Dow Jones futures were marginally higher on Friday morning, along with S&P 500 futures and Nasdaq futures. Nike (OF) and Micron technology (IN) focused on earnings and the central bank’s preferred measure of inflation in the deck.
Stocks sold off sharply Thursday, erasing Wednesday’s gains. The S&P 500 hit a new bear market low. The Nasdaq composite didn’t pare its June lows, but the large-cap Nasdaq 100 did, Apple shares and Tesla (D.S.L.A)
Treasury yields rebounded somewhat Thursday, while jobless claims fell to a five-month low, something the Federal Reserve didn’t want to see. Apple (APL) and Carmax (KMXJupiter triggered widespread losses. After paring Wednesday’s losses on reports that iPhone production was cut due to sluggish demand, Apple stock sold off sharply on Thursday, partly on analyst downgrades, as iPhone chipmakers are also struggling.
Carmax (KMX) on Thursday morning, which warned of “affordability challenges” and missed the earnings outlook badly. For largely similar reasons, Moody’s cut its outlook for the global auto industry from stable to negative. KMX shares crashed, sinking other auto dealers. But General Motors (GM), Ford Motor (F), Star (STLA) and Tesla shares were also sold.
There has been a lot of news about Tesla. Tesla will hold its annual AI Day on Friday night. Later in the week, Tesla will release Q3 delivery figures. But TSLA stock investors won’t have a chance to respond to those events until Monday morning.
Tesla on Thursday night denied local media reports that the EV giant would significantly lower Model 3 and Y prices in China. Speculation is growing that Tesla will cut some of its China prices in early October.
Nike Revenue and Sales The fiscal first quarter narrowly topped consensus. But gross margins fell significantly from a year ago, largely offloading excess inventory in North America. North American inventory increased 65% from a year ago. Dove Jones, the athletic apparel company, said it would take “decisive action” to remove the necessary items.
NKE shares shed 9% in extended action. Nike shares fell 3.2% to 95.52 in Thursday’s session, hitting a new two-year intraday low.
Micron revenue rose slightly, while revenue fell. The memory-chip company guided significantly lower for the current fiscal first quarter. It also plans to reduce wafer fab equipment costs by up to 50% from the current fiscal year to fiscal 2022.
MU shares were little changed in overnight trading. Micron shares fell 1.9% to 50.01 in Thursday’s session, hitting a 23-month low last week.
Micron’s capital spending cuts are bad news for the emerging memory chip-equipment giant. Utility items (Big), KLA Corporation (Clutch) and Lam Research (LRCX) All three stocks retreated modestly in extended action.
In other news, IBM (IBM), cut its quarterly dividend by 78% to 37 cents per share. IBM stock rose in overnight action.
Dow Jones Futures Today
Dow Jones futures rose 0.3% and fair value. NKE stock and IBM are Dow Jones components. S&P 500 futures rose 0.5% and Nasdaq 100 futures rose 0.6%.
The 10-year yield fell 4 basis points to 3.71% from Thursday night’s modest gains.
China’s central bank is allowing cities to cut the floor on mortgage rates in areas that have seen recent home price declines.
At 8:30 a.m. ET, the Commerce Department will release its August personal income and consumer spending report. Investors will focus on the PCE price index, the central bank’s preferred measure of inflation. The overall PCE index should show a slightly cooler 6.1% gain from a year ago. But core PCE inflation rose to 4.8% from 4.6%.
Stock market Thursday
The stock market fell sharply at the open and remained deep in the red throughout the day, ending the session only modestly above the low.
The Dow Jones industrial average fell 1.5% on Thursday Stock market trading. The S&P 500 index fell 2.1%. The Nasdaq composite slipped 2.8%. The small-cap Russell 2000 fell 2.2%.
Apple shares fell 4.9% to 142.48, hitting their worst levels since early July, though still some distance from June. Bank of America cut Apple shares to neutral with a 160 price target.
CarMax revenue fell 54% from a year earlier, well below consensus. Used car pricing is starting to come under pressure, with auto dealers citing affordability issues. KMX stock fell nearly 25%. Carvana (CNVA20% down.
Carmax’s miss and Moody’s industry downgrade hurt automakers. GM shares fell 5.65%, Ford 5.8% and Chrysler parent Stellandis 4.8%. Tesla stock fell 6.8%, falling from near its 50-day and 200-day lines, but above near-term lows.
The 10-year Treasury yield rose 4 basis points to 3.75%, after reaching 3.81% intraday. This followed a 26 basis point drop on Wednesday. However, the benchmark Treasury yield is on track for a ninth consecutive week of gains.
US crude oil prices fell 1.1% to $81.23 a barrel.
in the middle Best ETFsInnovator IBD 50 ETF (FFTYfell 1.2%. iShares Expanded Technology-Software Sector ETF (VAT) down 1.7%. VanEck Vectors Semiconductor ETF (SMH) lost 3.15%. MU is a significant SMH holding along with AMAT, LRCX and KLAC.
Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKK) fell 5.5% and the ARK Genomics ETF (ARKG4%, after sharp gains on Wednesday. Tesla shares are a major holding across ArcInvest’s ETFs.
Stock market analysis
Stock market bullish on Wednesday. Major indices took a few minutes on Thursday to erase all one-day recovery.
The S&P 500 index edged lower on Tuesday, signaling a new bear market. The Nasdaq 100 pared its June lows, with Apple and Tesla among the biggest losers.
The Nasdaq Composite has yet to break its June lows, but September.
The S&P 500 and Nasdaq rally day count has returned to zero. The Dow Jones didn’t break Tuesday’s bear market intraday lows, so Thursday was technically the second day of its rally attempt.
Treasury yields rose Thursday, but recouped only a fraction of Wednesday’s losses. The US dollar lost its value for the second session in a row. Still, the 10-year Treasury yield and the dollar have risen sharply over the past several weeks.
Apple, CarMax and Nike have raised new concerns about consumer spending. Apple stock and iPhone chip names have the largest share of the market, along with GM, Tesla and the auto industry. Nike alone is a $150 billion blue-chip component.
A Meta platforms (Meta) The hiring freeze and opportunity cuts, along with Micron’s weak outlook, added to broader corporate woes.
But you don’t have to look for reasons why stocks sold off on Thursday. It’s a bear market. Even though the US economy is at risk of falling into a clear recession, the Federal Reserve has been aggressively raising interest rates.
Wednesday’s bounce is delayed, but doesn’t signal the end of a sharp decline.
The CBOE Volatility Index, or VIX, rose on Thursday. But it was an insider’s day for the market fear gauge following Wednesday’s pullback. That suggests the major indices need to break decisively below their June lows before bear market bottoming.
What to do now
Investors need patience. At some point the bear market will end and a new sustained uptrend will form. But don’t jump at the first wave. Follow-up days It’s a great way to get a new market rally going quickly, but with at least some signs it can have staying power.
If you buy stocks on Wednesday’s bounce, you should be prepared for a quick exit. A few such Vertex Pharmaceuticals (VRTX) and DoubleVerify (TVThursday was great. But several intriguing names erased those gains on Wednesday.
For now, focus on updating your watchlists. Look for stocks with strong relative strength. If they hold key moving averages, great, but at this point there are many relative “winners,” etc World Wrestling Entertainment (WWE), are below their 50-day and 200-day lines.
According to Big picture Each day should be in sync with the direction of the market and the leading stocks and sectors.
Follow Ed Carson on Twitter @IBD_ECarson For stock market updates and more.
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