Dow Jones futures rose early Friday, along with S&P 500 futures and Nasdaq futures. All eyes are on the December jobs report due before the opening.
Tesla (TSLA) announced significant China price cuts for the Model 3 and Model Y in the wake of demand concerns and rising competition.
The stock market suffered big losses on Thursday due to hotter-than-expected employment data, including jobless claims, ahead of the big employment report. Major indices have retreated from key levels.
Microsoft (MSFT) extended the sell-off to Wednesday while Tesla (TSLA) gave up much of the previous day’s bounce. while, United Health (United nations), Cigna (CI) and other health insurers an awesome start to the new year.
Investors should wait for clear signs of market strength before adding exposure. Friday’s jobs report could provide a catalyst, but in what way?
Dow jones futures today
Dow futures rose 0.3% against fair value. S&P 500 futures rose 0.3%. Nasdaq 100 futures rose 0.3%.
The jobs report will make sure Dow futures, Treasury yields and more swing ahead of the open, setting the tone for Friday’s trading.
The Labor Department will release the December jobs report at 8:30 a.m. ET.
Economists expect to see the non-farm payrolls by 200,000, down from 263,000 in November. This would be the weakest since December 2020, but it’s still holding. The unemployment rate should remain steady at 3.7%. Average hourly earnings are expected to increase 5% from a year earlier, albeit down slightly from 5.1% in November.
Friday’s jobs report will be followed by several hot employment readings this week, from still-high employment opportunities on Wednesday to stronger-than-expected ADP employment data on Thursday and falling jobless claims.
The Fed wants to see slower growth in employment and wages to ease inflation pressures. Fed policymakers also repeatedly, including Wednesday’s Fed minutes from the December meeting, have indicated concern that a rally in the stock and bond market could undermine their fight against inflation.
Markets still expect the Fed to slow rate hikes again, to a move of just a quarter point at the February 1 policy meeting. But the odds fell to 61% from 69% on Wednesday.
Tesla price cuts china
Tesla announced significant price cuts in the Chinese market. Tesla lowered the price of the Model 3 to 229,900 yuan ($33,454), down 13.5% from the 265,900 set in late October. Base price for the new Model Y is 259,900 ($37,819), down 10% from 288,900 from late October. Both are down about 18% from where they were before the cut in late October.
Tesla extended its year-end incentives of 10,000 yuan at the beginning of 2023. So the effective discount is not as large as the sticker price would suggest. Still, a big discount.
On January 2, Tesla announced record deliveries in the fourth quarter, but they fell short of what they saw, while inventories swelled. Chinese demand lagged despite price cuts in October and big stimulus at the end of the year.
One factor is increased incentives. The Tesla Model 3 is now much closer to a Model 3 BYD (BYDDF) Seal, which starts at 225,800 yuan ($32,857). When the BYD Seal was first launched, the Model 3 was priced in China at just over $10,000.
How much of a sales boost will Tesla get, and how long will it last? How will competitors like BYD be, New (NIO) and others respond? China’s electric vehicle market will become fiercely competitive in 2023.
Tesla shares lost 2.9 percent. This follows a 5.1% retracement on Wednesday from Tuesday’s 12% drop to bear market lows.
Former WWE CEO Vince McMahon, who retired last year after a sexual harassment scandal, plans to bring back the entertainment company and sell it, The Wall Street Journal reported late Thursday. Sources told WSJ that McMahon will name himself and two others to the WWE Board of Directors.
WWE stock jumped 11% in late trading, bouncing back above its 50-day streak and not far from its November 28 peak of 81.63. Shares rose 2.3% to 72.04 Thursday, up 5.1% for the week so far as WWE stock bounced off the 50-day streak.
Aehr’s profits are up 220% over the previous year. Second-quarter fiscal revenue increased 54% to $14.8 million for a chip-testing company with exposure to the electric vehicle market. AEHR stock rose 14% in overnight trading. Shares fell 3.55% to 17.27 Thursday, consolidating even early entry. AEHR stock is down 14% to start 2023 after falling in the last five weeks of 2022.
Bed Bath & Beyond plans to file for bankruptcy in the coming weeks, The Wall Street Journal reported late Thursday. This is after the struggling homewares retailer issued a “continuity” warning early Thursday. BBBY stock fell 8% overnight after diving 30% in the regular session.
Stock market Thursday
An attempted rally in the stock market eased as jobless claims fell, closing near session lows.
The Dow Jones Industrial Average fell 1% on Thursday Stock market trading. The S&P 500 fell 1.2%. The Nasdaq Composite lost 1.5%. Small cap Russell 2000 fell 1.1%.
Microsoft shares lost 3%, a day after tech giant Dow Jones plunged 4.4% as UBS raised concerns about Azure cloud computing growth.
UnitedHealth, a Dow component like Microsoft, lost 2.9 percent to its lowest close since June. Shares are down 7.6% to start 2023, pulling back through the 200-day streak. Cigna stock fell 2% after falling below its 50-day line on Tuesday. CI stock is down 8.2% this week.
US crude oil prices rose 1.1% to $73.67 a barrel after falling to start 2023. Natural gas futures fell 10.8% to a one-year low.
The 10-year Treasury yield rose 1 basis point, to 3.72%. The 10-year yield reached 3.78% Thursday morning after the jobless claims data, but hit resistance at the 50-day line. The two-year yield, which is closely tied to Fed policy, rose 6 basis points to 4.45%. The 3-month Treasury note jumped 11 basis points, to 4.62%. A highly inverted yield curve signals a depression.
Exchange Traded Funds
between the The best mutual fundsThe Innovator IBD 50 ETF (fifty(down 0.2%, while the Innovator IBD Breakout Opportunities ETF)fit) decreased by 0.15%. iShares Expanded Technology and Software ETF (IGV) fell 3.2%, with a large stake in MSFT shares. VanEck Vectors Semiconductor Corporation (SMH) gave up 1.8%.
SPDR S&P Metals & Mining ETFs (XME) rose 0.5%. US Global Gates Foundation ETF (Planes) climbed 1.1%. SPDR S&P Homebuilders ETF (XHB) sank 0.75%. Energy Defined Fund SPDR ETF (xle(Advance 1.8% and Financial Select SPDR ETF)XLF) waived 0.75%. SPDR Health Care Sector Selection Fund (XLV) decreased by 1%. The UN stock is the largest component of the XLV, with Cigna also owning it.
Reflecting more speculative stories, the ARK Innovation ETF (ARK)ark(down 2.4% and the ARK Genomics ETF)ARKG) 0.9%. TSLA stock continues to lead across Ark Invest’s ETFs. Cathie Wood’s Ark has been boosting its Tesla holdings in the past few months.
Market rally analysis
After a modest rally to key resistance levels on Wednesday, major indexes fell again on Thursday.
The Dow, which closed nearly above the 21-day and 50-day moving averages on Wednesday, fell lower on Thursday. The S&P 500 and Russell 2000 have pulled back from their 21-day lines, while the Nasdaq has also pulled back.
Shares of Microsoft, Tesla and UnitedHealth fell in the S&P 500, but the losses were widespread. Invesco S&P 500 Equal Weight Fund (RSP) fell 1%, back below the 21-day, 50-day, and 200-day lines after retaking them on Wednesday.
The Biotech, Industrial, Housing, Medical, Infrastructure/Building Products and Mining sectors, along with some retailers and energy names, continue to show relative strength, along with Chinese stocks suddenly rebounding. Several buy signals flashed on Tuesday or Wednesday, but most of them turned back or reversed lower.
The market bullish attempt for major indices continues, but it has not made much progress. Since crashing in mid-December from recent highs, major indices have been range bound, hitting resistance on the upside but not breaking either.
Friday’s jobs report could break this sideways action, and lead to a decisive move above – or below – key levels. But even this can be temporary.
What are you doing now
Get set, set…and wait.
If you’re still involved in the market and looking for promising setups, it’s hard not to jump on promising stocks because they’re flashing buy signals. In the event of a sustained market rally, this will often work. But in the current volatile market environment, that simply didn’t happen.
The December jobs report is likely to drive the market higher. It may be a signal to make some purchases – in individual stocks or in sector/market ETFs – but not to significantly increase exposure.
Despite the tough market conditions, a lot of stocks are showing strength. So prepare your watchlists.
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