Dow Jones futures were little changed overnight, along with S&P 500 futures and Nasdaq futures, despite an earnings warning from AMD. The stock market’s attempted rally lost ground on Thursday, hitting resistance at near-term levels ahead of Friday’s key jobs report.
X
Tesla CEO Elon Musk and his lawyers filed several lawsuits related to the Twitter (TWTR) acquisition agreement. Meanwhile, the judge overseeing the Twitter case gave Musk until Oct. 28 to close the deal. But the move means the Musk-Twitter trial, if it happens, won’t start until November. TWTR stock fell.
Separately S&P Global raised the Tesla credit rating (TSLA) to investment grade, a move expected to reduce borrowing costs. But Tesla shares declined slightly, extending a recent strong downtrend.
Shockwave Medical (SWAV), Arista Networks (A NETWORK), Eli Lilly (LLY), About Semiconductor (WHERE) i Neurocrine Biosciences (NBIX) cleared or flirted with buy points during Thursday’s session.
NBIX stock is on the IBD Rating, while Shockwave is on the Rating’s Watch List. Microsoft (MSFT) and Google shares are among the long-term leaders of the IBD. SWAV and Onsemi are in the IBD 50. ANET and On Semiconductor are in the IBD Big Cap 20. SWAV was Wednesday’s IBD Stock of the Day.
Notice from AMD
After closing, Advanced microdevices ( AMD ) said third-quarter sales would be about $5.6 billion, well below analysts’ consensus of about $6.7 billion. AMD blamed a weak PC market and ongoing inventory changes.
AMD shares fell 4.5% overnight. Shares had fallen 0.1% to 67.85 in Thursday’s regular session. AMD shares continue to rise for the week after hitting two-year lows last week.
Intel (INTC), which competes with AMD in PC chips, retreated modestly. So he did Nvidia (NVDA), which competes with AMD in graphics chips.
separately, Aehr test systems ( AEHR ), a small chip maker with exposure to the electric vehicle space, reported better-than-expected first-quarter fiscal profit. AEHR shares jumped in extended action. The stock is indicating a move around the 50-day line, not far from a trendline entry. Shares of AEHR traded down 3.1% to 13.88 in late trading on Thursday.
Jobs report
The Labor Department will release the September jobs report at 8:30 am ET. Wall Street expects nonfarm payrolls to rise by 250,000, a solid increase but down from August’s 315,000. The unemployment rate remains at 3.7%. Labor force participation and wage gains will also be key.
The Federal Reserve wants to see labor markets tighten substantially before backing off on rate hikes. This week, the JOLTS survey showed job openings fell by a million in August, while weekly jobless claims rose more than expected. The ADP employment index showed solid private jobs higher, while the ISM manufacturing and services indicators gave mixed readings on employment.
A weak September jobs report could spur markets to lower expectations of a Fed rate hike in the coming months. But the September consumer price index is coming up on October 13.
Dow Jones futures today
Dow Jones futures were little changed at fair value. S&P 500 futures fell 0.1%. Nasdaq 100 futures fell 0.1%. Intel shares are in the Dow Jones, S&P 500 and Nasdaq, while AMD and Nvidia shares are notable components of the S&P 500 and Nasdaq.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next normal stock market session.
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Stock Exchange meeting
The stock market’s attempted rally began with the major indexes moving modestly to just below near-term resistance, then pulling back, closing at session lows as Treasury yields rose.
The Dow Jones Industrial Average retreated 1.15% in Thursday’s trading. The S&P 500 index fell 1%. The Nasdaq Composite was down 0.7%. The small-cap Russell 2000 lost 0.6%.
The 10-year Treasury yield rose 7 basis points to 3.83% as several Fed officials stuck to the central bank’s slack line. It jumped 14 basis points on Wednesday. The 10-year yield is now up for the week and not far from 12-year highs of around 4%. The drop in the 10-year Treasury yield from Monday to Tuesday was a key to the renewed attempt to recover the stock market.
U.S. crude rose 0.8% to $88.45 a barrel, its fourth straight advance. OPEC+ agreed on Wednesday to cut production quotas by 2 million barrels per day.
ETFs
Among the top ETFs, the Innovator IBD 50 ETF ( FFTY ) fell 0.5%. The iShares Extended Technology Software Sector ETF ( IGV ) was down 0.3%, with MSFT shares a huge component. The VanEck Vectors Semiconductor ETF ( SMH ) fell 0.7%. SMH fell overnight, with shares of AMD, Intel and Nvidia all leading components.
Reflecting more speculative stocks, the ARK Innovation ETF ( ARKK ) rose 0.3% and the ARK Genomics ETF ( ARKG ) lost a fraction. TSLA stock is a major holding in Ark Invest’s ETFs.
SPDR S&P Metals & Mining ETF ( XME ) retreated 0.45%. US Global Jets ETF (JETS) sank 0.9%. The Energy Select SPDR ETF ( XLE ) added 1.8%. The Select Healthcare Sector SPDR Fund ( XLV ) fell 1.3%.
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Tesla stock
Tesla shares fell 1.1% to 238.13, even on news of an investment-grade credit rating. Shares have fallen 10% this week, first on disappointing third-quarter earnings and then on the Twitter news.
On Thursday afternoon, Musk tweeted that production of the Tesla Semi has begun with deliveries to PepsiCo (PEP) from December 1. The years-delayed Semi will have a range of 500 miles, he said. Other specifications are unclear.
Musk-Twitter Deal saga
Tesla CEO Elon Musk appeared to reverse course on Tuesday, saying he wanted to go ahead with the $44 billion Twitter deal.
But the two sides have not agreed on new terms. Musk wants the deal to contain debt financing, an escape clause that was not in the April acquisition agreement. You also want to reserve the right to renew your fraud claims.
Musk’s lawyers, meanwhile, filed a motion in Delaware Court of Chancery to stay Twitter’s upcoming trial, saying the deal should close by Oct. 28.
Twitter immediately objected, saying it was an “invitation to mischief and delay”. His lawyers also asked Musk to pay $44 billion, more interest.
However, the Chancery Court judge, in a temporary victory for Musk, on Thursday afternoon pushed back the Twitter trial, which had been set to begin on October 17. If the Twitter deal isn’t closed by Oct. 28, it will set up the November trial. dates
Shares of TWTR fell 3.7% Thursday to 49.39, then fell 2% overnight after the judge delayed Twitter’s trial. Shares fell 1.35% on Wednesday after rising 22% on Tuesday. Musk agreed in April to pay $54.20 per share for Twitter stock.
Assuming Musk ends up buying Twitter, he may have to sell more TSLA stock to finance the acquisition. So that’s an overview of Tesla stock.
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Actions near the points of purchase
Shares of NBIX rose modestly to close above a flat-base buy point of 109.36 for the first time, according to MarketSmith analysis. Although breakouts have struggled in 2022, Neurocrine is 7% above its 50-day line.
LLY shares rose slightly on positive drug news, but failed to close above a traditional buy point.
ANET and Onsemi shares closed just above their downtrend lines, which are slightly above their 50-day lines. Both are technically early buy points within new consolidations, but have bounced back on light volume as Friday’s jobs point to market recovery.
Shares of SWAV touched a trendline on Thursday and then reversed slightly lower. The stock is still above its 21-day and 50-day lines. Shockwave stock will get a proper footing after Friday.
Analysis of market concentration
The stock market’s attempted rally lost ground again on Thursday. Major indices hit resistance at the 21-day line shortly after the open. They remained on the move, but generally fell for the rest of the session, closing near session lows.
Stocks pared losses on Wednesday even as Treasury yields rose. But they struggled on Thursday with the 10-year Treasury yield and the dollar, which rose solidly for a second straight session.
Major indices remain much higher for the week.
Investors weren’t ready to make big bets ahead of Friday’s jobs report. The jobs report could be critical to the market’s attempted recovery. A strong move could trigger a follow-up day to confirm the new uptrend, with the likes of Arista Networks, On Semiconductor and Shockwave. But a negative reaction to the jobs report could send the indexes back to bear market lows.
Energy stocks continued to lead on Thursday, but many look stretched after several sessions of underperformance. Medical plays remain intriguing, while chip, networking, restaurant, insurance, fertilizer, and several other groups have at least a few names around buy points.
On the downside, garbage hauling companies such as Waste connections (WCN) was heavily sold. Solar stocks struggled again.
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what to do now
While a few stocks showed buy signals on Thursday, at least intraday, there wasn’t much reason to buy again with the market’s fresh rally heading into the jobs report.
Even if the market tracks down in the coming days, that doesn’t mean investors should increase exposure quickly. The market would still face a number of technical challenges and economic headwinds, while AMD’s warning is just the latest bit of sad news ahead of earnings seasons.
But prepare those watch lists. As a market rally builds momentum, you want to be ready to take advantage of it by spotting potential big winners early.
Read The Big Picture every day to stay in sync with market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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