Dow Jones futures rose slightly on Friday morning, as did S&P 500 and Nasdaq futures as the July jobs report loomed. You’re here (TSLA) shareholders approved a 3-for-1 stock split Thursday night.
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The stock market rally ended mixed on a relatively calm Thursday for the major indices, but there were a few big profit drivers.
Vertex Pharmaceuticals (VRTX), Amgen (AMGN) and Neurocrine Biosciences (NBIX) reported better-than-expected earnings on Thursday evening, with biotechnology remaining a leading sector. All closed near buy points and key support levels.
Dow Jones Futures Today
Dow Jones futures were up 0.25% from fair value. S&P 500 futures advanced 0.2% and Nasdaq 100 futures rose 0.2%.
The Department of Labor will release the July jobs report at 8:30 a.m. ET. The jobs data is sure to swing Dow Jones futures and Treasury yields.
Remember that overnight action in Futures contracts on Dow and elsewhere does not necessarily translate into actual trading over the next stock Exchange session.
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Report on the works
Economists expect non-farm payrolls to rise by 250,000 in the July jobs report, compared to 372,000 in June. This would still indicate healthy hiring amid a slowing economy.
Keep an eye on the household survey, which showed a notable decline in employment in June. It is more error-prone than the payroll, but often shows that the labor market is running first.
Meanwhile, the jobless rate is expected to hold steady at 3.6%, with annual growth in hourly earnings slowing only a notch to 5%.
Unemployment claims rose to 260,000 in the past week, the highest in nine months. Job vacancies, while still high, have declined rapidly over the past two months.
The Federal Reserve, notably Fed Chief Jerome Powell, has argued that a soft landing is possible. Over the past two weeks, investors have started to accept the idea that the economy will weaken just enough to calm inflation enough to induce the Federal Reserve to slow down and then halt Fed rate hikes, without triggering a sharp decline in demand and employment.
Tesla Vote on 3-for-1 Stock Split: Time to Buy?
Biotechnology gains
VRTX stock fell in overnight trade as Vertex’s earnings beat views and the biotech giant raised its product revenue target for the full year. Shares fell 0.1% to 274.85, below the 50-day line and buy points at 276.10 and 279.23.
AMGN stock fell 1% in extended action after Amgen profits exceeded and the company largely reaffirmed its guidance for the full year. Shares fell 0.1% to 246.98 on Thursday, trading near the 50-day line. Amgen stock has a buy point of 253.87. The biotech giant has announced a $3.7 billion buyout of ChemoCentryx (211) before Thursday’s open.
NBIX stock fell slightly overnight after Neurocrine revenue and revenue in mind. The company raised its revenue forecast for its key drug, but also shelved a treatment that did not perform well. Shares rose 2% on Thursday to 95.93, rebounding from the 50-day line. NBIX stock has a buy point of 100.10.
Stock VRTX is enabled IBD classification and the IBD Big Cap 20 Index. The iShares Biotechnology ETF (IBB) is on Swing Trader.
Tesla stock split, annual meeting
Tesla shareholders approve a 3-for-1 stock split Thursday night at the annual meeting, two years after a 5-for-1 stock split. Tesla proposed the TSLA split in June. It’s unclear whether the actual split will have a material impact on Tesla’s stock. A TSLA stock split will make play options cheaper.
At the annual meeting, CEO Elon Musk said “this year, I swear” Tesla will solve autonomous driving, laughing.
Musk hinted that Cybertruck pricing and specs will be different from what Tesla originally announced in 2019, citing inflation. Pricing and specs pulled still seemed highly unlikely, while material costs and 4680 battery delays added to the program.
Musk also expects an increase in production in the second half. The Shanghai factory is benefiting from upgrades to increase capacity while Tesla has two new factories in Berlin and Austin that have grown at a glacial pace. Musk said Tesla may eventually have 10 to 12 factories and may make an announcement on the location of the next factory later this year.
Tesla stock rose a fraction overnight. Shares rose 0.4% to 925.90 in Thursday’s regular session, just above the 200-day line. TSLA stock rallied sharply in the stock split news, but that likely reflects the broad market rally and Tesla’s better-than-expected earnings on July 20. Tesla stock is far from the buy point of 1,208.10. Consolidation near the 200 day line or a handful higher could create a buying opportunity.
Electric vehicle stocks in China
Meanwhile, Chinese electric vehicle manufacturers are showing some strength. BYD (BYD), which reported booming sales in July on Wednesday, rose 2.6% to 38.10 on Thursday, back above the 50-day line. BYD stock will likely have a new base after another week, but a move above the August 1 high of 38.35 could offer early entry.
Li-Auto (LI) rose 1% to 34.32, continuing to trade between the 21-day and 50-day lines. LI stock should have a new base on a weekly chart after Friday. Li Auto’s stock is on the INN 50.
Nio (NIO) rose 3% to 20.90, bouncing off the 50-day line. NIO stock is still below the 200-day line.
Tesla vs. BYD: Which electric giant is the best buy?
Thursday stock market rally
The stock market rally did not move much on major indexes ahead of July’s jobs report.
The Dow Jones Industrial Average fell 0.3% on Thursday stock market trading. The S&P 500 index fell 0.1%. The Nasdaq composite rose 0.4%. Small cap Russell 2000 lost 0.2%.
U.S. crude oil prices fell 2.3% to $88.50 a barrel, hitting their lowest levels since before Russia invaded Ukraine in late February. Gasoline futures fell 4.1%, signaling a continued decline in prices at the pump.
The 10-year Treasury yield fell 7 basis points to 2.68%.
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From best ETFsthe Innovator IBD 50 ETF (FFTY) edged up 0.35%, while the Innovator IBD Breakout Opportunities ETF (FIGHT) ticked 1 cent more. The iShares Expanded Tech-Software Sector ETF (VAT) gained 0.2%. The VanEck Vectors Semiconductor ETF (SMH) increased by 1%.
SPDR S&P Metals & Mining ETF (XME) climbed 1% and the Global X US Infrastructure Development ETF (PAVE) added 0.8%. US Global Jets ETF (JETS) increased by 0.5%. ETF SPDR S&P Home Builders (XHB) gained 1.7%. The SPDR Energy Select ETF (XLE) fell 3.7% and the Financial Select SPDR ETF (45) fell 0.3%. SPDR Healthcare Sector Fund (XLV) fell 0.5%.
Reflecting more speculative history stocks, ARK Innovation ETF (ARKK) rose 0.8% and ARK Genomics ETF (ARKG) climbed 1.7%, both to three-month highs. Tesla stock is a major holding in Ark Invest’s ETFs. Cathie Wood’s Ark funds also hold small stakes in BYD and Nio stocks.
Five best Chinese stocks to watch now
Market rally analysis
The stock market rally had a mixed session on Thursday, trading in a tight range. After strong recent gains, including Wednesday’s tech advance, a pullback or pause would not be a surprise and could be healthy.
The Nasdaq composite is holding comfortably above its early June highs, with the Dow Jones, S&P 500 and Russell 2000 just below this resistance level.
While the major indexes were quiet on Thursday, there was plenty of action in sectors and individual stocks.
Oil and gas stocks are struggling again, with energy prices falling, especially crude oil. It’s hard to see the sector making any significant headway without underlying prices rising.
Biotechs had another strong session, with the IBB ETF up 2.2% after Wednesday’s 3.8% jump.
While there were several gain winners on Thursday, the gain losers showed the dangers of having little cushion ahead of the results. Aris Water Solutions (ARIS) tumbled 21% after earnings after closing in a buy zone on Wednesday. Fortinet (FTNT) plunged 16%, Eli Lily (THERE IS) and quantum power (REP) fell slightly, but moved away from buy points.
Lanthee (LNT) had a wild session, hitting a record high of 81.43 just after the open, plunging to 66.26 minutes later, briefly turning positive again before closing down 6.1% at 71.24.
Time the Market with IBD’s ETF Market Strategy
What to do now
The market rally is working, but investors have reason to be cautious about rapidly increasing exposure. A pullback could provide a temporary pullback for the indexes, but possibly big losses for many individual names. There is still a significant risk that the market rally will quickly run out of steam and pull back significantly, but perhaps not to recent lows.
Pay attention to the winnings.
Keep working on watchlists. Stay engaged with the market, but you don’t have to stare at the computer screen all day.
Lily The big picture every day to stay in tune with market direction and key stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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