Dow Jones futures fell overnight, while S&P 500 and Nasdaq futures fell following a profit warning from AMD. The attempted stock market rally lost ground on Thursday, hitting short-term resistance ahead of Friday’s key jobs report.
Tesla CEO Elon Musk and his attorneys have made several claims related to the Twitter (TWTR) repurchase agreement. Meanwhile, the judge handling the Twitter case has given Musk until October 28 to close the case. But the move means the Musk-Twitter trial, if it takes place, won’t begin until November. TWTR stock fell.
S&P Global separately noted the You’re here (TSLA) to investment grade credit rating, a long overdue move that will lower borrowing costs. But Tesla stock fell slightly, continuing a strong recent downtrend.
medical shock wave (SWAV), Arista Networks (A NET), Eli Lily (THERE IS), On semiconductor (On and Neurocrine Biosciences (NBIX) erased or flirted with buy points in Thursday’s session.
NBIX stock is on the IBD ranking, while Shockwave is on the ranking watch list. Microsoft (MSFT) and Google stock are among the IBD’s long-term leaders. SWAV and Onsemi shares are on the IBD 50 list. ANET and On Semiconductor shares are on the IBD Big Cap 20. SWAV was the IBD stock of the day on Wednesday.
After closing, Advanced micro-systems (AMD) said third-quarter sales would be about $5.6 billion, well below analyst consensus of about $6.7 billion. AMD blamed weakness in the PC market and ongoing inventory changes.
AMD stock fell 4% overnight. The shares had fallen 0.1% to 67.85 in Thursday’s regular session. AMD stock is still up for the week after hitting a two-year low last week.
Intel (INTC), which rivals AMD in PC chips, fell slightly. So done Nvidia (NVDA), which competes with AMD in graphics chips.
Separately, Aehr test systems (AEHR), a small chip-based equipment maker with exposure to the electric vehicle space, reported better-than-expected fiscal first-quarter earnings. AEHR stock jumped in long action. Stocks are signaling movement around the 50-day line, not far from a trendline entry. AEHR stock fell 3.1% to 13.88 in Thursday’s session.
Report on the works
The Department of Labor will release the September jobs report at 8:30 a.m. ET. Wall Street expects nonfarm payrolls to rise by 250,000, a solid gain but down from August’s 315,000. The unemployment rate should remain at 3.7%. Labor force participation and wage gains will also be key.
The Federal Reserve wants to see labor markets ease significantly before backing off on rate hikes. This week, the JOLTS survey showed that job vacancies fell by 1 million in August, while weekly jobless claims rose more than expected. The ADP jobs index showed solid private jobs on the rise, while the ISM manufacturing and services indicators gave mixed readings on employment.
A weak jobs report in September could prompt markets to lower expectations for Fed rate hikes in the coming months. But the consumer price index (CPI) for September looms on October 13.
Dow Jones Futures Today
Dow Jones futures fell 0.1% from fair value. S&P 500 futures fell 0.15%. Nasdaq 100 futures fell 0.3%. Intel stocks are on the Dow Jones, S&P 500 and Nasdaq, while AMD and Nvidia stocks are notable components of the S&P 500 and Nasdaq.
Remember that overnight action on futures contracts on Dow Jones and elsewhere does not necessarily translate into actual trading in the next regular trading session.
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Stock market rally
The stock market rally attempt began with the major indices moving slightly just below near-term resistance and then falling back, closing at session lows as Treasury yields rose.
The Dow Jones Industrial Average fell 1.15% in Thursday’s stock trading. The S&P 500 index lost 1%. The Nasdaq composite lost 0.7%. Small cap Russell 2000 lost 0.6%.
The 10-year Treasury yield rose 7 basis points to 3.83% after jumping 14 basis points on Wednesday. The 10-year yield is now up for the week and not far off the 12-year highs around 4%. The drop in the 10-year Treasury yield from Monday to Tuesday was a tailwind for the new attempt at a stock market rally.
U.S. crude oil prices rose 0.8% to $88.45 a barrel, their fourth straight advance. OPEC+ agreed on Wednesday to cut production quotas by 2 million barrels a day.
Among the top ETFs, the Innovator IBD 50 (FFTY) ETF fell 0.5%. The iShares Expanded Tech-Software Sector ETF (IGV) edged down 0.3%, with MSFT stock a large component. ETF VanEck Vectors Semiconductor (SMH) fell 0.7%. SMH dropped overnight, with AMD, Intel and Nvidia stocking all major components.
Reflecting more speculative historical stocks, ARK Innovation ETF (ARKK) edged up 0.3% and ARK Genomics ETF (ARKG) lost a fraction. TSLA stock is a major holding in Ark Invest ETFs.
SPDR S&P Metals & Mining ETF (XME) fell 0.45%. The US Global Jets ETF (JETS) fell 0.9%. ETF Energy Select SPDR (XLE) gained 1.8%. The SPDR healthcare sector fund (XLV) fell 1.3%.
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Tesla Stock, the Musk-Twitter saga
Tesla stock fell 1.1% to 238.13, even with the investment-grade credit rating news. Shares fell 10% this week, first on disappointing third quarter shipments and then on news from Twitter.
Tesla CEO Elon Musk appeared to backtrack on Tuesday, saying he wanted to move forward with the $44 billion Twitter deal.
But the two sides did not agree on new terms. Musk would like the deal to be contingent on debt financing — an escape clause that was not in the April buyout deal. He also wishes to reserve the right to renew his claims for fraud.
Meanwhile, Musk’s attorneys have filed a motion with the Delaware Court of Chancery to stay the upcoming Twitter lawsuit, saying the deal should now be completed by October 28.
Twitter immediately objected, saying it was “an invitation to mess up and delay.” His lawyers also called on Musk to pay $44 billion, more interests.
However, the Chancery Court judge, in a temporary victory for Musk, pushed back the Twitter trial on Thursday evening, which was due to start on October 17. If the Twitter deal doesn’t close by October 28, she will set up a November lawsuit on Rendezvous.
TWTR stock fell 3.7% on Thursday to 49.39. Shares fell 1.35% on Wednesday after climbing 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 fund the buyout. So it’s an overhang on Tesla shares.
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Stocks close to buy points
NBIX stock edged higher to close above a fixed base buy point of 109.36 for the first time, according to MarketSmith analysis. While flares have struggled in 2022, Neurocrine is 7% above its 50-day line.
LLY’s stock rose slightly on positive new drug news, but was unable to close above a traditional buy point.
ANET and Onsemi shares closed just above the descending trendlines, which are slightly above their 50-day lines. Both are technically early buy points within further consolidations, but rose on light volume as Friday’s jobs report looms for the market rally.
SWAV stock touched a trendline on Thursday and then reversed slightly. Stocks are still above their 21 and 50 day lines. Shockwave action will have a proper base after Friday.
Market rally analysis
The stock market rally attempt lost further ground on Thursday. The major indices hit resistance at the 21-day line shortly after the open. They remained in flux but generally down for the remainder of the session, closing near session lows.
On Wednesday, stocks pared losses even as Treasury yields jumped. But they struggled on Thursday with the 10-year Treasury yield and the dollar solidly up for a second straight session.
The main indices remain strongly up for the week.
Investors weren’t ready to make big bets ahead of Friday’s jobs report. The jobs report could be key to the attempted market rally. A strong move could trigger a day of tracking to confirm the new uptrend, with stocks like Arista Networks, On Semiconductor, and Shockwave. But a negative reaction to the jobs report could send the indices back to their bear market lows.
Energy stocks continued to lead on Thursday, but many look prolonged after running for several sessions. The medical games remain intriguing while the chip, networking, restaurant, insurance, fertilizer, and several other groups have at least a few names around the buy points.
On the other hand, waste transport companies such as waste connections (WCN) sold hard. Solar stocks suffered again.
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What to do now
While a few stocks gave buy signals on Thursday, at least during the day, there wasn’t much reason to make further purchases with the new market rally heading towards the jobs report. .
Even if the market organizes a follow-up in the coming days, this does not mean that investors should increase their exposure quickly. The market would still face a number of technical challenges and economic headwinds, while AMD’s warning is just the latest grim news as earnings seasons approach.
But get those watchlists ready. As a market rally gathers momentum, you want to be prepared to take advantage of it by spotting potential big winners ahead of time.
Read The Big Picture every day to stay in tune with market direction and top stocks and sectors.
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