Dow Jones futures were slightly higher after hours, along with S&P 500 futures and Nasdaq futures. Tesla (D.S.L.A) holds its annual shareholder meeting, but doesn’t deliver much big news.
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Stock market gains retreated on Tuesday as debt ceiling fears capped selling pressure, with the Nasdaq up for much of the session thanks to megacap technicals. Advanced Micro Devices (AMD), Nvidia (NVDA), Microsoft (MSFT), Amazon.com (AMZN) and Google Parents letters (Google)
The S&P 500 and Dow Jones retreated for most of the day, with the latter closing below its 50-day line. Market breadth is murky.
Debt ceiling talk
President Joe Biden and congressional leaders held new debt ceiling talks at the White House on Tuesday afternoon. “We have a lot of work to do,” House Speaker Kevin McCarthy said, adding that the two sides are far apart. He added that a deal could be reached this week.
However, the White House announced shortly before closing time on Tuesday that President Biden would cut short his upcoming trip to Asia due to debt ceiling negotiations. The news pushed major indexes to session lows, indicating that a debt-limit hike is not imminent.
Without a debt-ceiling hike, the U.S. could default as early as June, perhaps as early as June 1.
Meanwhile, the FTC moved to ban Amgen (AMGN) acquisition Horizon Therapeutics (HZNP) which raised concerns about M&A activity in biotech and medicine in general.
target (DGT), TJX Cos. (TJX) and Dynatrace (TD) report on Wednesday morning. TGT stock has been struggling below its moving averages. TJX stock is just below the initial entry. Dynatrace stock has already cleared an early entry and pauses just below a traditional breakout.
Nvidia has stock IBD Leaderboard, Dynatrace joins as an earnings option trade. TT stock is also available The IBD 50 List. MSFT stock is on the IBD Long-Term Leaders list IBD Big Cap 20.
A video embedded in this article discusses and analyzes Tuesday’s market action In holding (onion), AMD and Axelis Technologies (ACLS)
Tesla Vs. BYD: Competing for the crown of EV giants, but which is the best buy?
Tesla shareholder meeting
The Tesla shareholder meeting was held at the Austin EV plant.
TSLA stock investors are looking for more details on a variety of issues and products, including the Cybertruck, 4680 batteries and the updated Model 3.
CEO Elon Musk said Tesla will deliver production Cybertrucks this year, but did not provide more details about timing and so on.
Tesla offered a dark silhouette for what could be its next-generation vehicle. But there are no details on when the EV will arrive, whether it will be the cheapest model, or what its specifications will be.
Musk says he expects the economy to pick up in the next 12 months. He also popularized the Optimus humanoid robot.
Breaking with longstanding policy, Musk said, “We’re going to try a little promotion and see how it goes.”
Musk also shot down rumors that he might step down as Tesla CEO.
Earlier Tuesday, Bloomberg reported that Tesla Shanghai is close to starting test production of the updated Model 3.
Tesla shares rose 1% in late trading. Shares rose 0.1% to 166.52 in the regular session on Tuesday, below a 21-day line. Tesla stock also faces resistance at the 50-day line, with the 200-day line above it. If Tesla shares make some progress, it has a double-bottom buy point at 207.89.
Dow Jones Futures Today
Dow Jones futures rose 0.1% versus fair value. S&P 500 futures and Nasdaq 100 futures rose 0.1%. Tesla stock is a major S&P 500 and Nasdaq 100 holding.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they examine stocks that could be in for a stock market rally on IBD Live
Stock market rally
Stocks were mixed for much of Tuesday’s session, but the Nasdaq fell on debt ceiling concerns.
The Dow Jones industrial average fell 1% in stock market trading on Tuesday. The S&P 500 index fell 0.6%. The Nasdaq composite fell 0.2%. The small-cap Russell 2000 retreated 1.4%
Megacaps are key drivers. AMD stock rose 4.2%, briefly topping an official buy point. Nvidia shares rose 0.9% to a new 52-week high. Google shares rose 2.6% and Amazon rose 2%. MSFT shares advanced 0.7%.
US crude oil prices were down 0.35% at $70.86 a barrel.
Copper prices fell 2.2%, reflecting weaker-than-expected Chinese economic data and a stronger dollar. Gold retreated 1.5% and silver 1.6%.
The 10-year Treasury yield rose 4 basis points to 3.45%.
ETFs
Among growth ETFs, the innovator IBD 50 ETF (FFTY) fell 1.1%, while the Innovator IBD Breakout Opportunities ETF (Bot2% retreated. iShares Expanded Technology-Software Sector ETF (IGV) fell 0.3%, with Microsoft shares a key component. VanEck Vectors Semiconductor ETF (SMH) closed just below the break, with AMD stock and Nvidia as key shares.
Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKKretreated 2.5% and the ARK Genomics ETF (ARKG) fell 3.3%. TSLA stock is the No. 1 holding in Arc Invest’s ETFs.
SPDR S&P Metals & Mining ETF (XME) fell 2.8% and the Global X US Infrastructure Development ETF (sidewalkIt gave up to 1.6%. US Global Jets ETF (JETS) decreased by 0.45%. SPDR S&P Homebuilders ETF (XHBGave up to 1.2%. Energy Select SPDR ETF (XLEretreated 2.5% and the Health Care Sector SPDR Fund (XLV) fell 0.8%.
Fund Selection SPDR ETF (45fell 0.9%. SPDR S&P Regional Bank ETF (Createretreated 1.5%.
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Market rally analysis
The stock market rally had contrasting action on Tuesday, with megacap techs performing strongly amid a general pullback.
The Nasdaq hit its best levels since late August. The S&P 500 fell below its 21-day line. The Dow Jones fell below its 50-day line with its worst close since late March.
Breadth was unusually negative due to mixed action in major indices.
Losers beat winners by 2-to-1 on the Nasdaq and nearly 4-to-1 on the NYSE. New lows easily surpassed new highs.
The Nasdaq 100, led by shares of AMD, Nvidia, Microsoft, Amazon and GOOGL, rose 0.1% to hit an August high. But the First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) fell 0.95%, although it is still above the 50-day.
Invesco S&P 500 Equal Weight ETF (RSP) fell 1.4% to its worst finish since late March. It is fractionally closer to its October bear market low than its 2023 high from early February.
On a positive note, the chip sector is showing renewed strength and improving breadth. The SMH ETF gave up intraday gains on Tuesday, but is still performing well. AMD shares and Nvidia are clear leaders. But still Lam Research (LRCX) and Utility items (Big) chip-gear giants make positive moves with AMAT earnings on Thursday night. on the semiconductor (Ann) and ACLS Stack are EV-focused chip plays. Broadcom (AVGO) is near the point of purchase.
If the chip sector is poised to bounce back, that’s a positive sign for market upside. Semiconductors themselves have the largest market cap. Also, chips are in basically everything. So if the chips are good, that’s a good sign for many industries.
Meanwhile, the software has been upgraded. Yes, MSFT stock is part of that, though most of its gains reflect cloud computing and AI. But still Salesforce.com (CRM) stock, Service now (Now) and Dynatrace are all doing well, with many cloud names resurgent in recent weeks. ServiceNow announced new AI features in a partnership with Microsoft on Tuesday.
Conversely, the FTC’s move to challenge the Amgen-Horizon deal could set a precedent for blocking many other biotech acquisitions. So that could hurt biotech stocks for a while.
Time the market with IBD’s ETF Market Strategy
What to do now
With short leadership, the stock market rally continues to move sideways. Don’t try to force your way into a harsh expression in this environment. If you are in the right stocks like megacaps, you can get good exposure. If you’re not very lucky, you might be almost entirely cash.
When taking new positions, consider small stakes and focus on initial entries. You may want to take some fractional profits relatively early on to make sure you end up with a profit. While some stocks, such as Nvidia, made big gains, many others rose modestly from buy points and then fell.
Keep working on your watch lists. While there are reasons to be cautious in a choppy market, it won’t take long for the market rally to show renewed strength. So you should be prepared.
Read the big picture every day to stay in tune with market direction and leading stocks and sectors.
Follow Ed Carson on Twitter @IBD_ECarson For stock market updates and more.
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