Dow Jones futures were little changed overnight, along with S&P 500 futures and Nasdaq futures, with Friday’s July jobs report shaping up to be a big one. Tesla (TSLA) shareholders approved a 3-for-1 stock split Thursday night.
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The stock market rally ended a mixed Thursday for the major indexes, but there were some big swings in gains.
Vertex Pharmaceuticals (VRTX), Amgen (AMGN) and Neurocrine Biosciences (NBIX) reported better-than-expected earnings Thursday night as biotech remained the leading sector. All closed near purchase points and key support levels.
Dow Jones futures today
Dow Jones futures were little changed at fair value. S&P 500 futures and Nasdaq 100 futures rose.
The Labor Department will release the July jobs report at 8:30 a.m. ET. The employment data is sure to change Dow futures and Treasury yields.
Remember this night action in Dow futures and elsewhere does not necessarily become an actual trade in the next regular Stock Exchange session.
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Jobs report
Economists expect to see nonfarm payrolls increase by 250,000 in July jobs report, down from 372,000 in June. That would still mean healthy hiring amid a slowing economy.
Keep an eye on the household survey, which showed a significant drop in employment in June. It’s more error-prone than payroll, but it’s often the first to show the twists and turns in the job market.
Meanwhile, the unemployment rate is expected to hold steady at 3.6%, with annual growth in hourly earnings slowing to just 5%.
Jobless claims rose to 260,000 in the past week, the highest level in nine months. Vacancies, while still plentiful, have declined rapidly over the past two months.
The Federal Reserve, specifically Fed chief Jerome Powell, have argued that a soft landing is possible. Investors in the past few weeks have begun to buy into the idea that the economy will weaken enough to cool inflation enough to induce the Federal Reserve to slow and then stop raising interest rates without causing a large drop in demand and employment.
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Biotech profits
Shares of VRTX edged lower in overnight trading as Vertex’s earnings beat views and the biotech giant raised its full-year product revenue target. Shares were down 0.1% at 274.85, below the 50-day line and buy points of 276.10 and 279.23.
AMGN shares lost 1% in extended action afterward Amgen’s earnings peaked and the company largely affirmed full-year guidance. Shares fell 0.1% to 246.98 on Thursday, trading near the 50-day line. Amgen shares have a 253.87 buy point. The biotech giant announced a $3.7 billion buyout on ChemoCentryx (CCXI) before opening on Thursday.
NBIX shares fell slightly overnight after Neurocrine’s earnings and revenues exceeded. The company raised revenue guidance for its key drug, but also shelved a treatment that underperformed. Shares rose 2% on Thursday to 95.93, bouncing off the 50-day line. NBIX stock has a 100.10 buy point.
VRTX stocks included IBD ranking and on IBD Big Cap 20 Index. iShares Biotechnology ETF (IBB) is turned on SwingTrader.
Tesla stock split, annual meeting
Tesla shareholders approved the 3-for-1 stock split Thursday night at the annual meeting, two years after the 5-for-1 stock split. Tesla proposed the TSLA split in June. It’s unclear whether the actual split will have much of an impact on Tesla’s stock. The TSLA stock split will make the options play cheaper.
At the annual meeting, CEO Elon Musk said that “this year, I swear,” Tesla will solve the self-driving problem, laughing.
Musk also expects production to pick up in the second half of the year. The Shanghai factory is getting upgrades to increase capacity, while Tesla has two new factories in Berlin and Austin that have been growing at a glacial pace. Musk said Tesla could eventually have 10-12 factories and could make an announcement about the location of the next plant later this year.
Tesla shares rose a fraction overnight. Shares rose 0.4% to 925.90 in Thursday’s regular session, just above the 200-day line. Shares of TSLA rallied strongly after news of the stock split, but that likely reflected a broad market rally and Tesla’s better-than-expected earnings on July 20. Tesla shares are far from the 1,208.10 buy point. A consolidation near the 200-day line or a handle higher could create a buying opportunity.
EV shares in China
Meanwhile, Chinese EV makers are showing some strength. BYD (BYD), which reported a July sales boom on Wednesday, rose 2.6% to 38.10 on Thursday, once again above its 50-day line. BYD shares are likely to make a new base in another week, but a move above the August 1 high of 38.35 could suggest an early entry.
Li Auto (LI) rose 1% to 34.32, continuing to trade between the 21-day and 50-day lines. LI stock should have a new base on the weekly chart after Friday. Li Auto’s stock is at IBD 50.
Nio (NIO) rose 3% to 20.90, bouncing off the 50-day line. NIO shares are still below the 200-day line.
Tesla Vs. BYD: Which EV giant is the better buy?
Stock market rally on Thursday
The stock market rally didn’t move much on the major indexes heading into the July jobs report.
The Dow Jones Industrial Average fell 0.3% on Thursday Exchange Trading. The S&P 500 was down 0.1%. The Nasdaq composite rose 0.4%. The small-cap Russell 2000 lost 0.2%.
U.S. crude oil prices fell 2.3 percent to $88.50 a barrel, hitting their lowest levels since before Russia’s invasion of Ukraine in late February. Gasoline futures were down 4.1%, signaling a continued retreat in gas station prices.
The 10-year Treasury yield fell 7 basis points to 2.68%.
ETFs
Avg the best ETFsInnovator IBD 50 ETF (FFTY) rose 0.35%, while the Innovator IBD Breakout Opportunities ETF (BOOTH) scored 1 cent higher. iShares Expanded Tech-Software Sector ETF (IGV) realized a profit of 0.2%. VanEck Vectors Semiconductor ETF (SMH) grew by 1%.
SPDR S&P Metals & Mining ETF (XME) rose 1%, and the Global X US Infrastructure Development ETF (PAVING) added 0.8%. US Global Jets ETF (STREAMS) rose 0.5%. SPDR S&P Homebuilders ETF (XHB) gained 1.7%. Energy Select SPDR ETF (XLE) fell 3.7%, and the Financial Select SPDR ETF (XLF) fell by 0.3%. Select Healthcare Sector SPDR Fund (XLV) declined 0.5%.
Reflecting the more speculative stocks of history, the ARK Innovation ETF (ARKK) advanced 0.8% and the ARK Genomics ETF (ARKG) climbed 1.7%, both at three-month highs. Tesla stock is a major holding in Ark Invest’s ETF. Cathie Wood’s Ark funds also hold small stakes in BYD and Nio shares.
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Market Rally Analysis
The stock market rally had a mixed session on Thursday, trading in a tight range. After strong recent gains, particularly Wednesday’s tech advance, a pullback or pause would not be a surprise and could be healthy.
The Nasdaq Composite is holding comfortably above its highs since early June, with the Dow Jones, S&P 500 and Russell 2000 just below that resistance level.
While the major indexes were quiet on Thursday, there was plenty of action across sectors and individual stocks.
Oil and gas stocks are once again struggling with energy prices, especially crude oil. It is hard to see the sector making significant progress without underlying prices rising.
Biotechs had another strong session, with the IBB ETF up 2.2% after a 3.8% jump on Wednesday.
While there were a couple of profit-making Thursdays, the losing profits showed the dangers of a little delay in results. Aris Water Solutions (ARIS) tumbled 21% after gains after Wednesday’s close in a buy zone. Fortinet (FTNT) fell by 16%, Eli Lilly (LLY) and Quanta Power (PWR) fell moderately but further away from buy points.
Lantheus (LNTH) had a wild session, hitting a record high of 81.43 just after the open, sinking to 66.26 a few minutes later, briefly turning positive again before closing down 6.1% to 71.24.
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What should we do now
The market rally is working, but investors have reasons to be cautious about increasing exposure too quickly. A pullback could result in a temporary setback for the indices, but perhaps large losses for many individual names. There is still a significant risk that the market’s rally will soon run out and pull back significantly, though perhaps not to the recent lows.
Be careful around profits.
Keep working on the watchlists. Stay engaged with the market, but you don’t have to stare at a computer screen all day.
Read it The big picture every day to stay in sync with 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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