Dow Jones futures rose slightly at the end of Thursday, along with the S&P 500 and Nasdaq futures. The stock market recovery had a difficult session on Thursday. The Dow fell modestly, while Nasdaq stumbled and suffered its worst loss since late October, with shares in Apple, Tesla (TSLA) and many other technicians fell from areas of resistance.
X
The Treasury’s rising yields were the trigger, although a further shutdown by Covid in France and falling oil prices did not help. Investors should avoid technology stocks while prudently investing in other rising sectors.
FedEx (FDX) and Nike (NKE) highlighted the gains after closing.
FedEx’s earnings were better than expected, with EPS and sales growth accelerating for the third consecutive quarter. FDX shares rose 4% in extended trading, after falling 0.9% to 263.51 on Thursday.
Nike’s earnings hit while revenue fell short. Nike’s stock plunged 3% overnight, suggesting a test of its 50-day line on Friday. The Dow Jones giant fell 1.1% on Thursday to 143.17. NKE’s shares have a buying point of 148.05.
Why this IBD tool simplifies the search for the main stocks
Meanwhile, some high-tech and growth stocks have met resistance with Nasdaq under pressure again. Some examples include Tesla shares, PayPal (PYPL), Pinterest (PINS), Nvidia (NVDA), Apple (AAPL) and Twilio (TWLO).
Volkswagen (VWAGY), which had become quite extended amid the euphoria due to its big EV boost, plummeted 15%. Even now, VWAGY’s stock is 18.5% above its 10-day line.
Williams-Sonoma (WSM) burst Thursday, increasing 18.5%. WSM’s shares came out of a base of strong gains and guidance, as well as a dividend increase and repurchase.
PayPal and Nvidia’s shares are on the IBD Leaderboard. The AMP stock is at SwingTrader. PayPal’s stock is at IBD Long-Term Leaders. Tesla, PayPal and Williams-Sonoma shares are in the IBD 50. PINS shares are in Big Cap 20.
Dow Jones Futures Today
Dow Jones futures advanced 0.2% against fair value. S&P 500 futures were up 0.2%. Nasdaq 100 futures were up 0.3%.
Keep in mind that overnight action on Dow futures and elsewhere does not necessarily translate into real trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks at the stock market’s high on IBD Live.
Coronavirus News
Coronavirus cases worldwide reached 122.30 million. Deaths from Covid-19 reached 2.70 million.
Coronavirus cases in the US reached 30.34 million, with deaths above 551,000.
The European Medicines Agency said that the AstraZeneca (AZN) vaccine against coronavirus and not linked to blood clots. This could pave the way for European nations to resume AstraZeneca jabs. Even before the suspension of the AstraZeneca vaccine, the EU was far behind the UK and the US in terms of vaccination.
As a result, many European countries are seeing an increase in Covid’s cases. Paris and much of France will enter a partial blockade starting on Saturday and lasting four weeks. Italy again imposed many restrictions on Monday. This will keep Europe’s economic recovery slowing, while the United States quickly eases restrictions on coronavirus.
The FDA has not yet approved the AstraZeneca vaccine, awaiting the results of a test in the United States. The Biden government says it will send a few million stored doses to Canada and Mexico.
Stock market rally Thursday
The stock market recovery was on the defensive, with Nasdaq leading the indexes to close close to session lows.
The Dow Jones Industrial Average closed down 0.5% in Thursday’s stock market trading. The S&P 500 index fell 1.5%. The Nasdaq compound plunged 3% in greater volume, its worst drop since a 3.7% loss on October 28.
The 10-year Treasury yield jumped 7 basis points to 1.71%. The intraday peak of 1.754% was the highest since January 2020. With GDP growth likely to be 6% -8% in 2021, as the pandemic weakens, while fiscal and monetary policy is up, Treasury yields are rising of historical minimums generate a lot of sense.
Crude oil prices in the United States plunged 7.1% to $ 60 a barrel, falling for the fifth consecutive session. US oil inventories increased again last week, the Energy Information Administration reported on Wednesday. Gasoline supplies increased again after refinery shutdowns reached production for weeks. Meanwhile, coronavirus problems in Europe will weigh on the country’s energy demand.
Stocks of oil and solar energy were hit hard on Thursday, being the main attraction of the biggest losers in the S&P 500.
Attack resistance of growth stocks
Tesla’s shares fell 6.9% to 653.16. It has reached resistance around the 21-day exponential moving average, with the 50-day line significantly above that. On Wednesday, TSLA shares reversed higher, closing just above its 21 days.
Apple’s shares fell 3.4% to 120.53, also falling back from its 21-day line. On Tuesday, Apple burst above the 21st and a sharp bearish trend. Shares in PYPL, TWLO, PINS and Nvidia fell from their 21- and 50-day lines, losing 5% -9% on Thursday.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 2.7%, while the Innovator IBD Breakout Opportunities ETF (BOUT) lost 3.7%. The iShares Expanded Tech-Software Sector (IGV) ETF fell 3.5%. VanEck Vectors Semiconductor ETF (SMH) fell 4 %%, with Nvidia’s shares as a major component.
Reflecting stocks of more speculative stories, ARK Innovation ETF fell 5.8% and ARK Genomics ETF 4.7%. Like many of the speculative growth names they have, the two ARK ETFs have fallen from their 21-day lines. Tesla’s shares are ARK Investments’ largest ETF stake.
Stock of the day: sophisticated retailer with multiple points of purchase
Bullish stock market analysis
On Wednesday, the Nasdaq recovered from intraday lows with Treasury yields slashing gains after the Federal Reserve meeting and comments by Fed chief Jerome Powell.
But Thursday’s rise in 10-year Treasury yield caused the Nasdaq to fall below the 50-day line after three days above the key level. Nasdaq and growth stocks may be able to handle growing Treasury yields, but not increased earnings. Much like the brave Sir Robin in Monty Python’s “Holy Grail”, Nasdaq is quick to shout “run away” and flees at the first sign of trouble.
Nasdaq closed below its 21-day line for the first time since March 10 and reduced Wednesday’s intraday lows.
In short: the compound is essentially still in a correction. As long as the Nasdaq is below its 50-day line – as well as resistance near last week’s highs – THE. This is especially true for those trapped below key levels, such as Tesla, Apple and Twilio, with many others far worse off.
But even the technicians who are emerging or launching the first entries – like Applied Materials (AMAT), MKS Instruments (MSKI) and some other chip names – are at the mercy of Nasdaq.
If you have some long-term or pilot positions in some technologies, that’s fine, but now investors should focus on what’s working.
Dow Jones looks strong for now
Without technology, the stock market recovery still looks healthy. The Dow Jones hit a new intraday high, with the S&P 500 and Russell 2000 not far away. The reopening moves of the real economy / economy continue to emerge, extending gains or at least maintaining themselves.
If Nasdaq starts to approach its recent lows, the broader market is likely to weaken, as did the Dow in early March. In fact, on Thursday, the downfall of the Nasdaq, along with energy prices, caused sharp losses in the S&P 500 and ultimately dragged the Dow Jones down.
So don’t feel like you need to invest a lot. Do not go after actions that are extended from the purchase zones.
As always, be flexible and engaged.
Read The Big Picture every day to stay in sync with the direction of the market and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
YOU MIGHT LIKE:
Meet the next grand prize with MarketSmith
Best growth stocks to buy and watch
IBD Digital: Unlock IBD’s premium stock lists, tools and analytics today