Dow Jones futures rose slightly Thursday night, along with S&P 500 futures and Nasdaq futures. Marvell Technology (MRVL), Peloton Worldwide (PTON) and Bill.com (BILL) were among the big earnings overnight.
XThe stock market rally fell modestly Thursday, ending a winning streak, ahead of Fed chief Jerome Powell's much anticipated speech on Friday.
Tesla (TSLA) retreated slightly on Thursday. Tesla CEO Elon Musk said FSD Beta could open up broadly in just four weeks. But amid a variety of headlines, good and bad, often regarding Autopilot or Full Self-Driving, Tesla stock has had relatively tight daily and weekly closes.
CrowdStrike (CRWD), Palo Alto Networks (PANW) and other security software makers continued their strong run, after Microsoft (MSFT), Google (GOOGL) and others pledged big spending on cybersecurity after a White House summit on the subject.
CRWD stock, which joined the Nasdaq 100 before the open, rose 3.25% on Thursday and 278.77 this week to record highs. PANW stock added 2.4%, bolstering a 457.69 spike to all-time levels on Monday's blowout earnings. But other cybersecurity stocks, including Zscaler (ZS), SentinelOne (S) and Okta (OKTA) also have sprinted this week. CrowdStrike and Okta report next week.
The multiple bomb attacks near the Kabul airport, killing at least 13 U.S. service members and dozens of Afghans, may have been a catalyst for Thursday's market losses. Investors also may have taken profits ahead of Fed chief Powell, especially with multiple Fed officials calling for tapering bond buys. But after several days of solid price gains on declining volume, the market rally arguably was "due" for a down session.
MRVL stock, Peloton, Bill.com, Workday (WDAY) and Dell Technologies (DELL) were notable earnings movers overnight. Marvell, Dell and PTON stock retreated while Workday and Bill.com stock rallied.
Tesla stock is on IBD Leaderboard. CRWD stock and Bill.com are on the IBD 50.
Fed Chief Powell
Fed chief Powell speaks at 10 a.m. ET at the Jackson Hole monetary conference, which once again is virtual. He could discuss the Fed scaling back asset purchases, but many analysts expect him to leave most or all of that "taper talk" for the September Fed meeting
However, Dallas Fed President Robert Kaplan and St. Louis Fed President James Bullard on Thursday both explicitly backed a September Fed meeting decision in favor of a bond taper. Neither is a voting FOMC member in 2021, though Bullard will be in 2022.
Fed Gov. Esther George, who is a voting member, said the economy has made "substantial further progress," a standard that policymakers have for starting to reduce monetary stimulus. George says she's ready to discuss tapering bond buys sooner rather than later, though she didn't explicitly call for a September announcement.
The 10-year Treasury yield was flat Thursday at 1.34%, giving up intraday gains to nearly 1.37%. The benchmark Treasury yield is up 8 basis points so far this week.
Rising Treasury yields have fueled financial stocks over the past week, and they rebounded after testing recent buy points.
Dow Jones Futures Today
Dow Jones futures rose 0.2% vs. fair value. S&P 500 futures advanced 0.2% and Nasdaq 100 futures climbed 0.3%.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
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Stock Market Rally
The stock market rally closed near session lows Thursday, but didn't cede too much ground.
The Dow Jones Industrial Average fell 0.5% in Thursday's stock market trading. The S&P 500 index and Nasdaq composite sank 0.6%. The small-cap Russell 2000 retreated 1.1%
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) sank 0.8%, while the Innovator IBD Breakout Opportunities ETF (BOUT) dipped 0.4%. The iShares Expanded Tech-Software Sector ETF (IGV) edged down 0.4%. The VanEck Vectors Semiconductor ETF (SMH) gained 0.15%.
SPDR S&P Metals & Mining ETF (XME) retreated 1.8% and Global X U.S. Infrastructure Development ETF (PAVE) declined 0.8%. U.S. Global Jets ETF (JETS) gave up 1%. SPDR S&P Homebuilders ETF (XHB) ceded 0.7%. The Energy Select SPDR ETF (XLE) retreated 1.5% and the Financial Select SPDR ETF (XLF) 0.5%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) fell 1.55% and ARK Genomics ETF (ARKG) 1.35%. ARKK hit resistance at its 50-day and 200-day lines, while ARKG is below both levels. Tesla stock is the No. 1 holding across ARK Invest's ETFs.
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Key Earnings
Marvell stock dropped 4% overnight after the data-center-chip maker narrowly beat views and nudged guidance overnight. MRVL stock has rallied for six straight sessions as it rebounded from its 50-day line.
PTON stock fell 6% on a wider-than-expected Peloton loss, weak guidance and a price cut for its connected bike. But Peloton stock pared initial losses as it tries to stay in a short base within a much-longer consolidation. PTON stock reversed lower after hitting resistance around its 50-day and 200-day lines.
Bill.com stock leapt 13% from record highs on strong quarterly results and bullish guidance.
Workday earnings beat while subscription revenue guidance was strong. WDAY stock popped 5%, moving up the right side of a base, but doesn't appear to offer an early entry.
Dell earnings beat views. Dell stock fell 2% after closing just above a buy point.
Tesla Stock
Tesla stock fell 1.4% on Thursday to 701.16. That's still above its 21-day moving average and follows gains in the prior four sessions and five of the last six. Tesla has been trading in relatively tight range in the past few weeks and arguably the past two months — especially compared to the volatile trading for much of 2021. Tighter daily and weekly closes is a positive signal.
Tesla stock has stayed in its lane amid various self-driving headlines.
Late Wednesday, Elon Musk said FSD Beta V10 would be released in a week, pledging big improvements. In fact, he said he expects to release FSD Beta to all Tesla owners with Full Self-Driving within four weeks. Keep in mind that Musk has been promising a wide FSD Beta release for months, so it would surprise no one if it's delayed yet again. In any case, Musk has been saying Level 5 full autonomy is just months away for several years. Despite its name, Tesla has told regulators that Full Self-Driving will remain a Level 2 driver-assist system. Drivers must remain alert and ready to take control at any moment.
Just days earlier, Musk said that the current FSD Beta version is "not great." Last week, the NHTSA began an investigation into Tesla Autopilot crashes into emergency vehicles parked on the side of roads with flashing lights on. Two U.S. senators called on the FTC to look into Tesla's marketing claims for Autopilot.
Separately, Tesla is now using LFP batteries from China's CATL for U.S.-made Model 3 SR+ vehicles.
Investors could use 730 as an early entry for Tesla stock, treating it like a handle buy point. Especially aggressive traders could use a downward-sloping trend line from the January peak of 900.40, with Wednesday's high of 716.98.
Market Rally Analysis
After five straight days of gains on declining volume, the Nasdaq was due for a pause. The market rally held on to the bulk of its recent gains in the face of negative headlines and ahead of potentially big news from Fed chief Powell.
Still, the Russell 2000 is back below the 50-day line. That could be just a blip after a four-day rally from beneath its 200-day. But small caps, and market breadth generally, have lagged the rally for several months.
Some leading stocks started off Thursday with positive action, but reversed lower with the broader market. Some merely gave back a fraction of recent gains. Others, such as Airbnb (ABNB), Square (SQ) and Snap (SNAP), have lost most or all of their recent advances.
A few had sharp losses, but mostly due to negative earnings reactions or after running up sharply in recent days. The former include Autodesk (ADSK) and Burlington Stores (BURL) while the latter includes Doximity (DOCS).
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What To Do Now
Buying stocks at the edge of buy zones or outright extended has been very difficult in 2021's choppy market rally and sector rotation. That's especially true if the overall market or specific sectors have had a recent run.
If you buy correctly, and a stock advances 5%, 10% or 20% over a few weeks, you have to decide whether to take a quick win, take partial profits or try to hold on through a pullback and risk most or all of your gains. The current market rally may spur some shorter-term trading, but investors have to sell based on what works for them broadly and on a stock-by-stock basis.
Read The Big Picture every day to stay in sync with the 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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