Dow Jones futures rose modestly Sunday night, along with S&P 500 futures and Nasdaq futures, as President Joe Biden wrapped up his campaign. Tesla (Tesla), Google-parent the alphabet (Google), Service now (now) And General Electric Aerospace (General Electric) leads a series of earnings reports next week.
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Tesla, Google set to report earnings as tech giants take a hit
President Biden Drops Out of 2024 Race
President Joe Biden said in a statement Sunday that he will “step aside” from the 2024 election, after weeks of concerns following his disastrous presidential debate last month. Biden endorsed Vice President Kamala Harris, expressing his “full support and endorsement of Kamala as our party’s nominee.”
Biden’s exit could unsettle financial markets, which have increasingly priced in former President Donald Trump’s return to the White House. While Trump is likely to remain the favorite against Harris or another Democratic candidate, Biden’s exit makes that less certain.
Dow Jones Futures Today
Dow Jones futures rose 0.1% to fair value, S&P 500 futures rose 0.3% and Nasdaq 100 futures rose 0.4%.
The yield on 10-year US Treasury bonds fell to 4.22%, and crude oil futures rose.
Bitcoin briefly dropped to $65,850 after Biden’s exit, but has rebounded to above $68,000, up slightly.
China’s central bank cut its key short-term interest rate by 10 basis points to 1.7% overnight.
Remember that overnight moves in Dow Jones futures and elsewhere do not necessarily translate into actual trades in the next regular stock market session.
Stock market is turning down
The stock market’s bullish trend toward the Dow Jones, small caps and various non-tech sectors turned into a broad-based decline by Friday.
The Nasdaq fell, the S&P 500 fell amid chip woes, Crowd Strike (Crood) IT outages and more. Nvidia (NVDA program) and many other leaders were sold.
Increase in profits
Companies like Google, Service Now and General Electric are still in a position to be sued. So is Tesla, though it fell sharply on Friday after former President Donald Trump, backed by Elon Musk, vowed to roll back electric-vehicle policies.
Google and ServiceNow’s earnings reports will be important for technology sectors, ranging from artificial intelligence and cloud computing to online advertising and business software.
In addition to Tesla, Google, ServiceNow, and GE, this week will be a huge earnings week: Appfolio App (Arab Lawyers Union), United Rentals (URI address), KLA Company (clacklike), Tenet Healthcare (tetrahydrocannabinol), are reported, as well as oil machinery plays. Weatherford (Word) And Technip FMC (FTI).And there are hundreds more.
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Stock market rise
The stock market started the week on a high note, especially outside the Nasdaq. But Nvidia shares and chips in general fell on Wednesday, with the weakness widening late in the week.
The Dow Jones Industrial Average rose 0.7% in trading last week, but fell to near weekly lows after hitting a record high on Thursday. The Russell 2000 index of small companies rose 1.7%, but remained off its multi-year high set on Wednesday.
The S&P 500 fell 2%, falling below its 21-day line after hitting a record high on Tuesday.
The Nasdaq fell 3.65%, falling decisively below its 21-day moving average. It is now just 1.7% above its 50-day moving average, after being 8.9% above that key level on July 10.
Invesco S&P 500 Equal Weight ETF (Failed) fell 0.1% after hitting a record high on Thursday.
First Trust Nasdaq 100 Equal Weighted ETF (QQIW) fell 2.4% to test its 50-day line after hitting an all-time high on Tuesday. While the QQEW’s slide is better than the Nasdaq 100’s 4% drop, it shows that the sudden decline in growth tech stocks is extending beyond large companies.
The Chicago Board of Trade Volatility Index, or VIX, rose about 33% to 16.53, the biggest weekly gain since March 2023. However, the market’s fear gauge is well below its peaks in April (21.36) or October 2023 (23.08).
The yield on the 10-year U.S. Treasury note rose five basis points to 4.24% after hitting a four-month low on Wednesday.
U.S. crude oil futures fell 2.5 percent to $80.13 a barrel, after falling 3.25 percent on Friday.
Copper futures fell 8.25%, their worst week in two years. When “Dr. Copper” falls, it’s not a good sign for the global economy.
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Exchange Traded Funds
Among the growth ETFs is the Innovator IBD 50 ETF (Boy) fell 4.7% last week. iShares Expanded Tech-Software Sector ETF (IGV) fell 2.8%, with ServiceNow shares a major holding and CrowdStrike also a member. The VanEck Vectors Semiconductor ETF (Trait) fell 9.6%, with Nvidia stock being the biggest component.
The most speculative story stocks, the ARK Innovation ETF (Ark) fell 0.4% last week and the ARK Genomics ETF (I will ride) rose 0.2%. Tesla stock is the No. 1 investment among Ark Invest’s ETFs.
SPDR S&P Metals & Mining ETF (XME) fell 2.4% last week. Global X US Infrastructure Development ETF (cradle) pared its gains to just 0.35%. US Global Jets ETF (jet aircraft) fell 0.7%. SPDR S&P Homebuilders ETF (XHP) Up 3.25%. Energy Select SPDR ETF (XLE) rose 2.05% and the Select Healthcare SPDR Fund (XLV) decreased by 0.25%. The Select Industrials SPDR Fund (Forty-one) rose 0.55%, but was near its weekly lows.
SPDR Financial Select Fund (XLF) rose 1.2% and the SPDR S&P Regional Banking ETF (Cree) jumped 7.5%.
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Tesla stocks
Tesla shares fell 4% on Friday to 239.20, their lowest close since July 2. However, the stock remains above its 21-day moving average. On a weekly basis, Tesla shares are down a relatively modest 3.6%, having traded the previous week and shown a constructive performance after a big rally. Tesla has a 271 buy point in a consolidation process that dates back several months to a year.
In his Republican nomination speech Thursday night, former President Donald Trump pledged to repeal the de facto national electric vehicle mandate. Ending the mandate would likely help Tesla by limiting competition, though California and some other blue states have their own electric vehicle mandates. Removing the mandates would also reduce Tesla’s revenue from electric vehicle credits. Meanwhile, Trump has previously said he favors eliminating electric vehicle subsidies, which would likely hurt Tesla.
Trump added that he wants Chinese electric carmakers to set up factories in the United States, which would be a major shift from President Biden’s position. BYD (BYDDF) rose 1.7% to 31.06 on Friday, reclaiming a 30.84 buy point.
Musk has strongly supported Trump and donates large sums of money to a pro-Trump political action committee.
Trump said on Saturday that he read that Elon Musk gives him $45 million a month, so “we have to make life good for people like him.”
Tesla will report Tuesday evening. Earnings are likely to fall sharply, though revenues could rise. The focus, as usual, will be on the conference call with Musk, who will talk about deliveries, future models and several major projects.
Tesla shares fall ahead of earnings after Trump comments; BYD in buy zone
nvidia stock
Nvidia stock fell 8.75% to $117.93 for the week, its lowest since early June. The AI chip leader held above its 50-day line but closed just below its 10-week line. Nvidia stock may be on a double-bottom, but it needs more time.
If Nvidia declines decisively, it would be very negative for the technology sector.
What are you doing now
The Nasdaq is struggling while other markets are also starting to pull back. It doesn’t seem like a good time to make new purchases, especially with earnings rising. Be quick to get rid of losers, which will help reduce your overall exposure.
The bright side here is that leading tech companies are no longer priced optimally ahead of earnings season. This provides a greater chance for a big positive reaction. But corporate earnings are sure to rise significantly along the way.
It’s definitely a good time to get involved and prepare. That means updating your watch lists and game plan this weekend and getting them into the mix by Monday morning.
Nvidia stock is on the rise IBD Leaderboard And the Inflammatory bowel disease 50Google shares are rising. IBD Big Cap 20.
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