Tuesday, February 27, 2024

Dow Jones Futures: Market Rally Looks To Rebound After Sell-Off; Micron Jumps On Earnings

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Dow Jones futures rose Thursday morning, along with S&P 500 futures and Nasdaq futures. Micron Technology (MU) reported Wednesday night, with big implications for semiconductors, notably chip-equipment makers such as Applied Materials (AMAT).

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The stock market rally saw modest gains turn into solid losses on the major indexes, with many leaders skidding lower.

Google parent Alphabet (GOOGL) broke out Wednesday in heavy volume on report of a possible ad sales restructuring, but then pared gains with the market. Trucking firms Saia (SAIA) and Old Dominion Freight Line (ODFL) also flashed buy signals intraday.

In the oil machinery space, WFRD stock continued Tuesday’s strong move, offering an additional early entry.

Meanwhile, Tesla (TSLA) fell below an early entry amid a Reuters report that the EV giant blamed drivers for parts failures that it knew for years were defective.

Meta Platforms and Amazon stock are on IBD Leaderboard. Meta and Amazon also are on SwingTrader, along with AMAT stock. Meta and CCL stock are on the IBD 50. Meta stock is on the IBD Big Cap 20.

Weatherford International (WFRD) was Wednesday’s IBD Stock Of The Day.

The video embedded in the article reviewed Wednesday’s market action and analyzed Google, ODFL stock and MongoDB (MDB).

Dow Jones Futures Today

Dow Jones futures climbed 0.4% vs. fair value. S&P 500 futures advanced 0.45%. Nasdaq 100 futures rose 0.6%, fueled by MU stock.

The 10-year Treasury yield edged up to 3.89%.

Crude oil futures rose slightly.

At 8:30 a.m. ET, investors will get weekly jobless claims data, the Philly Fed manufacturing index and the final reading  for third-quarter GDP.

Remember that premarket action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Micron Earnings

MU stock jumped in premarket trading. Micron reported a smaller-than-expected fiscal Q1 loss while sales rose 16%, snapping five quarters of big year-over-year declines. The memory-chip giant also guided higher on the current Q2. Micron stock fell 4.2% to 78.69 in Wednesday’s regular session, but still close to a 52-week high.

Chip-equipment makers Applied Materials (AMAT), KLA Corp. (KLAC) and Lam Research (LRCX) edged higher in late trade. All three fell about 3% on Wednesday, but are trading around 52-week highs.

Several other chip plays rose fractionally as well.

Carnival (CCL) and CarMax (KMX) report before the open. Both Carnival and KMX stock are moving up the right side of bases, but CCL stock is a lot closer to the top.


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Stock Market Rally

The stock market rally was slightly to modestly higher for much of Wednesday, but began retreating midafternoon and picked up momentum, closing at session lows.

The Dow Jones Industrial Average fell 1.3% in Wednesday’s stock market trading. The S&P 500 index and Nasdaq composite tumbled 1.5%. The small-cap Russell 2000 slumped 1.9%.

The Dow and Nasdaq snapped nine-session winning streaks, with the latter falling back below 15,000.

There didn’t seem to be a specific catalyst, but the reversal wasn’t really a surprise either. The Nasdaq was more than 8.5% above its 50-day line intraday Wednesday, so the odds of a pullback were rising. The CBOE Volatility Index, or VIX, had been hovering near a four-year low, signaling excessive bullishness. The market fear gauge popped 9.1% on Wednesday.

It’s unclear if Wednesday’s market sell-off is just a blip, the start of a modest pullback or the first step in something more serious.

Unsurprisingly, growth stocks took harder hits Wednesday than the indexes.

U.S. crude oil prices edged up 0.4% to $74.22 a barrel, rising 3.9% so far this week.

The 10-year Treasury yield fell 4.5 basis points to 3.88%, hitting the lowest levels since late July.

ETFs

Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) fell 1.4%. The VanEck Vectors Semiconductor ETF (SMH) slumped 2.8%. MU stock is a major SMH holding, along with AMAT, KLAC and LRCX stock.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) slumped 4.1% and ARK Genomics ETF (ARKG) 4.9%. Tesla stock is still a major holding across Ark Invest’s ETFs.

SPDR S&P Metals & Mining ETF (XME) declined 1.8% and the Global X U.S. Infrastructure Development ETF (PAVE) 1.6%. U.S. Global Jets ETF (JETS) descended 1.6%. SPDR S&P Homebuilders ETF (XHB) stepped down 1.1%. The Energy Select SPDR ETF (XLE) slipped 0.9% and the Health Care Select Sector SPDR Fund (XLV) gave up 1.45%.

The Industrial Select Sector SPDR Fund (XLI) retreated 1.6%. The Financial Select SPDR ETF (XLF) shed 1.8%.


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Google Stock

Google stock rose 1.2% to close at 138.34. That was still one of the best performers on the S&P 500 on Wednesday and the only Magnificent Seven stock to finish higher.

In the morning, shares jumped to 141.70, blasting above a 139.42 cup-with-handle buy point in heavy volume. Shares retook the 50-day line Monday.

GOOGL stock jumped early Wednesday after The Information reported that the search giant could restructure its ad sales team of 30,000, relying more on machine learning to let customers buy ads on Google, YouTube and more.

Trucking Stocks

Saia stock rose 2% to 436.54, blasting above a trendline and 428.79 early entry and then breaking past the 443.85 buy point.

ODFL stock edged up 0.2% to 402.03. Intraday, Old Dominion hit 415.95, decisively clearing the 50-day line and breaking a  downward-sloping trendline.

Saia and Old Dominion are both in the less-than-truckload space. The trucking gains came despite weak FedEx (FDX) results and guidance late Tuesday.

Weatherford Stock

WFRD stock edged up 0.3% to 96.01. Intraday, shares got as high as 98.69, clearing a downward-sloping trendline.  Tuesday’s strong move above the 50-day line also offered an early entry within a cup base. The official buy point is 100.93, according to MarketSmith analysis.

Tesla Stock

Tesla stock fell 3.9% to 247.14 on Wednesday, back below a 252.75 early entry. Shares are working on a 278.98 double-bottom buy point.

On Wednesday, Reuters reported that tens of thousands of drivers have suffered failed suspensions or steering parts over several years. The report, based on a Reuters review of documents, reveal that the EV giant knew that many parts were defective, but often blamed drivers for any resulting failures.

The report and the underlying documents potentially raise the risks of expensive recalls, lawsuits and even potentially criminal liability.

The news comes as Tesla rolls out an over-the-air “recall” to improve driver monitoring while using Autopilot

Still, TSLA stock’s slide Wednesday seemed tied to the broader market reversal, not the Reuters report.

What To Do Now

The stock market rally had been getting stretched, both in the major indexes and leading stocks. A pause and modest pullback would be healthy; there aren’t compelling reasons to be adding exposure now.

As a practical matter, there aren’t many buying opportunities right now, though Google stock, Saia and Weatherford are exceptions.

Investors could choose to take some profits and lighten exposure, especially if they haven’t been doing that in recent days on the way up. Remember, if you aren’t selling on the way up, you’re selling on the way down.

Keep your watchlists up to the date and stay engaged.

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

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

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