Dow Jones Futures: No End to the Stock Market; Infrastructure law in doubt, threatening Tesla deliveries

Dow Jones futures rose slightly late Thursday, along with S&P 500 futures and Nasdaq futures, with the focus on a possible vote on an infrastructure bill and Tesla shipments. The stock market made another lackluster recovery on Thursday, reversing on the downside, closing again on session lows, despite Congress avoiding a government shutdown.




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Retailers were big losers on Thursday amid weak earnings from CarMax (KMX) and Bed bath in addition (BBBY). But again there were widespread losses.

Among the tech titans Apple (AAPL) and Facebook (FB) begin to live below the 50 day line while Amazon.com (AMZN) is below the 200-day line. Microsoft shares and Google parents alphabet (Googl) are starting to find their way below the 50-day line and look very similar to the Nasdaq composite.

Snap (SNAP), Nvidia (NVDA) and AMD (AMD) rebounded towards their 50-day lines but all closed below this key level.

Tesla (TSLA) could report deliveries for the third quarter as early as Friday, with enthusiasm building around a strong number. Nio (NIO) is expected to report the September sale on Friday, with Xpeng (XPEV) and Li car (LI) also possible on this day. Chinese electric and battery giant WORLD (BYDDF) is expected to report next week.

Tesla shares fell, but holds strong in a buy zone. Nio stocks, Xpeng and Li Auto are all near multi-month lows. BYD stock has pulled back over the past few weeks but is still near record highs. All four Chinese EV stocks rose on Thursday.

Tesla shares, Snap, Nvidia, Microsoft, Google and Microsoft (MSFT) are on the IBD leaderboard. Google and Microsoft shares are long-term leaders at IBD. Google share is also on the IBD 50.

Government standstill averted

The Senate and the House of Representatives have approved a short-term funding proposal. It goes straight to the White House for President Joe Biden’s signature and prevents a partial government shutdown for hours. Congress has yet to approve a debt ceiling hike to avoid a government default, with Republicans insisting that the Democrats pass it themselves. Treasury Secretary Janet Yellen said this week that October 18 is the deadline, although the Congressional Budget Office is suggesting late October or early November as the default date.


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Infrastructure coordination?

But the fate of the $ 1 trillion bipartisan infrastructure bill is in doubt. House spokeswoman Nancy Pelosi went on to say Thursday afternoon that the House would vote on the package tonight. But many progressives vow to oppose the deal. They want significant progress first, or the full passage of another, partisan, tax and spending bill. With Democrats only holding a majority of three seats in the House of Representatives and only a handful of Republicans likely to support the Infrastructure Bill, the odds of a high-profile defeat seem high. So Pelosi could pull the infrastructure bill at the last minute unless it wants to send a message to some of its members.

Thursday night reports suggested that the House would vote after 9 p.m. ET, if at all.

Dow Jones Futures today

Dow Jones futures rose 0.1% from fair value. S&P 500 futures and Nasdaq 100 futures rose 0.1%.

The 10-year yield fell from Thursday close to just under 1.5%.

Zoom video (ZM) and Five9 (FIVN) agreed to terminate its merger agreement after FIVN shareholders refused to approve the $ 14.7 billion acquisition. Regulators reviewed the deal as Zoom’s China links posed a potential national security risk. Zoom’s share price, which has plummeted since the deal was announced, made the deal unattractive for FIVN shareholders. ZM stock barely changed overnight while Five9 fell modestly.

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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Thursday on the stock exchange

The stock market opened higher again but struggled to make headway, closing near the session lows for the third straight year.

The Dow Jones Industrial Average fell 1.6% in trading on Thursday. The S&P 500 index fell 1.2%. The Nasdaq Composite was down 0.4% after trading higher for much of the session. The small-cap Russell 2000 lost 0.9%.

The 10-year government bond yield fell 1 basis point to 1.53% and stayed close to recent highs. Crude oil prices rose slightly, while natural gas prices rose sharply again.

Apple shares and Microsoft fell nearly 1%. Facebook shares, Google and Amazon only lost a fraction. All are down heavily for the week.

Growth ETFs

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) lost 0.4%, while the Innovator IBD Breakout Opportunities ETF (BOUT) fell 2.2%. The iShares Expanded Tech-Software Sector ETF (IGV) closed just below the breakeven point. Microsoft is an important part of it, while Snap stocks are a stake too. The VanEck Vectors Semiconductor ETF (SMH) lost 0.1%, with Nvidia and AMD stocks helping to boost SMH.

The ARK Innovation ETF (ARKK) rose 0.7% and the ARK Genomics ETF (ARKG) rose 1.15%, reflecting more speculative stocks, but both are multi-month lows. The Tesla share is the top holding company among the ARK Invest ETFs.

Sector ETFs

SPDR S&P Metals & Mining ETF (XME) was up 0.2%, while the Global X US Infrastructure Development ETF (PAVE) was down 2.2%. The US Global Jets ETF (JETS) lost 1.7%. SPDR S&P Homebuilders ETF (XHB) slid 3.2%, with construction companies, suppliers and home-related retailers like RH and Williams-Sonoma all losing ground. The Energy Select SPDR ETF (XLE) gave up 1.5% and the Financial Select SPDR ETF (XLF) gave up 1.6%.

The SPDR S&P Retail ETF (XRT) fell 4.75% on Thursday. CarMax tumbled 13% due to its loss of profits, while AutoNation slumped 6%. Both fell below the buy points. BBBY stock plunged 22% to a 52-week low after missing out on supply chain problems and leading them down on the heels of Nike (OF) and NS (NS). Together with a Kohls (KSS) downgrade due to supply chain issues, a number of retailers out of stock, including Macys (M), Williams-Sonoma (WSM), Bath and body work (BBWI), gap (GEOGRAPHICAL POSITIONING SYSTEM), Turn (RVLV) and more.

Apparel manufacturers were also big losers, including Hanesbrands (HBI).

Tesla deliveries

The EV giant will report deliveries and production numbers for the third quarter as early as Friday, but these could come over the weekend or next Tuesday. Tesla shipments will hit around 232,000, according to the latest upward revised analyst consensus. Tesla first sold the Model Y in Europe, which is likely to boost sales in that region. Tesla exported most of its Shanghai production, mostly to Europe, in July and August, but September appears to be a large number.

Chip scarcity can limit Tesla production, but if so, it will only slow past production growth. Meanwhile, global auto production has plummeted, increasing Tesla’s demand and prices

Tesla stock fell 0.75% to 775.48 on Thursday and was comfortably in the range of a 764.55 handle buy point.


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Nio deliveries

Nio typically reports monthly sales on the first day of the following month, so expect the numbers on Friday. Xpeng and Li Auto could also follow suit. Nio and Li Auto have cut their quarterly delivery targets, citing chip issues. Nio and Xpeng both reported lower sales in August than in July.

Nio and Xpeng make electric cars, while the Li Auto’s Li One has a small gasoline engine to increase range.

BYD, which has ramped up production, should slightly exceed sales of Nio, Xpeng and Li Auto combined for September.

Also, Nio started selling its ES8 in Norway on Thursday, joining rivals Xpeng and BYD in this important EV market.

On Thursday the Nio share rose 1.4%. XPEV stock rose 2.9% and Li Auto stock rose 2.2%. All three are near recent lows and below major moving averages. BYD stock rose 2.8% and approached its soaring 50-day line.

Market analysis

The S&P 500 fell below Tuesday’s low and just below its September 20 low after an insider day on Wednesday. It was the worst deal since August 19th.

The Dow Jones is still above its September 20 low, but then never retook its 50-day line last week. The Russell 2000 is back below its 200-day line.

The Nasdaq composite tried to rebound but lost just above its August 19th low. With the slump of tech giants like Apple and the retreat of key sectors like chips and software, the Nasdaq has lost its upward momentum.

The FFTY is now 8.2% down for the week.

The major indices are all below their 50-day moving averages and have been trending down over the past few weeks. The Nasdaq’s 21-day line is about to break below its 50-day line, with the S&P 500 already suffering from this short-term bearish cross.

Leading stocks, with a few exceptions such as upstart (UPST) or Tesla stock, are trying to hold on or are badly damaged.


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What now

Investors have little or no reason to increase their exposure. When the stock market lives below the 21 and 50 day lines, good things don’t happen. The general trend remains weak. Could Thursday’s low be the low point and the market rally back to record highs from here? Sure, but we could also be on the verge of a market correction.

Most of the money is made in strong market upward trends. Making big bets against long odds is a high loss strategy.

Keep your attention low and focus on stocks that work or are long-term winners. Focus on building your watchlists and preparing for the next money market.

Most of all, it’s an important day to read The Big Picture.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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