Dow Jones Futures: Market rally fizzles out as Congress faces deadlines; Tesla is staying in the buying area

Dow Jones futures rose slightly late Wednesday, along with S&P 500 futures and Nasdaq futures. A rebound in equity markets fizzled out on Wednesday, with major indices giving up early gains and the Nasdaq breaking recent lows. Some top performers, like Tesla stock, held up, but chip stocks and many other growth leaders continued to struggle.

Government bond yields erased the morning’s losses and closed slightly higher. The dollar continues to rise.

The Senate is moving towards a vote on expanding government funding to avoid a shutdown after Thursday. Meanwhile, House spokeswoman Nancy Pelosi signaled she could postpone a scheduled Thursday vote on the bipartisan infrastructure deal as she struggles to please various wings of the Democratic Party.

Fight growth stocks

Growth stocks continued to struggle ASML (ASML), Snap (SNAP), Generac (GNRC), modern micro devices (AMD), Palantir technologies (PLTR), Digital turbine (APPS) and Nvidia (NVDA) all show disappointing measures.

ASML stock was down 3.8% a day after falling 6.6% below its 50-day line. AMD stock briefly attempted to rebound from Tuesday’s big loss but lost for its worst closing price since the breakout day on July 28th. Nvidia stock encountered resistance on its 50-day day and fell slightly.

SNAP stock tried to rebound from its 50-day line but reversed and closed below that level, down 3.7%. PLTR stock fell 3.2% below its 50- and 200-day lines after falling 7.75% to break below a buy point on Tuesday. APPS stock fell 3.4% after losing 6.9% on Tuesday, just above its 200-day line that served as an aggressive entry a week earlier.

GNRC stock fell 4.4%, was one of the S&P 500’s biggest losers on Wednesday, and closed well below the 50-day line. Generac is forecasting sales for the year as a whole that will be slightly below the analysts’ estimates. The market leader in generators and energy storage systems also kept revenues for the 2024 financial year low.

Tesla shares hold up

On the top, Tesla (TSLA) rose 0.5% to 781.31 and held above a buy point of 764.55. Several less noticeable autoplays also did well. KMX warehouse and AutoNation (AN) rose in buying zones, with CarMax (KMX) reported profits early Thursday. Meanwhile auto parts dealer AutoZone (AZO) and O’Reilly car (ORLY) are also in the purchase area.

Tesla stocks, Snap, Nvidia, Generac and AMD are on the IBD leaderboard, despite Snap’s position being trimmed on Wednesday. AutoNation stocks were added to SwingTrader on Wednesday. Snap and AutoNation are on IBD 50. AZO stock was IBD stock of the day.

The video embedded in this article has been analyzed Netflix (NFLX), Matador resources (MTDR) and AN share.

Pelosi is delaying the vote on infrastructure?

The Senate hopes to be able to vote on a draft law on emergency funding for the government without extending the debt limit on Wednesday. The Republicans in the Senate on Monday evening rejected a funding bill that would increase the debt ceiling. But they have signaled that they would approve a “clean” funding bill to avoid a partial government shutdown after September 30th. Congress would still have to raise the debt ceiling to avoid national bankruptcy. The House of Representatives voted Wednesday night to suspend the debt ceiling, a measure that was doomed to defeat the Senate.

House spokeswoman Pelosi hinted that she could delay a vote on a $ 1 trillion infrastructure bill, despite saying on Wednesday evening that the “plan” was to arrest Thursday. The vote, originally scheduled for September 27th, was recently postponed to September 30th. Progressives are threatening to reject the bipartisan infrastructure agreement without making significant progress on a partisan reconciliation law. Center Democrats shy away from the size of the tax and spending package. Even if a price tag is agreed for the reconciliation package, it can take weeks for legislation to be finalized.

Ultimately, Congress is likely to pass the Infrastructure Act and a major reconciliation package. But the chance that nobody will get through is less than zero.

Dow Jones Futures today

Dow Jones futures rose 0.25% from fair value. S&P 500 futures rose 0.2% and Nasdaq 100 futures rose 0.2%.

Keep in mind that overnight action in Dow futures and elsewhere does not necessarily result in an actual trade in the next regular trading session.


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Stock market rally Wednesday

The stock market rally struggled to hold its ground on Wednesday and stalled. The major indices opened higher, with a series of small volume ups and downs. The Nasdaq has just dropped below its November 20th low. All major indices remain below their 50-day moving averages

The Dow Jones Industrial Average rose 0.3% in trading on Wednesday. The S&P 500 index climbed 0.2%. The Nasdaq Composite lost 0.2%. The small-cap Russell 2000 also lost 0.2%

The yield on 10-year US Treasuries fell slightly below 1.5% ahead of the stock market opening on Wednesday, but rebounded and rose 1 basis point to 1.54%, the highest closing price since mid-June.

Meanwhile, the US dollar rose sharply to its best level in a year. The recent surge in government bond yields is propping up the dollar by making dollar-denominated assets more attractive. A stronger dollar makes US exports more expensive and lowers the dollar value of profits and sales of multinationals.

Crude oil futures fell slightly on a surge in US crude oil inventories and a return of some storm-backed golf production. The rising dollar also weighed on raw materials.

ETFs

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) lost 0.2%, while the Innovator IBD Breakout Opportunities ETF (BOUT) gained 0.1%. The iShares Expanded Tech-Software Sector ETF (IGV) lost 0.2%. The VanEck Vectors Semiconductor ETF (SMH) slumped 1.5%, with ASML, AMD and Nvidia all comprising components.

SPDR S&P Metals & Mining ETF (XME) slumped 2.2% and Global X US Infrastructure Development ETF (PAVE) lost 0.1%. The US Global Jets ETF (JETS) was down 0.5%. The SPDR S&P Homebuilders ETF (XHB) rose 0.5%. The Energy Select SPDR ETF (XLE) was unchanged, while the Financial Select SPDR ETF (XLF) rose 0.1%.

The ARK Innovation ETF (ARKK) slumped 2.2% and the ARK Genomics ETF (ARKG) gave up 1.8%, reflecting more speculative story stocks. ARKK is at its worst since early June and ARKG is just above its May lows. Tesla stock remains the top position among ARK Invest’s ETFs, but Cathie Wood has sold a large portion of her TSLA stake in the past few weeks.


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Analysis of the market rally

The stock market rally tried to get off the ground but a series of half-hearted attempts faded, with major indices closing mixedly and closing close to session lows. The Dow Jones and the S&P 500 ended with modest price gains.

The Nasdaq composite fell below its September 20th low, with the August 19th low being the next logical support area. The Nasdaq 100 fell below both levels on August 19 and September 20. The Russell 2000 was just crashing between its 50-day and 200-day lines.

Growth stocks didn’t rebound much, even from session highs, landing near session lows. The FFTY ETF slid below its 50-day moving average. It’s now down 7.8% for the week, which would be the worst weekly loss since the coronavirus crashed.

Some growth stocks rebounded from their 50-day line, such as Dexcom (DXCM). But will these outliers continue to thrive in the face of the shaky market rally or will they succumb to the broader downturn? Meanwhile, many growth stocks saw anemic upward moves or simply slid down, including Snap, Nvidia, and ASML.

However, energy stocks held up well as Matador Resources cracked an unofficial buy point. Financial stocks also look healthy.

For the time being, the stock market rally remains “under pressure”.


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What now

Investors may be a little shy after two recent failed attempts to rebound, with the lackluster action being uninspiring at best. You probably should be.

If the market rally takes another run to new highs and beyond, there is no need to jump at the first sign of strength.

Alternatively, if you’ve been slowly reducing exposure in the previous days or weeks, use any bounces as a chance to reduce.

Prepare for the next strong market run. Look for stocks with strong relative strength lines that are rising or holding near highs. Stocks that outperform in uneven or weak markets are likely to result in a clear uptrend.

Read The Big Picture daily to keep up 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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