Dow Jones futures fell Thursday morning, while S&P 500 futures and Nasdaq futures fell slightly. The 10-year government bond returns 4% again.
Crypto financial company Silvergate capital (SI) crashed on plans to shut down and liquidate. American Express (AXP) boosted shareholder returns as MongoDB tumbled on guidance.
The stock market rally had a mixed session on Wednesday, with major indices trading around the main moving averages.
Chip stocks did well, with Nvidia (NVDA), Advanced micro devices (AMD), On Semiconductor (ON), Aehr test systems (AEHR) and Monolithic power (MPWR). But NVDA stock, AMD, Onsemi and Aehr Test Systems fell extended. MPWR stock is working on a cup-with-handle base.
Tesla (TSLA) fell amid two new security clearances and an analyst downgrade on Wednesday. TSLA stock is down 10% since the March 1 Investor Day, which didn’t have much news. Shares continued to fall early Thursday.
SI shares crashed as the crypto bank planned to close. Database software maker MongoDB (MDB) reported late Wednesday. American Express (AXP) announced another AXP share buyback and a dividend increase.
NVDA share is on IBD Leaderboard. MPWR stocks are on the IBD 50, Big Cap 20, and the IBD Long-Term Leaders watch list.
The video embedded in this article discussed the action of the market rally and analyzed Monolithic Power stocks, Oracle (ORCL) and C3.ai (AI).
Dow Jones Futures Today
Dow Jones futures fell 0.1% from fair value. AXP stocks gave a small boost to Dow futures. S&P 500 futures fell 0.3% and Nasdaq 100 futures fell 0.6%. TSLA stock weighed on the S&P 500 and Nasdaq 100 futures, while NVDA stock also fell early Thursday.
The yield on 10-year Treasury bills rose 4 basis points to 4.01%.
The Labor Department will release weekly jobless claims data at 8:30 a.m. ET on Thursday, with the February jobs report on Friday morning.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Silvergate Capital shuts down
After hours, the embattled Silvergate Capital said it will wind down operations and liquidate Silvergate Bank. Silvergate is one of the largest lenders to major crypto companies and facilitates transfers between exchanges and market makers. Stocks have been in free fall over the past year as the cryptocurrency financial structure shrank. Last week, Silvergate said it would not be able to file its 10-K before the March 16 deadline.
SI shares plunged nearly 40% in premarket trading, after falling 5.8% to a new low of 4.91 on Wednesday. Silvergate crashed 57% on the 10-K filing delay in March. SI stocks peaked at 239.26 in November 2021.
signature bank (SBNY), which has been trying to reduce crypto exposure after rising in previous years, fell 9% overnight. SBNY stock is at its lowest point in two years. Coin base (COIN) was down 4%. Coinbase said on March 2 that it had switched to Signature Bank for facilitating dollar transfers away from Silvergate.
Bitcoin fell modestly on the news from Silvergate Capital.
AXP share buyback
Shares of AXP rose slightly overnight after the credit card giant announced it would buy up to 120 million shares, replacing the roughly 36 million left from a previous buyback plan. American Express also increased its quarterly dividend by 15% to 60 cents per share. American Express shares fell 0.3% to 174.83 on Wednesday and found support again around the 21-day mark. AXP shares have a buy point of 182.25 cups with handle.
MDB shares fell 11% in extended action after MongoDB’s earnings topped views, but guidance disappointed. Shares of MongoDB rose 2.3% during Wednesday’s session to 228.70, just below the 200-day line after recovering from the 50-day line last Friday. The database software company is working on a short consolidation with a potential buy point of 248.25.
Stock market rally
The stock market rally went up and down and ended mixed.
The Dow Jones Industrial Average fell 0.2% during Wednesday trading. The S&P 500 index rose 0.1%, with ON stock and AMD the top two performers. The Nasdaq composite rose 0.4%. The small-cap Russell 2000 posted fractional gains.
US crude oil prices fell 1.2% to $76.66 a barrel. Copper futures rose 1.4%.
Treasury Revenues, Fed Rate Outlook
The 10-year Treasury yield remained stable at 3.97% after falling to 3.9% intraday. The 2-year Treasury yield increased 5 basis points to 5.06%. The 6-month T-bill yield increased 2 basis points to 5.31%.
The probability of a 50 basis point rate hike on March 22 rose from 70% on Tuesday to 76% and only 31% on Monday. Fed Chief Jerome Powell’s testified Tuesday that he expects rates to move higher that day than previously expected, and perhaps at a “faster” pace.
The Fed’s beige book report, released Wednesday at 2 p.m. ET, showed little or no growth in six of the Federal Reserve’s 12 districts in recent weeks. Inflation remained widespread, although moderating.
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) was up 0.8%, while the Innovator IBD Breakout Opportunities ETF (BOUT) was up 0.5%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 0.2%. The VanEck Vectors Semiconductor ETF (SMH) soared 2.6%. Nvidia stock is the No. 1 holding in SMH, with AMD also a top component. ON stock and Monolithic Power are also in SMH.
Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) and ARK Genomics ETF (ARKG) fell 0.1%. Tesla stock is a major stock in Ark Invest’s ETFs. Cathie Wood’s Ark also owns a lot of COIN shares.
SPDR S&P Metals & Mining ETF (XME) closed 0.25% higher. US Global Jets ETF (JETS) rose 0.45%. SPDR S&P Homebuilders ETF (XHB) climbed 1%. The Energy Select SPDR ETF (XLE) lost 1% and the Financial Select SPDR ETF (XLF) fell 0.4%. The Health Care Select Sector SPDR Fund (XLV) fell 0.5%.
Five best Chinese stocks to watch right now
Tesla shares fell 3% early Thursday.
TSLA fell 3% on Wednesday to 182, reaching its lowest level in more than a month.
The National Highway Traffic Safety Administration opened two new Tesla safety probes. One pertains to steering wheels coming off on some 2023 Model Y crossovers due to a missing bolt securing the steering wheel to the steering column. The study covers an estimated 120,000 Model Y vehicles.
The NHTSA also announced a special investigation into a deadly Tesla crash into a parked fire truck on Feb. 18, saying it believed the Model S operated with an automatic propulsion system. The regulatory agency has a large number of pending Tesla crash probes related to Autopilot or Full Self-Driving, including several related to stationary emergency vehicle incidents.
Berenberg downgraded Tesla stock’s rating to hold from a buy, saying the share price has returned to fair value. The analyst said Tesla’s price cuts will hit gross margins in the near term, but still see high margins in the long run.
Since Wednesday’s close, Tesla shares are down 10.2% since March 1 Investor Day. While the EV giant confirmed plans for a factory in Mexico, it didn’t offer much on a future next-generation vehicle, presumably a low-cost EV.
Still, TSLA stock is down 16.4% from its Feb. 16 high of 217.65, but is still up nearly 79% from its bear market low of Jan. 6 at 101.81.
Three factors drove Tesla’s big rally in early 2023. First, investors believed that January’s price cuts would fuel the supply boom. Second, hope for big Tesla Investor Day news. Third, the broader growth-led market rally.
But Tesla is already resorting to significant additional discounting to earn additional supply gains in the first quarter, while Investor Day was unexciting. A fluctuating, sliding market since the beginning of February has not helped either.
So in that context, TSLA stock may have been resilient by holding onto most of its gains from early 2023.
Perhaps Tesla stock will forge an all-time low, with a buy point above the 200-day mark. That may include a 50-day/10-week line test.
Tesla started Chinese EV price war; Brutal battle ahead
Analysis of the market rally
The stock market rally remains closely linked to the moving averages.
The S&P 500 managed to close slightly higher but just below the 50-day line after undermining that important level on Tuesday. The Russell 2000 broke below its 50-day line intraday and reached its lowest level since late January before rallying for a razor-thin advance
The Dow Jones fell not far from the 2023 and 200-day lows.
The Nasdaq rose modestly but resisted on the 21-day line.
On Friday, the market rallied out of a short-term trading range, only to fall back this week. More generally, the major indices are in the lower half of a trading range stretching back to early February.
Leading stocks fared better on Wednesday.
Nvidia, On Semiconductor and Chips were strong overall, supporting the Nasdaq along with a slim line Apple (AAPL) profit. But buy signals in this sector are scarce.
Arista Networks (ANET) surged to the edge of the buy zone as some software plays like New relic (NEW) and Fortinet (FTNT) gained ground within their post-gap-up consolidations.
Airlines stayed on high, though cruise lines took to water. Homebuilder stocks have held up remarkably well given rising government bond yields.
Plenty of other names faded with the market, though leaders didn’t take much damage.
Time the market with IBD’s ETF market strategy
What to do now
The market rally is once again struggling around key levels.
While leading stocks are doing better, many recent buys have run into problems or are not progressing. It is probably best to take a wait and see approach until the stock market rally shows renewed strength or breaks lower.
While the S&P 500 and other indices don’t far undercut recent lows, a few good days are all it takes for the rally to look healthy again. So take the time to prepare your watchlists.
Read The Big Picture every day to stay in sync with market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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