and are close to a 264.86 buy point from a cup-with-handle buy point, according to MarketSurge. Aggressive traders could have bought TSLA stock Thursday on the gap up.
At this point, investors may want to wait to see if Tesla can pause around current levels for a few days, or even a few weeks. TSLA stock has gone on two strong runs in the past four months but gave that all back before rebounding again.
What To Do Now
The market rally isn’t acting fine. A pullback amid rising Treasury yields and ahead of massive earnings, economic data, the presidential election and the next Fed meeting, makes a lot of sense. Still, the major indexes remain near record highs.
Leading stocks generally are doing well.
But aside from earnings gap ups, there haven’t been many actionable names this week, and some of those have earnings in the next few days.
The next two weeks are about as packed as possible. Apple (AAPL), Microsoft (MSFT), Google-parent Alphabet (GOOGL), Amazon.com (AMZN) and Meta Platforms (META) all report next week, along with hundreds of others.
Those megacap reports will have huge implications for Nvidia and other AI hardware names, as well as the broader tech sector.
The first Q3 GDP report and the October jobs report also are next week. The presidential election is Nov. 5 while the Fed meets Nov. 6-7.
So with the market pausing, investors have plenty of reasons to be cautious about new buys. If you do take new positions, be ready to exit quickly. Investors also might consider trimming positions for various reasons.
A market pullback or pause could create a lot more setups. So keep updating your watchlists and exit strategies.
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Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
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