Dow Jones futures fell slightly early Friday, along with S&P 500 futures and Nasdaq futures. Investors will turn to the November jobs report on Friday morning.
A Tesla Semi truck delivery event was held Thursday night and Tesla ( TSLA ) rival BYD set to release growing EV sales numbers.
The stock market rally showed solid action on Thursday, with the indexes mixed but consolidating Wednesday’s big gains on Fed chief Jerome Powell’s comments. Thursday’s PCE inflation report, the Fed’s favorite price gauge, showed a smaller-than-expected monthly increase and overall and core inflation cooling slightly again.
Ulta Beauty (ULTA) headlines Thursday night’s earnings report. ULTA stock was little changed overnight after reporting strong earnings and increased guidance. Shares of the retailer of beauty products are already at record highs, extending from point of purchase. The Veeva System (VEEV) beat fiscal Q3 opinion, but Q4 guidance was slightly below consensus midpoint. VEEV stock fell modestly in extended trading. Shares closed above the 200-day line, just around an early entry.
Meanwhile, Dow giant Caterpillar (CAT) continues to look strong, with CAT stock just below a buy point. Cybersecurity Leaders Palo Alto Networks (PANW) and Marriott International (MAR) are also flashing buy signals.
Boeing stock is on SwingTrader. Caterpillar was the IBD Stock of the day on Thursday.
Dow Jones Futures Today
Dow Jones futures fell a fraction against fair value. S&P 500 futures sank 0.1%. Nasdaq 100 futures declined 0.3%.
The 10-year Treasury yield rose 2 basis points to 3.55%.
Dow futures, Treasury yields and more will swing on the November jobs report, due out at 8:30 am ET.
Remember that overnight actions in Dow futures and elsewhere do not necessarily translate into actual trading in the next regular stock market session.
Economists expect the November jobs report to show an increase in nonfarm payrolls of 200,000, down from 261,000 in October. Pay attention to the survey at home, which showed jobs down by 328,000 in October. The unemployment rate, based on household surveys, is expected to hold steady at 3.7%, with the labor force participation rate rising to 62.3%.
Other jobs data this week generally pointed to a gradual slowdown. Initial jobless claims unexpectedly fell, but ongoing claims rose again. ADP reported a sharp slowdown in private sector hiring last month, while the October JOLTS survey saw a modest decline in job openings.
Tesla Semi Delivery Event
A Tesla Semi truck delivery event began shortly after 5 pm PT.
Tesla CEO Elon Musk will hand over some Tesla Semi EVs PepsiCo (PEP) on Thursday night. Speaking of late, the Tesla Semi was first unveiled six years ago and was supposed to go into production in 2020.
Musk says the Tesla Semi, which will use the same Plaid drive units as the Model S, has a range of 500 miles on a single charge. Investors will be looking for exact specifications on price, range and freight. That will be important as the Tesla Semi takes on the big electric car already on the market from Volvo, Nicholas (NKLA), BYD (BYDDF) and more.
Another big question is what Tesla Semi production will be in the coming months. Musk did not provide clarity on this front.
Meanwhile, Tesla is now offering $3,750 off the Model 3 and Model Y in the US this month. The idea is to encourage people to take delivery now. On January 1st, the new US$7,500 tax credit goes into effect, subject to certain price and income limits, prompting many would-be buyers to wait. The tax credits should apply to most Model 3 sedans and Model Y crossovers, though the government has yet to provide clarity.
Tesla also cut an 8,000 yuan ($1,133) insurance subsidy in half for December purchases, as planned, but now offers free charging and other benefits reportedly above 15,000 yuan.
Tesla stock closed flat at 194.70 Thursday. TSLA shares rose 7.7% on Wednesday, retracing their 21-day highs, amid a strong market rally and as China EV shares rallied.
Tesla vs. BYD: Which EV Giant is the best buy?
China EV giant BYD is expected to release November deliveries on Friday or Saturday, yet another record. BYD is expected to be China’s number 1 auto brand for the month, surpassing Volkswagen (VWAGY). VW Group will likely remain number 1 including Audi.
BYD stock fell 2.2% to 25.07 but is still above its 50-day line. BYDDF rose 9.9% on Wednesday, along with other China EV stocks.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock market rally
The stock market rally had a 30-minute Thursday morning, but gradually improved to mixed, a strong performance after Wednesday’s big gain.
The Dow Jones Industrial Average fell 0.6% in Thursday’s stock market trading, and Salesforce.com (CRM) a big negative. The S&P 500 index dipped 0.1%. The Nasdaq composite rose 0.1%. The Russell 2000 index retreated 0.2%.
US crude oil prices rose 0.8% to $81.22 a barrel.
The 10-year Treasury yield sank 17 basis points to 3.53%, the lowest since late September. In the wake of Fed chief Powell’s comments and the PCE inflation report, markets are close to a 50-basis-point Fed rate hike on December 14, ending a four-meeting streak of 75-basis-point moves. In addition, there is now a 50-50 chance of just one quarter Fed rate hike in February.
The dollar, moving with production, fell to the lowest level in almost three months.
Stock Near Buy Points
CAT stock dipped 0.3% to 235.69. Shares pause around a still valid 238 buy point in a cup base going back to April, according to MarketSmith analysis. Investors could see 239.95 as another buy point, either as a secondary handle in the seven-month base or as a traditional handle in a larger consolidation starting in June 2021.
Shares of cybersecurity company Palo Alto Networks rose 5% to 178.40, jumping above its 200-day line, retaking that key level for the first time since mid-September. This comes after it rebounded from its 50-day line on Wednesday, shrugging off a strong sell-off in peers. CrowdStrike (CRWD). Investors could see PANW stock as a major double-bottom base with a buy point of 193.01. But the stock has already taken action by clearing the 200-day line and a downward trend line from the April peak.
MAR stock dipped 0.1% to 165.19, remaining above the 164.99 handle buy point from a bottom base starting August 16. On Wednesday, Marriott stock rebounded from its 200-day line, rising 2.5% on heavy volume.
Among the top ETFs, the iShares Expanded Tech-Software Sector ETF ( IGV ) rose 1.1%, even as top holding CRM shares sold. VanEck Vectors Semiconductor ETF ( SMH ) sank 0.3%.
The SPDR S&P Metals & Mining ETF (XME) fell 0.8% and the Global X US Infrastructure Development ETF (PAVE) rose 0.1%. The US Global Jets ETF (JETS) dipped 0.4%. The SPDR S&P Homebuilders ETF ( XHB ) rose 1.25%. The Energy Select SPDR ETF (XLE) was down 0.3% and the Financial Select SPDR ETF (XLF) was down 0.6%. Healthcare Sector SPDR Fund ( XLV ) advanced 0.3%
Reflecting more speculative stocks, the ARK Innovation ETF ( ARKK ) rose 1.1% and the ARK Genomics ETF ( ARKG ) rose 0.6%. Tesla stock is a heavy weight through Ark Invest’s ETFs. Box Contract Cathie Wood also has a small position in BYD stock.
The five best Chinese stocks to watch right now
Market gathering analysis
The stock market rally showed constructive action on Thursday, essentially holding on to Wednesday’s strong gains.
The S&P 500 index rallied on the day from a pullback to its 200-day moving average, after finally retaking that key level on Wednesday. The Russell 2000 also held its 200-day line. The Nasdaq still has work to do to return to its 200-day high.
The Dow Jones gave up only part of Wednesday’s gains, largely due to Salesforce. Several Dow Jones stocks, including shares of Caterpillar, Boeing and UNH, are showing strength. This reflects broader forces in industries, financial, health services and more.
The October PCE inflation report was slightly better than expected. After Wednesday’s powerful market rally on Fed chief Jerome Powell – which frankly did not sound especially dovish – just holding on to these gains Thursday was constructive.
Friday’s jobs report is yet another hurdle. If the jobs data shows some labor market slack, it could provide another tailwind for stocks. But a hot job market can trigger a big selloff.
Treasury yields and the dollar have fallen hard over the past few days and weeks, providing a strong tailwind for stocks. A rebound in production and the greenback would not be a surprise.
Keep in mind that the market rally had a number of large gains one day, followed by sideways or sliding actions. This makes it difficult for investors to make gains even as the indexes have trended higher over the past several weeks.
Market Timing and IBD’s ETF Market Strategy
What To Do Now
There were reasons to buy or stop on Wednesday’s big move. On Thursday, investors could add a little exposure, but the jobs report is a big question.
A Friday market rally on the November jobs report could trigger a number of buying opportunities. But don’t be fooled by promising actions in front of big news. Instead, work on your watch list to be ready to act. But also be ready to reduce exposure if the market or your holdings go sharply south.
Read the Big Picture every day to stay connected with market direction and leading stocks and sectors.
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