Dow Jones futures fell modestly overnight, along with futures for the S&P 500 and futures for the Nasdaq. airbnb (ABNB) soared at the bottom of earnings, while CRDO shares tumbled on a warning. Shopify (SHOP) leads results ahead of Wednesday’s open.
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The stock market rally ended mixed, well off session lows despite the January CPI inflation report. Headline and core CPI inflation rates continued to decline, but less than Wall Street expected. Treasury yields finally rose once more as markets priced in further rate hikes from the Federal Reserve.
Several leading stocks showed buy signals on Tuesday, including Boeing (LICENSED IN LETTERS), Arista Networks (A NETWORK), wing stop (TO THE), cadence design systems (CDNS) and marriott international.
TSLA shares, which surged in 2023, surged Tuesday despite weekly decline tesla (TSLA) Electric vehicle registrations declined last week.
airbnb and tripadvisor (TRIP) led key earnings reports on Tuesday night.
ABNB shares flew 10% overnight from a bottom up as Airbnb earnings outpaced views on also strong guidance. TRIP shares rose 10% in extended action on its results after closing above a buy point on Tuesday.
However, Creed Technology Group (CRDO) crashed hours after warning of a massive deficit in its April fourth quarter. He sees revenue of $30 million to $32 million against views of $58 million, and says his biggest client is cutting back. CRDO shares, which had been trading near record highs, fell 48% overnight.
In other news, Warren Buffett Berkshire Hathaway (BRKB) disclosed its fourth-quarter investment holdings ahead of SEC filings Tuesday. Berkshire continued to add to its Apple (AAPL), but sold almost all of its Taiwan Semiconductors (TSM) shares after buying them in the third quarter. TSM shares fell 5% overnight.
Shopify Earnings Wednesday Early
Ecommerce software giant Shopify, Biogen (BIIB), analog devices (GOING), Trading Desk (TTD), Roblox (RBLX), Taylor Morrison House (TMHC) and more are available early Wednesday.
Shares of TMHC and Analog Devices closed Tuesday in traditional buy zones. SHOP shares are slightly extended, while Biogen shares are just below an aggressive entry as well as a buy handle point. Trade Desk and RBLX stocks are bottoming out, but between their 200 and 50 day lines.
WING’s shares are classified by IBD. BA shares are on SwingTrader. CDNS shares are in IBD Long-Term Leaders. Cadence design. Wingstop and ANET shares are at IBD 50. ADI and Arista Networks shares are at Big Cap 20.
The video included in this article discussed Tuesday’s market action and looked at Boeing, Wingstop and MAR stocks.
Dow Jones Futures Today
Dow Jones futures fell 0.3% against fair value. S&P 500 futures fell 0.45% and Nasdaq 100 futures lost 0.6%.
The 10-year Treasury yield fell 2 basis points to 3.74%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading at the next regular stock market session.
Join IBD experts as they discuss actionable actions in the stock market rally on IBD Live
stock rally
The stock market rally spiked on Tuesday morning but strengthened in the afternoon to finish mixed.
The Dow Jones industrial average fell 0.5% in trading on Tuesday. The S&P 500 index lost a fraction, despite big gains in shares of Tesla, Aptiv and CDNS. The Nasdaq Composite rose 0.6%. The small-cap Russell 2000 fell
US crude prices fell 1.4% to $79.08 a barrel. Natural gas futures rose 6.7%, trying to stabilize after falling from late-August highs.
The 10-year Treasury yield rose 4 basis points to 3.76%.
The 6-month Treasury bill rate is at 5.02%, above the 5% level for the first time since 2007. The one-year Treasury yield is up to 4.99%. These rising rates point to markets finally believing Fed policymakers that rate hikes will exceed 5% and stay elevated. Part of this reflects optimism that the economy will not slip into recession, but it is also a sign that inflation may be persistent.
Markets are now pricing in three more quarter-point rate hikes, bringing the fed funds range to 5.25%-5.5% for the June or July policy meeting.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) was up 1.9%, while the Innovator IBD Breakout Opportunities ETF (BOUT) was up 1%. The iShares Expanded Technology Software (IGV) Sector ETF gained 1.1%. The VanEck Vectors Semiconductor (SMH) ETF jumped 2.15%.
Reflecting stocks from more speculative stories, the ARK Innovation ETF (ARKK) jumped 2.5% and the ARK Genomics ETF (ARKG) rose 0.8%. Tesla stock remains a major holding in Ark Invest ETFs.
SPDR S&P Metals & Mining ETF (XME) rallied 2.4%. The US Global Jets ETF (JETS) rose 1.6%. SPDR S&P Homebuilders ETF (XHB) fell 0.4%. The Energy Select SPDR ETF (XLE) was just above breakeven, while the Financial Select SPDR ETF (XLF) fell 0.5%. The Select Healthcare Sector (XLV) SPDR Fund lost 0.6%.
Five best Chinese stocks to watch now
Tesla Stock
TSLA shares rose 7.5% to 209.61, up 106% from the Jan. 6 bear market low of 101.81.
Tesla China EV registrations fell to 6,963 in the week ending February 12 from 8,643 in the previous week, while BYD[ticker symb=BYDDF] and most other EV manufacturers had higher records. That drop itself may indicate that the demand boost from Tesla’s big price cuts is running out of steam. However, Tesla Shanghai exporting recent production could explain the lower local sales figures.
Still, aside from the Model Y in the US, there are signs of lackluster demand for Tesla.
Investors may be looking forward to a Tesla investor day on March 1. CEO Elon Musk is expected to reveal his Master Plan Part Three, with Tesla providing more details on a new EV platform. Analysts will also be looking for updates on Cybertruck and any confirmation on a long-rumored Model 3 facelift.
Market recovery analysis
The stock market rally had a patchy action on Tuesday morning, but ultimately closed relatively well. Given that stocks had rallied on Monday, Tuesday’s action on the hotter-than-expected January CPI inflation report was quite bullish.
The Nasdaq and S&P 500 are comfortably above their 21-day moving averages, while the Dow Jones and Russell 2000 found support at that key level.
So far, the major indices this week are trading within the range of the previous week, which was also an inside week.
Ultimately, it’s not the news, it’s the reaction to the news.
Whether it’s the major indices or individual names like Tesla stock, the market in 2023 has generally reacted positively to mixed earnings, economic data and other news.
While the indices were mixed, the leading stocks were generally higher.
edge nets, GlobalFoundries (GFS), shares of CDNS and Marriott have sold off buy points on earnings, though they are up from their 50-day lines.
suitable (APTV), one of several auto parts makers showing strength, rallied a buy point on Tuesday and then moved through the buy zone.
BA shares passed a new buy point on a major order for Boeing aircraft from Air India. WING shares broke and when holding (ON) showed an aggressive tackle.
Time the Market with IBD’s ETF Market Strategy
What to do now
The stock market rally remains healthy, with the major indices consolidating in recent sessions.
Investors may choose to add exposure carefully. As you add new positions, do so as close to the point of purchase as possible. Don’t buy extended stock. Be prepared to take out losers quickly or if you make solid profits back and forth.
Keep working on those watch lists. The pause in the market rally has offered an opportunity for stocks to establish themselves again. Major stocks are pushing higher so you need to be ready,
Read The Big Picture every day to stay in sync with market direction and major stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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