Dow Jones futures were little changed Friday morning, along with S&P 500 futures and Nasdaq futures, with the June jobs report on tap. The stock market rally lost ground Thursday, with the Nasdaq falling below its 50-day line. AMC stock, GM and Tesla (TSLA) were big movers.
General Motors (GM) said it’ll easily beat first-half targets, a week after announcing it was reopening four North American plants as chip woes somewhat subside. GM stock jumped, leading Ford (F) and most auto stocks higher. But Tesla stock broke below key support on a report that China demand for Tesla vehicles tumbled in May.
Highly valued growth stocks had a tough day, though this was by no means uniform.
AMC Entertainment (AMC) plunged, rallied and retreated again, as AMC stock continues to offer more thrills than AMC theaters. Meanwhile, Bed Bath & Beyond (BBBY), BlackBerry (BB), GameStop (GME) and new meme stock Workhorse Group (WKHS) were big movers once again.
AMC stock remained active early Friday.
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CrowdStrike earnings topped and the cybersecurity firm also gave bullish revenue guidance. But CRWD stock were flat in extended trading. Shares fell 2.1% to 216 on Thursday. CrowdStrike stock has been working on a handle with a potential 227.05 buy point. That’s just below a late April peak of 227.20. The official CRWD stock buy point is 251.38.
Broadcom earnings also beat views. AVGO stock edged higher Friday morning. Shares of the communications chipmaker and software maker fell 1.9% to 464.80 on Thursday. Broadcom stock has a 489.73 double-bottom base buy point. AVGO stock may be forming a handle just above its 50-day line.
Sports apparel retailer Zumiez (ZUMZ) Q1 earnings surged to $1.03, vs. an 84-cent loss a year earlier and crushing estimates for EPS of 1 cent. Sales more than doubled to $279.1 million, above views for $215.9 million. ZUMZ stock jumped 6% before the open, signaling a bullish rebound from its 50-day line and breaking a trend line. Zumiez has an official buy point of 49.33.
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Biden Infrastructure Plan
President Joe Biden made a new infrastructure offer of about $1 trillion, down from $1.7 trillion and his original $2.2 trillion infrastructure-led spending proposal. Instead of hiking the corporate tax rate to 28% from 21%, he would impose a minimum 15% tax aimed at getting dozens of companies that pay little or no income tax. Still, much of the $1 trillion would be deficit financed.
Republicans recently proposed $928 billion in infrastructure spending over five years, but only $297 billion in new outlays.
Senate Minority Leader Mitch McConnell said he’s “hopeful” about the latest Biden infrastructure proposal.
Biden could try to push through a big infrastructure bill without Republicans, but some moderate Democrats have been wary, especially on tax hikes. The new $1 trillion proposal could be aimed more at Sen Joe Manchin, D-W. Va. and a few other Democrats, rather than GOP senators.
Another spending package with minimal tax hikes on corporations would likely be good news for Wall Street. Keep in mind that Biden has proposed nearly doubling the capital gains rate to help finance yet another spending bill.
Dow Jones Futures Today
Dow Jones futures were flat vs. fair value. S&P 500 futures climbed 0.15% and Nasdaq 100 futures rose 0.25%.
Dow futures may be awaiting the June jobs report due at 8:30 a.m. ET. Economists expect to see nonfarm payrolls up 645,000. That follows April’s 266,000, which came in far below estimates of nearly 1 million. Recent labor data, including the ADP Employment Report and weekly jobless claims, suggest substantial hiring is underway.
Facebook (FB) edged lower as European Union and U.K. regulators opened dual antitrust investigations into whether the online giant distorts the classified ads market by using data collected from rivals.
Bitcoin fell somewhat overnight on another cryptic tweet from Tesla CEO Elon Musk, suggesting some sort of breakup with the cryptocurrency.
Remember that overnight action in Dow Jones futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Coronavirus cases worldwide reached 172.97 million. Covid-19 deaths topped 3.71 million.
Coronavirus cases in the U.S. have hit 34.17 million, with deaths above 611,000.
Stock Market Rally
U.S. Stock Market Today Overview
Last Update: 4:06 PM ET 6/3/2021
The stock market rally retreated Thursday, though the losses weren’t spread evenly.
The Dow Jones Industrial Average edged down 0.1% in Thursday’s stock market trading. The S&P 500 index lost 0.4%. The Nasdaq composite retreated 1.4%
In addition to auto stocks, oil and gas stocks continued to rally with crude prices. Financials did well, with the 10-year Treasury yield climbing a few basis points.
On the downside, gold and silver stocks and ETFs slumped with precious metals. Homebuilders retreated, likely on those rising Treasury yields.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 1.1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) edged down 0.2%. The iShares Expanded Tech-Software Sector ETF (IGV) gave up 1.2%. The VanEck Vectors Semiconductor ETF (SMH) retreated 1.7%.
SPDR S&P Metals & Mining ETF (XME) fell 1.3%. Global X U.S. Infrastructure Development ETF (PAVE), benefiting from Biden infrastructure talk, closed just below breakeven. U.S. Global Jets ETF (JETS) descended 3%. SPDR S&P Homebuilders ETF (XHB) fell 1.3%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) slumped 3.5% and ARK Genomics ETF (ARKG) 2.3%. Both are below their 200-day lines. ARKK’s 50-day line crossed below the 200-day line, a bearish move known as the “death cross.” ARKG seems headed for its own death cross soon. Tesla stock is the top holding across ARK Invest’s ETFs.
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AMC announced before the open that it planned to sell 11.5 million shares “at the market.” On Tuesday, AMC sold 8.5 million shares to Mudrick Capital, which sold the position hours later.
In Thursday’s SEC filing, AMC cautioned against buying the shares, noting the extreme risks.
AMC ended up selling those shares on Thursday at an average price of 50.85, raising $587 million.
AMC stock plunged as low as 37.66 then briefly turned higher, hitting 68.80 after AMC announced the share sale was completed. But shares slumped again, closing down 18% to 51.35. AMC stock is up 96% so far this week after more than doubling last week.
BBBY stock plunged 28% to 31.90. Bed Bath & Beyond stock rocketed 62% on Wednesday, blasting out of a consolidation.
GME stock retreated 8.5% to 258.18. GameStop stock climbed 13% on Wednesday.
BB stock rose 4.1% to 15.88. BlackBerry stock is up 57% so far this week.
Workhorse stock leapt 28% as the electric-van startup becomes a new short-squeeze favorite of Reddit investors. WKHS stock is up 58% so far this week. But it’s still far below the early February peak of 42.96.
AMC stock fell early Friday. Meme stocks were mixed, with relatively modest moves compared to recent gyrations.
GM Stock Jumps On Bullish Guidance
General Motors said it expects first-half results to be “significantly better” than prior guidance. That comes a week after GM said it was reopening four North America plants as it manages its chip shortages.
GM stock rose 6.4% to 63.46, hitting a record high 63.67 intraday. That briefly topped a 63.54 cup base buy point.
GM stock vaulted from a proto-handle that was not yet finished. The recent pause followed last week’s jump on the plant reopening. That jump offered early entries from a trend line break and the 50-day line, as well as a 59.68 buy point from what could be deemed a double-bottom pattern.
GM stock and Ford rose early Friday, with JPMorgan lifting its Ford stock price target.
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Tesla Stock Dives On China Demand
Tesla orders in China nearly halved in May vs. April, The Information reported, citing internal data. That comes amid weeks of consumer complaints over Tesla safety and its response to criticism. State media has given ample coverage in recent weeks, giving the clear signal that Beijing wants to punish Tesla.
In April, Tesla deliveries in China excluding exports fell by two thirds vs. March, to 11,671, according to trade group data. At the time, it was unclear if that reflected weak demand or various supply issues, such as chip shortages. Tesla has removed radar sensors and some lumbar support features from Model 3 and Model Y cars in the U.S., likely due to semiconductor supply issues.
But the May China orders report, if true, would clearly reflect weak demand in the world’s largest auto market.
Investors will get May China deliveries data for Tesla in the next week or two.
China has accounted for the bulk of Tesla’s growth since the Shanghai factory opened at the tail-end of 2019. If Tesla faces an extended sales slump in China, it would have a huge impact on earnings and Tesla stock.
A big question is how long Beijing decides to inflict pain on Tesla. The longer the negative media coverage continues, the harder it will be for Tesla to bounce back as local rivals such as Nio (NIO) and global giants such as Volkswagen (VWAGY), GM and Ford grab market share.
With the Austin plant coming on line later this year and the Berlin plant finished by early 2022, Tesla is ramping up capacity, betting on a massive increase in demand from Q1 2020 levels.
Tesla stock skidded 5.3% to 572.84, back below its 200-day moving average, as well as the 600 level.
That’s still above the May 19 low of 546.28. But the relative strength line for Tesla stock is at 2021 lows. The RS line is the blue line in the chart provided.
Tesla stock was the second-worst performer on the S&P 500 index on Thursday. Ford and GM stock were the two biggest S&P winners.
TSLA stock rose slightly Friday morning.
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Market Rally Analysis
The stock market rally woke up after a few days of quiet trade, but not in a good way. The Dow Jones and S&P 500 held up well, rebounding from their 21-day lines. But the Nasdaq is back below its 50-day line. The market rally is starting to look split once again.
For now, it’s not a decisive break of the 50-day. But it’s crucial for the Nasdaq to find support here.
If the market in the short run shifts from a gradual uptrend back to sideways-to-down action, it’s once again going to be hard for individual investors to make headway. The ongoing sector rotation lowers the odds further.
What To Do Now
If your portfolio has automakers — aside from Tesla stock — as well as energy names and some financials, then Thursday may have been an OK day. If you owned gold stocks, homebuilders and some highly valued growth names, significant losses were possible. Of course, those winners and losers could change places in the next few days.
If some of your stocks are hitting sell rules, cut them loose. Meanwhile, it’s probably not a great time to be adding exposure. Wait for the Nasdaq to shore up, perhaps clearing Tuesday’s intraday high. Meanwhile, if the Nasdaq moves significantly lower from here, while the Dow, S&P 500 and Russell 2000 head back toward their 50-day lines, investors may want to significantly cut back.
In the meantime, keep working on your watchlists. A number of stocks are setting up and could be actionable quickly. So stay engaged.
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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