Dow Jones futures edged higher overnight, along with S&P 500 futures and Nasdaq futures, with Friday’s jobs report for July playing a big role. Tesla (TSLA) shareholders approved a 3-for-1 stock split Thursday night.
The stock market rally ended mixed for the major indices on a relatively quiet Thursday, but there were some big gain moves.
Apex Pharma (VRTX), amgen (AMGN) and Neurocrine Life Sciences (NBIX) reported better-than-expected earnings Thursday night as biotechs remain a leading sector. All closed near buy points and key support levels.
Dow Jones futures today
Dow Jones futures rose 0.3% from fair value. S&P 500 futures were up 0.2% and Nasdaq 100 futures were up 0.3%.
The Department of Labor will release the July jobs report at 8:30 am ET. The jobs data will surely make Dow futures and Treasury yields swing.
Keep in mind that overnight action in Dow futures and elsewhere doesn’t necessarily translate to actual trading in the next regular trading session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Economists expect the nonfarm payrolls to rise by 250,000 in the July jobs report, compared to 372,000 in June. That would still indicate a healthy attitude amid a slowing economy.
Keep an eye on the household survey, which showed a notable drop in employment in June. It’s more error-prone than payslips, but often shows the turning points in the job market first.
Meanwhile, the unemployment rate is expected to remain steady at 3.6%, with annual hourly wage growth decelerating just a tad to 5%.
Jobless claims rose to 260,000 last week, the highest in nine months. Although job vacancies are still high, they have fallen rapidly over the past two months.
The Federal Reserve, particularly Fed Chair Jerome Powell, has argued that a soft landing is possible. Investors in recent weeks have started to embrace the idea that the economy will weaken just enough to cool inflation enough to persuade the Federal Reserve to slow and then halt the Fed’s rate hikes without triggering a large drop in demand and employment.
Tesla 3-for-1 Stock Split Vote: Is Now the Time to Buy?
VRTX stock was trending lower in overnight trading as Vertex’s earnings beat expectations and the biotech giant raised its full-year product sales target. Shares fell 0.1% to 274.85, below the 50-day moving average and buy points of 276.10 and 279.23.
AMGN stock fell 1% in broad action after Amgen topped earnings and the company broadly confirmed full-year guidance. Shares fell 0.1% to 246.98 on Thursday, trading near the 50-day moving average. Amgen stock has a handle buy point of 253.87. The biotech giant announced a $3.7 billion acquisition ChemoCentryx (CCXI) ahead of Thursday’s opening.
NBIX stock fell slightly overnight after Neurocrine’s earnings and revenue topped. The company raised sales guidance for its lead drug but also shelved a treatment that wasn’t working well. Shares rose 2% to 95.93 on Thursday, recovering from the 50-day moving average. NBIX stock has a handle buy point of 100.10.
VRTX shares are on the IBD Leaderboard and the IBD Big Cap 20 Index. The iShares Biotechnology ETF (IBB) is on SwingTrader.
Tesla stock split, annual meeting
Tesla shareholders approve a 3-for-1 stock split at Thursday night’s annual meeting, two years after a 5-for-1 stock split. Tesla proposed separation from TSLA in June. It’s unclear whether the actual split will have a major impact on Tesla stock. A TSLA stock split will make gaming options cheaper.
At the annual meeting, CEO Elon Musk said with a laugh: “I swear this year Tesla will solve self-driving.
Musk, citing inflation, hinted that Cybertruck’s pricing and specs will be different than what Tesla originally touted in 2019. The prices and specs drawn always seemed highly unlikely, while material costs and 4680 battery delays were added to the program.
Musk also expects a boost in production in the second half of the year. The Shanghai factory is getting capacity-boosting upgrades, while Tesla has two new factories in Berlin and Austin that are ramping up at a rapid pace. Musk said Tesla could eventually have 10-12 factories and could make an announcement about the location of the next factory later this year.
Tesla stock rose slightly overnight. Shares rose 0.4% in Thursday’s regular session to 925.90, just above the 200-day moving average. TSLA stock had rallied strongly following 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 1,208.10 buy point. A consolidation near the 200-day line or a handle higher could create a buying opportunity.
China EV shares
Meanwhile, electric vehicle manufacturers in China are showing some strength. BYD (BYD), which reported booming July sales on Wednesday, rose 2.6% to 38.10 on Thursday, back above the 50-day moving average. BYD stock is likely to find new base in another week, but a move above the 38.35 Aug 1st high could offer an early entry.
Li car (LI) climbed 1% to 34.32 and continued to trade between the 21-day and 50-day moving average. LI stock should have fresh base on a weekly chart after Friday. Li Auto stock is on the IBD 50.
no (NIO) rose 3% to 20.90 and bounced off the 50-day moving average. NIO stock is still below the 200-day moving average.
Tesla vs BYD: Which EV Giant is the Better Buy?
Stock market rally Thursday
The stock market rally didn’t move much on the major indices that went into the July jobs report.
The Dow Jones Industrial Average fell 0.3% in trading on Thursday. The S&P 500 index fell 0.1%. The Nasdaq Composite rose 0.4%. Small-cap Russell 2000 lost 0.2%.
US crude prices fell 2.3% to $88.50 a barrel, their lowest level since the Russian invasion of Ukraine in late February. Gasoline futures were down 4.1%, suggesting a continued drop in prices at the pump.
The 10-year government bond yield fell 7 basis points to 2.68%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) is up 0.35%, while the Innovator IBD Breakout Opportunities ETF (BOUT) is ticking up 1 cent. The iShares Expanded Tech-Software Sector ETF (IGV) returned 0.2%. The VanEck Vectors Semiconductor ETF (SMH) is up 1%.
SPDR S&P Metals & Mining ETF (XME) was up 1% and Global X US Infrastructure Development ETF (PAVE) was up 0.8%. The US Global Jets ETF (JETS) rose 0.5%. SPDR S&P Homebuilders ETF (XHB) is up 1.7%. Energy Select SPDR ETF (XLE) slumped 3.7% and Financial Select SPDR ETF (XLF) 0.3%. The Health Care Select Sector SPDR Fund (XLV) fell 0.5%.
Mirroring more speculative story stocks, ARK Innovation ETF (ARKK) is up 0.8% and ARK Genomics ETF (ARKG) is up 1.7%, both to three-month highs. Tesla stock is a key position in Ark Invest’s ETFs. Cathie Wood’s Arche Funds also own small stakes in BYD and Nio stocks.
The five best Chinese stocks to watch right now
Analysis of the market rally
The stock market rally had a mixed session on Thursday, trading in a tight range. After strong recent gains, particularly Wednesday’s tech-driven rally, a pullback or pause would come as no surprise and could be healthy.
The Nasdaq Composite is holding comfortably above its early June highs, while the Dow Jones, S&P 500 and Russell 2000 are just below this resistance level.
While the major indices were quiet on Thursday, there was a lot of movement in sectors and individual stocks.
Oil & gas stocks struggle again as energy prices, particularly crude oil, fall. It’s hard to imagine the sector making any significant progress without underlying prices rising.
Biotechs had another strong session, with the IBB ETF gaining 2.2% after Wednesday’s 3.8% gain.
While there were multiple earnings winners on Thursday, earnings losers highlighted the dangers of a small cushion en route to results. Aris water solutions (ARIS) tumbled 21% after gaining after closing in a buying zone on Wednesday. Fortinet (FTNT) down 16%, Eli Lilli (LLY) and quantum power (PWR) was down slightly but further away from buy points.
Lantheus (LNTH) had a wild session, hitting a record 81.43 just after the open, plunging to 66.26 a few minutes later and briefly turning positive again before closing up 6.1% at 71.24.
Time the market with IBD’s ETF market strategy
The market rally is working, but investors have reasons to be cautious about adding exposure quickly. A pullback could mean a temporary setback for indices, but perhaps big losses for many individual names. There is still a significant risk that the market rally will soon lose momentum and pull back significantly, albeit perhaps not to the recent lows.
Be careful with the income.
Keep working on watch lists. Keep in touch with the market without having to stare at the computer screen all day.
Read The Big Picture every day to keep up to date with market direction and leading stocks and sectors.
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