Dow Jones futures were trending higher Wednesday morning, along with S&P 500 futures and Nasdaq futures. modern micro devices (AMD) headed notable gains after the close.
The stock market rally eased on Tuesday, with the Dow Jones leading the declines amid House Speaker Nancy Pelosi’s trip to Taiwan and hawkish Fed comments.
amd stock, SolarEdge Technologies (SEDG), Lithium Game Lively (LTHM), Western Petroleum (OXY), Pioneer of natural resources (PXD), healthcare expense management company Evolved Health (EVH) and PayPal (PYPL) reported late Tuesday.
Early Wednesday, China e-commerce companies Alibaba (BABA) reports quarterly earnings. Electric and battery giant from China BYD (BYDDF) is expected to report July sales, according to ship dates from no (NOK), Xpeng (XPEV) and Li car (LI) on Monday.
(The video embedded in the article discusses and analyzes what is happening in the market onsemi (ON), KBR (KBR) and Harmony Life Sciences (HRMY).)
Dow Jones futures today
Dow Jones futures rose 0.3% versus fair value. S&P 500 futures were up 0.15%. Nasdaq 100 futures edged higher.
The 10-year government bond yield fell 3 basis points to 2.71%.
Keep in mind that overnight action in Dow futures and elsewhere doesn’t necessarily translate to actual trading in the next regular trading session.
AMD stock fell solidly after AMD earnings beat views but fell short of revenue guidance. Shares rose 2.6% to 99.29 on Tuesday, continuing their strong run from a 52-week low on July 5. AMD stock is still below its 200-day moving average.
SEDG stock plummeted after narrowly beating gains and slightly missing earnings. SolarEdge shares rose 1.9% to 365.41 on Tuesday, rising in recent days on other solar revenue and a tax-spending climate bill promoting green energy.
LTHM stock edged up after Livent’s earnings beat views and sales guidance was strong. Livent shares rose 6.8% to 25.93 on Tuesday, retaking their 50-day and 200-day moving averages. rival Albemarle (ALB) reported on Wednesday evening. ALB stock rose late. Shares rose 1.6% on Tuesday, moving toward a buy point.
OXY stock fell slightly despite Occidental’s earnings beating quarterly targets by a wide margin. Warren Buffett’s favorite energy stock fell 0.3% on Tuesday, just above its 50-day moving average on a cup basis.
PXD stock was flat after beating gains and falling earnings, part of a big week for shale results. Pioneer Natural Resources also announced a dividend increase. PXD stock fell 0.1% below its 50-day mark on Tuesday.
EVH stock soared after Evolent’s earnings beat guidance and the healthcare management company raised full-year guidance. Evolent stock rose 1.2% on Tuesday, just outside the buy range.
PYPL stock rose after PayPal earnings smashed and guidance was strong. The digital payments leader also confirmed that activist investor Elliott Management has taken a $2 billion stake. Shares rose 1.2% to 89.63 on Tuesday, continuing to recover from late June lows but well below the 200-day moving average.
Tesla vs BYD: Which EV Giant is the Better Buy?
BABA shares rose 2.5% to 92.62 on Tuesday ahead of earnings but remains below its 50-day and 200-day moving averages.
BYD shares fell 1.5% to 36.75 on Tuesday, slightly below its 50-day moving average as it works on fresh consolidation.
BYD is likely to report another month of record sales, with several new growth drivers kicking in shortly. This includes the BYD seal, a Tesla (TSLA) Rival of the Model 3, which starts deliveries this month. The Chinese EV giant is also expanding into a number of new markets in the coming weeks and months.
For its part, Tesla shares rose 1.1% to 901.76, extending a winning streak to five sessions. The shares again met resistance at the 200-day moving average.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
stock market rally
The stock market rally closed lower after trading up and down during the session.
Spokeswoman Pelosi visited Taiwan on Tuesday with plans to visit senior officials. Chinese officials had threatened to take action if she continued the visit and staged or announced various military showdowns. After Pelosi’s plane touched down, the main indices rallied but then faded to mixed.
The Dow Jones Industrial Average fell 1.2% in trading on Tuesday, with blue chips not far off session lows. The S&P 500 index fell 0.7%. The Nasdaq Composite, which was up for most of the day, closed up about 0.2%. Small-cap Russell 2000 fell 0.1%
US crude prices rose 0.6% to $94.42 a barrel. US natural gas prices fell 7%.
The 10-year government bond yield jumped 13 basis points to 2.74%, recovering from an intraday low of just under 2.58%. Yields rallied as Pelosi-Taiwan fears eased. San Francisco Fed Chair Mary Daly and Chicago Fed Chair Charles Evans were the latest dovish policymakers to stress that the central bank is far from done with inflation-fighting.
Among the best ETFs, Innovator IBD 50 ETF (FFTY) is up 1%, while Innovator IBD Breakout Opportunities ETF (BOUT) is down 1%. The iShares Expanded Tech-Software Sector ETF (IGV) edged up 0.2%. The VanEck Vectors Semiconductor ETF (SMH) is down 0.2%.
The SPDR S&P Metals & Mining ETF (XME) is down 1.3% and the Global X US Infrastructure Development ETF (PAVE) is down 1.5%. US Global Jets (JETS) fell 1%. SPDR S&P Homebuilders (XHB) fell 3.1% as higher Treasury yields weighed on the sector. The Energy Select SPDR ETF (XLE) is down 0.2% and the Financial Select SPDR ETF (XLF) is down 1.1%. The Health Care Select Sector SPDR Fund (XLV) fell 0.4%.
Mirroring stocks with more speculative histories, ARK Innovation ETF (ARKK) was up 2.7% and ARK Genomics ETF (ARKG) was up 2.3%. TSLA stock remains a top position among Ark Invest’s ETFs. Ark also owns a small stake in BYD stock.
The five best Chinese stocks to watch right now
Analysis of the market rally
The stock market rally started lower but then recovered only to then fade again.
Given the geopolitical headwinds and dovish Fed comments, a modest market decline wasn’t too worrying, especially given the market’s rally over the past few weeks.
The Nasdaq held support near its early June highs.
The Dow Jones, S&P 500, and Russell 2000 fall short of their early June highs. Additionally, the major indices are facing several more resistance levels, most notably the 200-day moving average.
Market leadership improves.
Solar, oil and gas, food, defense, heavy construction, and a variety of medical stocks are doing well, although some are just starting up while others are expanding. Even a few chip names are showing strength or building, although AMD stock and the entire group are still on a long road to recovery. Some steel and metals stocks, and possibly even fertilizer stocks, are starting to rally.
But after rising significantly, often by small amounts, in recent weeks, many of these stocks could use a break. So a sideways movement of the market over a few days or weeks could be constructive.
Time the market with IBD’s ETF market strategy
Investors should remain modestly invested. It is still unclear whether this is a sustained uptrend or another bear market rally. Remember, the more aggressively you enter the market, the quicker you should exit if conditions worsen.
Whether you are 10% or 50% invested, look for early entries and try to open positions near the buy points. This can make it easier to gain a cushion, as many stocks fall behind after short runs.
It’s definitely a time to get in close touch with the market.
Read The Big Picture every day to keep up to date with 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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