Dow Jones futures were little changed Wednesday morning, along with S&P 500 futures and Nasdaq futures. Midterm election results pointed to a GOP House, while Tesla CEO Elon Musk sold more TSLA stock. Along with Bitcoin, Disney, MetaPlatforms and Tesla also took notice.
X
The stock market rallied higher Tuesday morning, fueled by lower Treasury yields and a weaker dollar. Major indices made strong gains as Bitcoin and other cryptocurrencies tumbled on surprise Binance-FTX acquisition deal. But the stock recovered somewhat in the end.
Bitcoin-related stocks such as cryptocurrency exchanges Coinbase (currency), commercial use Robinhood Markets (HOOD), cryptocurrency custodian Silvergate Capital (S.I) and Bitcoin Miner Marathon Digital (Mara) is sold out.
Looking ahead, the Consumer Price Index is large.
Main revenue
Walt Disney (DIS), Occidental Petroleum (OXY), Tesla (D.S.L.A) competitor Lucid Motors (LCID) and Array technologies (ARRY) reported late Tuesday.
Disney stock fell solidly in pre-market trading and ended lower on earnings Disney+ subscriber growth was strong. OXY shares are more than 20% of Warren Buffett’s Berkshire Hathaway (BRKB), lower nodes Mixed income. Weak Q3 results and LCID shares tumble Lucid Air bookings are on the decline. ARRY shares rose sharply Strong earnings and guidance.
Meta work cuts
Facebook Parents Meta platforms (Meta) will lay off more than 13,000 employees, or 13% of its workforce, CEO Mark Zuckerberg told employees Wednesday morning, taking responsibility for the company’s missteps. Wednesday’s layoffs were widely expected. META stock, which recently hit multi-year lows, rose more than 3% in pre-market trading.
Tesla stock
Tesla shares rose more than 1% Wednesday morning. Late Tuesday, Tesla CEO Elon Musk disclosed that he sold 19.5 million shares on Nov. 4, 7 and 8 for $3.95 billion. That could help pay for his latest Twitter deal, though Musk said the stock sale in early August was the last. He will need it.
Musk’s recent stock sell-off contributed to the recent decline in Tesla stock. Concerns about increased China subsidies and Elon Musk’s Twitter reign could weigh on TSLA stock.
Tesla shares fell 2.9% to 191.30 in Tuesday’s session, after falling to 186.75 intraday, the lowest since May 2021.
Mid-term elections
The midterm election results are still coming in. Republicans are likely to retake the House of Representatives, but the Republican Party may be in a tailspin. With the Georgia race likely to go to a run-off, the Senate is likely to win. Another 50-50 Senate is possible.
Whatever the final outcome, President Joe Biden and the Democrats will no longer have full control of the White House and Congress. Financial markets tend to do better with gridlock in Washington. Stocks also traditionally do well in the third year of a presidential term.
A divided government could be good news for Wall Street and good news for security firms, private prisons and drug makers. Again, markets may have already priced some in.
Dow Jones Futures Today
Dow Jones futures fell 0.2%. Against fair value, DIS stock weighed on blue chips. S&P 500 futures lost about 0.1%. Nasdaq 100 futures rose, even as META and Tesla stocks offered gains.
The 10-year Treasury yield rose 1 basis point to 4.14%.
Crude oil futures fell about 1%.
Bitcoin slid again, pushing down bitcoin-related stocks like Coinbase.
China’s consumer inflation rose less than expected. Wholesale prices fell.
Remember that it is an overnight operation Dow futures The next routine elsewhere doesn’t necessarily translate into actual trading stock market session.
Join IBD experts as they analyze the stocks that could act on the stock market rally on IBD Live
Stock market rally
The stock market rallied higher on Tuesday morning, but gave it back in the afternoon as the bitcoin meltdown spread to stocks. The S&P 500 and Nasdaq briefly turned negative before recovering.
The Dow Jones industrial average rose 1% on Tuesday Stock market trading. The S&P 500 index rose 0.6%. The Nasdaq composite advanced 0.5%. Small-cap Russell gained 2000.
Tesla stock nears its May 2021 tradeday low.
Shares of Apple and Microsoft fell 0.4%, while shares of Google fell 0.5% and Amazon fell 0.5%. It’s all up this week, but after falling last week.
The 10-year Treasury yield retreated 9 basis points to 4.13%.
The US dollar fell significantly for a third day in a row, hitting its lowest level since late September.
US crude oil prices fell 3.1% to $88.91 a barrel. Natural gas futures fell 11.6%, continuing their biggest daily swing.
Bitcoin Dives
Despite a weak dollar, bitcoin fell as the world’s No. 1 cryptocurrency exchange agreed to buy rival FTX, which faced a liquidity crunch. Doubts that the Binance-FTX deal will actually happen, FTX has been making a huge pullback in the past couple of days. A few months ago, FTX and founder Sam Bankman-Fried looked like potential saviors for other ailing crypto companies.
Bitcoin fell to $17,484.20 on Tuesday after November 2020. Although it recovered somewhat on Tuesday afternoon, it is now trading below $18,000 after touching $17,266 overnight. The pioneering digital currency broke below $20,000 on Monday night. Ethereum, Dogecoin and other cryptocurrencies showed similar or even bigger losses.
The FTX token plunged 80% on Tuesday after heavy losses in recent days and weeks.
COIN stock fell 10.8% to a four-month low. Binance buying FTX could create a major new competitor for Coinbase and shake off Bitcoin’s woes and worries about crypto-related companies.
Hood, a Bankman-Fried investor, fell 19%. MARA shares fell 5.3% to their lowest level since July. After the closing, Marathon Digital posted a wider-than-expected loss, while revenue fell 75%.
SI stock fell 23% to its lowest level since December 2020.
Tesla still owns some Bitcoins, while Elon Musk has owned Dogecoin for some time.
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ETFs
in the middle Best ETFsInnovator IBD 50 ETF (FFTY) fell 0.3%, while the Innovator IBD Breakout Opportunities ETF (BotUp 0.1%. iShares Expanded Technology-Software Sector ETF (IGV) rose 1.3%, with MSFT stock a key component. VanEck Vectors Semiconductor ETF (SMH) rose 2.2%.
SPDR S&P Metals & Mining ETF (XME) increased by 1.9%. Energy Select SPDR ETF (XLEUp 0.1%. Health Care Select Sector SPDR Fund (XLVUp 0.5%.
Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKK0.4% and the ARK Genomics ETF (ARKG1.4% up. Tesla stock is the number one holding in Arc Invest’s ETFs.
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Market rally analysis
The stock market rally was severely damaged by Fed Chairman Jerome Powell’s flamboyant comments last Thursday. But even with Bitcoin’s woes, it has been rallying over the past three sessions.
The Dow Jones rebounded from last week’s high after retracing its 200-day line on Monday.
The S&P 500 rose slightly above its 50-day line, though it remains below the Nov. 1 short-term high.
The Nasdaq hit resistance at its 21-day moving average, weighed down by Tesla and tech woes. It is still below the 50-day mark and far from its 200-day line.
But the Direxion Nasdaq-100 Equal Weighted ETF (QQQE) rose more than 1% to edge above its 50-day line.
Falling Treasury yields helped lift stocks on Tuesday, while the dollar’s slide over the past three sessions was a key driver.
Midterm election results may trigger market moves, but Thursday’s CPI inflation report may be key. A tame CPI reading will fuel hopes for slower central bank rate hikes And Low peak ratio. But another hot inflation number could trigger a selloff in stocks and bonds.
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Leading stocks
There are not many new buying opportunities on Tuesday.
Global Foundries (GFS) followed the trendline and rose above the lowest handle.
Albemarle (ALB) cleared an initial entry, but quickly ran up to its official buy point and closed below that key level. However, ALB stock is above its 50-day range after a big move from the Nov. 3 intraday low.
Crocs (CROX) briefly retraced a buy point United Health (UNH) closed in the buy range.
Many LNG stocks are near buy points.
Technical weakness is still a concern. Chip stocks bounce back as SMH ETF holds firm above 50-day line. Megacap Technologies etc Apple (AAPL) are trying to jump in, but after a big sale. The same goes for cloud software.
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What to do now
Stock market gains rebound after last week’s sharp losses, with the Dow Jones and S&P 500 regaining key positions. Investors may want to be more cautious, CBI inflation report wobbles. Also, there aren’t a lot of active stocks at the moment, although many have been set up.
Investors need to be ready to take action, get involved and build your watch lists. Growth stocks are still generally out of favor, so make sure you cast a wide net to find stocks and sectors that are emerging leaders.
Be sure to be aware of passive income. Some stocks have been big earnings winners, while others have rebounded powerfully after falling early. There has also been some high-profile selling, as Disney and Lucid shares showed overnight.
According to Big picture Each day should be in sync with the direction of the market and the leading stocks and sectors.
Follow Ed Carson on Twitter @IBD_ECarson For stock market updates and more.
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