Dow Jones futures fell Friday morning, along with S&P 500 futures and especially Nasdaq futures ahead of the key jobs report. AI plays Broadcom (AVGO) and Samsara (IOT) announced its earnings figures last night.
The stock market rally rebounded strongly Thursday morning, but the indexes quickly became mixed. The S&P 500 and Russell 2000 undermined key levels, while the Nasdaq barely made a dent in recovering from recent losses.
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Nasdaq drops after strong start; JPMorgan, Alamos Gold, ARGX in the spotlight
Concerns about economic growth persisted amid mixed messages on Thursday, ahead of Friday’s jobs report. Nonfarm payrolls are expected to rise by 160,000 in August, up from a weak 114,000 in July. The unemployment rate is expected to fall to 4.2%.
Investors fear another drop in the jobs report after this week’s surprisingly weak labor market numbers.
Tesla (TSLA) stood out on Thursday, with Tesla shares rising on plans to roll out fully self-driving cars.
Tesla rival by D (BYDDF), PennyMac Financial Services (PFSI scheme), Sea (SE) and DaVita (DVA) remain in buy zones.
ServiceNow (NOW), Meta platforms (META text), DoorDash (DASH) and Netflix (NFLX) are all trying to get off key short-term support and back above the buy points.
Nvidia (NVDA) rose slightly, but it was an inside day after the heavy losses of the past few sessions.
In general, investors should be cautious about new purchases and take action to exit losers, pending evidence
Nvidia stock, DaVita and ServiceNow are on the IBD Leaderboard, with DoorDash on the Leaderboard watchlist. Meta stock and ServiceNow are on the IBD 50.
Dow Jones Futures Today
Dow Jones futures fell 0.4% vs. fair value. S&P 500 futures fell 0.65%. Nasdaq 100 futures fell 1.1%, with Broadcom, Nvidia and many other big tech companies retreating.
The 10-year US Treasury yield fell a few basis points to 3.7%.
Crude oil futures rose slightly.
Please note that trading Dow futures and other markets overnight does not necessarily result in actual trading during the next regular trading session.
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Merits
Broadcom revenue narrowly topped quarterly expectations, but sales forecasts came in well ahead. AVGO shares fell sharply in overnight trading. The AI ​​chip and software giant fell 0.8% to 152.82 in Thursday’s session. Broadcom shares had a 172.42 handle buy point in a consolidation that dates back to June 18, but may not continue beyond Friday.
NVDA stock and Nvidia chipmaker Taiwanese semiconductor (TSM) decreased slightly in liking.
Samsara’s gains peaked with AI and IoT generally providing good guidance. The IOT stock rose solidly in extended action, off initial after-hours highs, but signaled a move back above a buy point. Shares rose 0.2% to 38.75 on Thursday, finding support near the 50-day. Shares undercut the 39.21 cup-with-handle entry earlier in the week.
Smart leaf (SMAR) surpassed its after-the-close gains, with SMAR shares surging overnight. Shares rose 4.25% to 49.35 on takeover rumors, now out of reach of a 45.34 cup-with-handle buy point initially set in July.
Guidewire software (GWRE) topped expectations with the insurance software maker raising guidance. Shares rose early Friday. GWRE shares fell 2.1% to 143.93 on Thursday, barely holding their 50-day line. Guidewire shares have a flat-base buy point of 153.85.
DocuSign (DOCU) earnings beat expectations, with shares down slightly overnight. DOCU stock is working to find traction in a messy consolidation that stretches back to December 2023. Shares fell 0.85% to 56.93 on Thursday.
What’s on the agenda: Apple unveils iPhone 16; Oracle, Adobe expect earnings figures
Rally on the stock market
On Thursday it looked like the stock market was recovering, but that didn’t last long.
ADP estimated that the private sector was the weakest since January 2021 in August, well below expectations. That came a day after July’s jobless claims also hit their lowest since early 2021. August’s weekly jobless claims and ISM services index showed some strength, but investors were cautious again ahead of Friday’s jobs report.
The Dow Jones Industrial Average fell 0.5% in stock market trading Thursday, undermining its 21-day line intraday but ending above that level. The S&P 500 index fell 0.3% and the small-cap Russell 2000 lost, both closing slightly below their 50-day lines.
The Nasdaq Composite, which opened 1.2% higher, closed up 0.25%, well below its 21-day and 50-day lines. The tech-heavy index held the 17,000 level and above its follow-through day low of Aug. 13, but those are still in play.
The Invesco S&P 500 Equal Weight ETF (RSP) fell 0.6%, but only tested its 21-day line.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) fell 0.3%, testing support at the 200-day line.
Both ETFs show that Thursday’s limited strength was largely due to Tesla and, to a lesser extent, big tech companies such as Nvidia, Meta Platforms, ServiceNow and Netflix.
U.S. crude prices fell 5 cents to $69.17 a barrel, erasing intraday gains even as OPEC+ postponed a planned production increase. Crude futures, now down 8.9% over four sessions, are at a 2024 low. Gasoline futures fell 1.8% and 14.3% over four sessions on Thursday to their lowest levels since March 2021.
The 10-year Treasury yield fell nearly 4 basis points to 3.73%, down 18 basis points so far this week. It’s the lowest close since June 2023.
ETFs
The iShares Expanded Tech-Software Sector ETF (IGV) fell 0.4%. ServiceNow shares are big IGV components, with Samsara, Guidewire, DocuSign and Smartsheet as members. The VanEck Vectors Semiconductor ETF (SMH) fell 0.2%. Nvidia is the No. 1 holding in SMH, with Broadcom shares also a major holding.
Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) rose 1.7% and ARK Genomics ETF (ARKG) rose 0.4%. Tesla is a key component of Ark Invest’s ETFs. Nvidia stock is also a major holding.
The SPDR S&P Homebuilders ETF (XHB) and the Energy Select SPDR ETF (XLE) fell 0.8%. The Health Care Select Sector SPDR Fund (XLV) fell 1.4%.
The Industrial Select Sector SPDR Fund (XLI) fell 1.2% and the Financial Select SPDR ETF (XLF) fell 1.1%.
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Tesla stocks
Tesla shares rose 4.5% to 229.20 on Thursday, reclaiming the 50-day line. Though they closed with intraday highs of 235, shares gave a buy signal after hitting a short-term high of 228.22.
However, market conditions increase the risks of aggressive entry into the market.
Shares fell slightly on Friday morning.
TSLA stock has an official buy point of 271 after a 33% consolidation.
Tesla, via Elon Musk’s X, aims to roll out Full Self-Driving in China and Europe in the first quarter of 2025, pending regulatory approval. In July, Musk had said he expected regulatory approval in those markets by the end of 2024.
Tesla also confirmed that FSD is rolling out to the Cybertruck this month and said FSD V13 will be released in October.
The EV giant is hosting a robotaxi event on October 10.
It’s not clear what Tesla will show. Full Self-Driving is, despite the name, a Level 2 driver assistance system.
In addition, Chinese EV giant BYD rose 0.9% to 30.30, keeping its share price within range of last Friday’s 30 buy points for mugs with handles.
What to do now
The market rally is on the edge, with the S&P 500 and Russell 2000 just shy of the 50-day line but not too far removed from a healthy future. The Nasdaq is more damaged, but not beyond repair.
As the market recovers, many of the stocks that are rallying will give buy signals. However, further market weakness could trigger some sell signals.
While Tesla impressed on Thursday and companies like Meta, ServiceNow, DoorDash and PennyMac look solid, that can change quickly in a tough market. Eli Lilly (LLY), GE Aerospace (No CyberArk (CYBR) are among the indices that broke below the 21-day line this week.
In this environment, it is best to wait and see how this plays out. It is not a time for new purchases. You can keep a modest exposure, and perhaps cut back as you exit losing positions.
But be prepared for a decisive market move up or down. Make sure your watchlists are up to date and your exit plans are ready for Friday’s jobs report and Wall Street’s reaction.
Read The Big Picture every day to stay up to date on market developments and the most important stocks and sectors.
Follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
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