Dow Jones futures tilted higher Wednesday morning, along with S&P 500 futures and Nasdaq futures. Advanced Micro Devices (AMD) headlined notable earnings after the close.
The stock market rally retreated 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 play Livent (LTHM), Occidental Petroleum (OXY), Pioneer Natural Resources (PXD), health care cost management firm Evolent Health (EVH) and PayPal (PYPL) reported late Tuesday.
Early Wednesday, China e-commerce firm Alibaba (BABA) reports quarterly earnings. China EV and battery giant BYD (BYDDF) will likely report July sales, following deliveries data from Nio (NIO), Xpeng (XPEV) and Li Auto (LI) on Monday.
(The video embedded in the article discusses the market action and analyzes Onsemi (ON), KBR (KBR) and Harmony Biosciences (HRMY).)
Dow Jones Futures Today
Dow Jones futures rose 0.35% vs. fair value. S&P 500 futures climbed 0.25%. Nasdaq 100 futures advanced 0.1%.
The 10-year Treasury yield fell 3 basis points to 2.71%.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
AMD stock fell solidly after AMD earnings topped views but revenue guidance fell short. Shares rose 2.6% to 99.29 in Tuesday’s regular session, continuing a strong run from a 52-week low on July 5. AMD stock is still below its 200-day line.
SEDG stock tumbled after earnings just beat beat and revenue slightly missed. SolarEdge stock rose 1.9% on Tuesday to 365.41, surging over the past several days on other solar earnings and a tax-spending-climate bill that promotes green energy.
LTHM stock edged higher after Livent earnings topped views and revenue guidance was strong. Livent stock jumped 6.8% on Tuesday to 25.93, reclaiming its 50-day and 200-day moving averages. Rival Albemarle (ALB) reports Wednesday night. ALB stock nudged higher late. Shares rose 1.6% on Tuesday, moving towards a buy point.
OXY stock fell slightly despite Occidental earnings comfortably beating quarterly targets. Warren Buffett’s favorite energy stock dipped 0.3% on Tuesday, just above its 50-day line in a cup base.
PXD stock was flat after earnings topped and revenue missed, part of a big week for shale results. Pioneer Natural Resources also announced a dividend hike. PXD stock edged down 0.1% on Tuesday, below its 50-day.
EVH stock soared after Evolent earnings beat views and the health care management firm raised full-year guidance. Evolent stock rose 1.2% on Tuesday, just out of buy range.
PYPL stock surged after PayPal earnings beat and guidance was strong. The digital payments leader also confirmed activist investor Elliott Management has taken a $2 billion stake. Shares rose 1.2% on Tuesday to 89.63, continuing to bounce from late-June lows but far below the 200-day line.
Tesla Vs. BYD: Which EV Giant Is The Better Buy?
BABA stock rose 2.5% to 92.62 on Tuesday ahead of results but remains below its 50-day and 200-day lines.
BYD stock fell 1.5% to 36.75 on Tuesday, modestly below its 50-day line as it works on a new consolidation.
BYD is likely to report another month of record sales with several new growth drivers about to kick in. That includes the BYD Seal, a Tesla (TSLA) Model 3 rival, which starts deliveries this month. The China EV giant is also expanding to a slew of new markets in the coming weeks and months.
Tesla stock, for its part, rose 1.1% to 901.76, extending a winning streak to five sessions. Shares did hit resistance at the 200-day line once again.
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.
Speaker Pelosi visited Taiwan on Tuesday, with plans to visit with top officials. Chinese officials had threatened to take action if she went ahead with the visit, and did carry out or announce various military shows of force. After Pelosi’s plane touched down, the major indexes rebounded but then faded to mixed.
The Dow Jones Industrial Average fell 1.2% in Tuesday’s stock market trading, with blue chips not far from session lows. The S&P 500 index sank 0.7%. The Nasdaq composite, up for much of the day, closed down about 0.2%. The small-cap Russell 2000 dipped 0.1%
US crude oil prices rose 0.6% to $94.42 a barrel. US natural gas prices tumbled 7%.
The 10-year Treasury yield leapt 13 basis points to 2.74%, rebounding from an intraday low of just under 2.58%. Yields rebounded as Pelosi-Taiwan fears eased. San Francisco Fed President Mary Daly and Chicago Fed President Charles Evans became the latest dovish policymakers to stress that the central bank is now nowhere close to finished with fighting inflation.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) fell 1%. The iShares Expanded Tech-Software Sector ETF (IGV) edged up 0.2%. The VanEck Vectors Semiconductor ETF (SMH) dipped 0.2%.
The SPDR S&P Metals & Mining ETF (XME) retreated 1.3% and the Global X US Infrastructure Development ETF (PAVE) lost 1.5%. US Global Jets (JETS) descended 1%. SPDR S&P Homebuilders (XHB) tumbled 3.1%, as higher Treasury yields weighed on the sector. The Energy Select SPDR ETF (XLE) dipped 0.2% and the Financial Select SPDR ETF (XLF) gave up 1.1%. The Health Care Select Sector SPDR Fund (XLV) fell 0.4%.
Reflecting stocks with more speculative stories, ARK Innovation ETF (ARKK) rose 2.7% and ARK Genomics ETF (ARKG) tacked on 2.3%. TSLA stock remains a top holding across Ark Invest’s ETFs. Ark also owns a small stake in BYD stock.
Five Best Chinese Stocks To Watch Now
Market Rally Analysis
The stock market rally opened lower but then bounced back, only to fade again.
Given the geopolitical headwinds and hawkish Fed comments, a modest market pullback wasn’t too concerning, especially given the market rally in recent weeks.
The Nasdaq held support near its early-June highs.
The Dow Jones, S&P 500 and Russell 2000 aren’t quite up to their early-June highs. Above all that, the major indexes face several more resistance levels, notably the 200-day line.
Market leadership is improving.
Solar, oil and gas, food, defense, heavy construction and a variety of medical stocks are performing well, although some are just setting up while others are extended. Even a few chip names are showing strength or setting up, although AMD stock and the overall group are still on a long road to recovery. Some steel and metal plays and possibly even fertilizer stocks are starting to bounce back.
But after running up significantly over the past several weeks, often in light volume, many of these stocks could use a pause. So sideways market action over a few days or weeks could be constructive.
Time The Market With IBD’s ETF Market Strategy
What To Do Now
Investors should remain modestly invested. It’s still unclear if this is a sustainable uptrend or another bear market rally. Remember: The more aggressive you are in getting into the market, the quicker you should get out if conditions deteriorate.
Whether you’re 10% invested or 50%, look for early entries, and try to start positions close to the buy points. That can make it easier to gain a cushion as many stocks pull back after brief runs.
It’s definitely a time to be closely engaged with the market.
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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