Dow Jones futures rose modestly after hours, along with S&P 500 and Nasdaq futures, with FedEx (FDX) and Nike (NKE) leading the charge.
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The stock market rally bounced modestly on Tuesday, snapping a four-day losing streak.
Meanwhile, Litter (AAPL) flirted with lowering its bear market low a day later amazon.com (AMZN) did.
tesla (TSLA) continued to decline. TSLA shares have now added to their gains since the stock split in August 2020.
On the positive side, oilfield services play a Schlumberger (SLB), halliburton (HAL) and ProFrac (ACDC) are showing strength, with Schlumberger and ACDC stocks showing early buy points on Tuesday.
The video embedded in the article discussed Tuesday’s market action and analyzed SLB, Halliburton and ProFrac stocks.
Nike and FedEx Profits
Dow Jones giants Nike and FedEx reported earnings on Tuesday, also offering some sense of the holiday shopping season.
Nike’s earnings and sales outpaced views, but inventories were up 43% year-over-year. Margins dropped due to markdowns. NKE shares surged more than 10% after hours, signaling a move back above the 200-day line. Shares rose 0.2% to 103.21 on Tuesday.
FedEx earnings beat views but revenue fell short. FDX shares rose solidly in extended trading. The shares closed down 2.6% to 164.35, below the 50-day line.
Dow Jones Futures Today
Dow Jones futures were up 0.35% from fair value, with NKE shares offering a boost. S&P 500 futures advanced 0.25%. Nasdaq 100 futures were up 0.3%.
Keep in mind that overnight action in Dow futures and elsewhere does not necessarily translate to actual trading in the next regular stock market session.
Join the IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
stock market rally
The stock market rally erased early losses and closed slightly higher.
The Dow Jones Industrial Average was up 0.3% in Tuesday’s stock market trades. The S&P 500 index rose 0.1%, with Tesla shares the worst performer in the index. The Nasdaq composite rose 1 point. The small-cap Russell 2000 advanced 0.5%.
Apple shares fell to 129.89, 1% from the June market low of 129.04. Shares rebounded to close 7 cents to 132.30. Amazon shares rose 0.3% after briefly edging off Monday’s new low.
US crude oil prices rose 1.2% to $76.09 a barrel. Natural gas prices fell 9% after falling more than 11% on Monday.
The 10-year Treasury yield rose 10 basis points to 3.68% after rising 10 basis points on Monday. The Bank of Japan on Tuesday turned slightly hawkish, letting Japan’s 10-year yield rise as low as 0.5%.
The 2-year yield, more closely tied to Fed policy, was essentially flat at 4.27%.
On Friday, traders will get the November PCE inflation report, with economists expecting another notable drop in headline and core inflation.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) was up 0.5%. The VanEck Vectors Semiconductor ETF (SMH) was down 0.6%.
Reflecting stocks from more speculative stories, the ARK Innovation ETF (ARKK) fell 0.2% to hit a new five-year low. ARK Genomics ETF (ARKG) was up 0.8%. Tesla is a large stake in Ark Invest ETFs.
The SPDR S&P Metals & Mining ETF (XME) was up 2.6% and the Global X US Infrastructure Development ETF (PAVE) was up 0.4%. The US Global Jets ETF (JETS) gained 0.4%. SPDR S&P Homebuilders ETF (XHB) was down 0.55%. The Energy Select SPDR ETF (XLE) rallied 1.5% and the Financial Select SPDR ETF (XLF) rallied 0.4%. The Health Care Select Sector SPDR Fund (XLV) closed lower.
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Actions near the points of purchase
Oil service companies are bouncing back even as oil prices near one-year lows, perhaps in anticipation of stronger prices in 2023. Exxon Mobil (XOM) and chevron (CVX) recently released its capital expenditure plans for the coming year, suggesting strong demand for service companies such as Halliburton, Schlumberger, ProFrac and others.
Shares in SLB rose 3.9% to 51.76, rebounding above both the 50- and 21-day moving averages and arguably breaking a narrow downtrend line, warranting an early entry. Schlumberger stock is back in a still valid buy zone from a deep base. SLB shares are expected to have a new baseline with a buy point of 56.14 after this week.
Oil services giant Halliburton bounced above its 21-day line, rising 3.8% to 37.42, still close to its 50-day line. HAL shares have a Buy Point of 40.09 from a 47% deep handle coaster, according to MarketSmith analysis. It doesn’t have an obvious initial entry. The handle will be long enough to be its own base after this week.
Shares in ProFrac jumped 6.9% to 23.23, pulling back above their 50-day and 21-day lines and breaking a recent downtrend, much like shares in SLB. This could serve as an early entry. ACDC shares are expected to reconsolidate with a buy point of 27.10 starting this week. ProFrac shares went public at 18 per share. Had three bases since then, with breakouts not working for a long time.
Tesla stock
Tesla shares fell 8.1% to 137.80, hitting another two-year low. Shares in the EV giant are down 67% since their November 2021 peak and 29% in December alone.
Tesla shares have now increased their advance since the 5-for-1 split in August 2020. (TSLA shares were also split 3-for-1 in August 2022.)
Tesla’s sales in China slowed for the second week in a row, according to weekly record data. That’s despite ever-increasing year-end incentives, which are expected to end on Jan. 1 along with China’s EV subsidies.
Elon Musk’s Twitter saga is raising concerns of significant damage to the Tesla brand. Many notable long-term TSLA bulls are increasingly critical of Musk.
Evercore and Daiwa Capital Markets cut TSLA share price targets on Tuesday, both citing Twitter. Oppenheimer downgraded Tesla on Monday.
Tesla stock failed on Monday, despite Elon Musk saying he would step down as CEO of Twitter following a survey of Twitter users on the matter.
Stocks continued to fall on Tuesday even as major indexes and many major stocks tried to take a stand. The large volume of selling in recent weeks suggests that large institutions are selling or reducing TSLA shares.
Tesla has a worst possible Accumulation/Distribution Rating of E.
At some point, Tesla stock may recover and enter another run, but that could take months or even years.
Tesla Vs. BYD: Which giant EV is the best buy?
Market Rally Analysis
After a sharp sell-off since the highs of Dec. 13, the stock market rally ended its narrow losing streak.
The major indices looked oversold and arguably “due” for a bounce. They got one, though it wasn’t much.
The Dow Jones found support at the 50-day line, but the other key indices made no notable technical moves.
The stock market recovery remains under pressure.
AAPL stock has bounced from near bear market lows, but that doesn’t mean it will continue to do so.
Many leading stocks found support at key levels. But whether they will hold and recover strongly depends a lot on the market as a whole.
Energy names may be a partial exception given the way they are traded based on underlying crude oil or natural gas prices. Oil service companies like SLB and coal producers like Consolidated Energy are doing better now.
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What to do now
It’s not a good time to buy stocks. While major indices have held steady and some major stocks have not collapsed, the market recovery is still weak.
The S&P 500 rebounding from the 50-day line would look like a minimal sign of strength, with the 200-day and December high tests much higher.
Even if the market recovers, Tesla’s continued collapse on Tuesday shows that not all stocks will follow.
If you feel compelled to play this market, take pilot positions and be ready to make quick profits and cut losses.
Keep looking for rising stocks and finding support at key levels. Stocks with strong relative strength during weak markets can be leaders in the next advance.
Read The Big Picture every day to stay in sync with market direction and major stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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