Dow Jones futures rose modestly overnight, along with S&P 500 futures and Nasdaq futures. Micron technology (MU) and Lululemon Athletica (LULU) headlined overnight gains.
The stock market’s rally attempt had small losses on Tuesday, but major indices held key levels. Megacaps like Apple (AAPL), Meta platforms (META), Microsoft (MSFT), Tesla (TSLA) and Google parent Alphabet (GOOGL) retired on Tuesday, but looks healthy overall. Chip stocks slumped, but hit lows.
Financial regulators testified on Tuesday about the bankruptcy of Silicon Valley Bank and Signature Bank. Lawmakers criticized banks, regulators and each other, suggesting that they will not introduce new measures to support banks at this point, such as broader deposit insurance.
Bank of the First Republic (FRC), one of the most controversial regional banks, fell 2.3%. But FRC stock came close to the intraday lows well. First Republic is no longer for sale, Fox Business reporter Charles Gasparino tweeted Tuesday afternoon citing sources. It could be a sign of strength that First Republic no longer needs rescue. FRC shares rose nearly 12% on Monday, but are down 89% this month.
MU stock rose 1% overnight. The memory chip giant reported a larger-than-expected loss and a 53% drop in revenue that also missed views. Micron recorded inventory write-downs of more than $1.4 billion and issued weak Q3 guidance. But CEO Sanjay Mehrotra said in the earnings statement that “customer inventories have declined in several end markets, and we see the balance between supply and demand gradually improving over the coming months.” He added that the chipmaker is “close to transitioning to sequential revenue growth.”
Chip investors have bet on recovery while it is not yet clear that this is in the offing. Micron tends to see the industry cycle turn early.
Micron shares closed 0.85% to 59.28, but recovered to hold the 50-day line. MU shares have a buy point of 64.44 from a low. But investors could use 61.88 as an early entry from a potential handle.
Lululemon’s profits rose nearly 31%, while sales rose 30% to $2.8 billion. Both are slightly accelerated compared to Q3. LULU shares were up 13% in late trading. Shares were up 1% to 320.32. Lululemon stock recently reclaimed their 50-day and 200-day lines.
Progress software (PRGS) and egg producer Cal Maine (CALM) also reported.
Cal-Maine climbed 2.5% on a profit spike of 717%. PRGS shares fell nearly 5% on weak guidance.
META shares are listed on IBD Leaderboard and SwingTrader. Microsoft and Google stocks are long-term IBD leaders.
The video embedded in the article discusses Tuesday’s market action and analyzes Microsoft stock, Shift4 Payments (To celebrate Skyline champion (SKY).
Dow Jones Futures Today
Dow Jones futures rose 0.3% from fair value. S&P 500 futures rose 0.4%. Nasdaq 100 futures rose 0.4%.
Crude oil rose slightly.
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
Attempted stock market rally
Equity markets’ rally attempt fell slightly on Tuesday, with major indices closing losses by mid-afternoon.
The Dow Jones Industrial Average closed 0.1% lower in trading on Tuesday. The S&P 500 index fell 0.2%. The Nasdaq composite fell 0.45%. The small-cap Russell 2000 fell less than 0.1%.
US crude oil prices rose 0.5% to $73.20 a barrel.
The yield on 10-year Treasury bills rose 4 basis points to 3.57%. Two-year Treasury yields rose 10 basis points to 4.06%.
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) lost 1.1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) fell 0.1%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 0.4%, with MSFT stocks the core holding. The VanEck Vectors Semiconductor ETF (SMH) fell 0.7%, but was well off the day’s lows. MU Shares is a large SMH holding company.
Due to stocks with more speculative stories, the ARK Innovation ETF (ARKK) fell 1.5% and the ARK Genomics ETF (ARKG) fell 2.2%. TSLA stock is a major stock in Ark Invest’s ETFs.
The SPDR S&P Metals & Mining ETF (XME) rose 1.1% and the Global X US Infrastructure Development ETF (PAVE) gained 0.75%. US Global Jets (JETS) were up 0.9%. SPDR S&P Homebuilders ETF (XHB) rose 0.6%. The Energy Select SPDR ETF (XLE) lost a fraction and the Health Care Select Sector SPDR Fund (XLV) lost 0.6%
The Financial Select SPDR ETF (XLF) was just below breakeven. The SPDR S&P Regional Banking ETF (KRE) fell 0.1%. FRC stock is one of many KRE components.
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Apple shares and Microsoft both fell 0.4%, after the Dow tech giants fell more than 1% on Monday. Apple is just above a buy point, while MSFT shares are still below the entry. The pullbacks from both stocks are light in scope.
Google shares fell 1.4% to 101.03 after falling 2.8% on Monday. Stocks have fallen below the 200-day mark. However, GOOGL stock now has a good handle. The buy point of the cup with handle is 106.69.
META stock fell 1.1% to 200.68, but is still above a buy point of 197.26, according to MarketSmith’s analysis.
Tesla shares fell 1.4% to 189.19% after Monday’s gains were cut to 0.7%. Stocks hold the 50-day lines but below the 21-day and 10-week lines. TSLA stock is about to forge a low with a potential buy point of 217.75.
Analysis of the market rally
The attempted stock market rally lost ground, but the overall picture did not change much. The Nasdaq remains above its 21-day and 50-day moving averages.
The S&P 500 is still between 50 days and 200 days. The Dow Jones reached another 21-day resistance, but held its 200-day line. It was also an indoor day after a relatively quiet Monday.
Megacap stocks like Apple and Google are pulling back this week after supporting big-cap indices for much of March.
Chip stocks were notable losers. Nvidia (NVDA), which expanded greatly, had only a small decline, but many semiconductors trading around buy points lost 2%-4%.
Market breadth was so-so. Winners outscored losers on the NYSE while trailing on the Nasdaq. Combined, the winners just outnumbered the fallers.
The attempted market rally has still not had a follow-up day to confirm the uptrend.
Homebuilders are looking strong, along with some building materials and home-related retailers. Some software names are doing well, including MSFT stocks, but also several cybersecurity games. But market leadership is narrow.
Time the market with IBD’s ETF market strategy
What to do now
A market rally attempt is still underway, but has not made much progress. The stock market has been showing turbulent movements for several weeks. Certain areas have done well, but the latitude has been poor.
If you get into the right stocks, there have been opportunities to make a profit. But many buying opportunities have evaporated. Some stocks make strong moves and then fall back. So staying agile is key, exploiting early entries and making quick profits.
But the overall exposure should be light. And there’s nothing wrong with being largely or entirely on the sidelines. Cash can be king, especially when it pays 4%.
Build your watchlists. Look for stocks near buying points, as well as names that are simply relatively strong.
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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