Dow Jones Futures: No End To Stock Market Woes; Infrastructure Bill In Doubt, Tesla, Nio Deliveries Loom

Dow Jones futures rose slightly late Thursday, along with S&P 500 futures and Nasdaq futures, with a possible infrastructure bill vote and Tesla deliveries in focus. The stock market made another lackluster rebound attempt Thursday, reversing lower and closing at session lows once again, despite Congress avoiding a government shutdown.

Retailers were big losers Thursday, amid weak earnings from CarMax (KMX) and Bed Bath & Beyond (BBBY). But there were broad-based losses once again.

Among the tech titans, Apple (AAPL) and Facebook (FB) are starting to live below the 50-day line, while (AMZN) is below the 200-day line. Microsoft stock and Google parent Alphabet (GOOGL) are starting to get comfortable under the 50-day line, looking a lot like the Nasdaq composite.

Snap (SNAP), Nvidia (NVDA) and AMD (AMD) rebounded toward their 50-day lines but all closed below that key level.

Tesla (TSLA) could report third-quarter deliveries as soon as Friday, with buzz building about about a strong figure. Nio (NIO) will likely report September sales on Friday, with Xpeng (XPEV) and Li Auto (LI) also possible that day. China EV and battery giant BYD (BYDDF) will likely report next week.

Tesla stock dipped but is holding strong in a buy zone. Nio stock, Xpeng and Li Auto are all near multi-month lows. BYD stock has pulled back in the past few weeks but is still near record highs. All four China EV stocks rose Thursday.

Tesla stock, Snap, Nvidia, Microsoft, Google and Microsoft (MSFT) are on IBD Leaderboard. Google and Microsoft stock are on IBD Long-Term Leaders. Google stock is on the IBD 50 as well

Government Shutdown Averted

The Senate and House have approved a short-term funding bill. It’s going straight to the White House for President Joe Biden’s signature, averting a partial government shutdown by a matter of hours. Congress still needs to approve a debt limit hike to avoid a government default, with Republicans insisting that Democrats pass it on their own. Treasury Secretary Janet Yellen said this week that Oct. 18 is the deadline, though the Congressional Budget Office suggests late October or early November is the drop-dead date for a default.

Infrastructure Vote?

But the fate of the bipartisan $1 trillion infrastructure bill is in doubt. House Speaker Nancy Pelosi continued to say Thursday afternoon that the House would vote on the package tonight. But many progressives are vowing to oppose the deal. They want significant progress, or outright passage, of another, partisan tax-and-spending bill first. With Democrats holding only a three-seat majority in the House, and only a handful of Republicans likely to back the infrastructure bill, the odds of a high-profile defeat seem high. So Pelosi could pull the infrastructure bill at the last minute, unless she aims to send a message to some of her members.

Reports Thursday evening suggested that the House would cast votes, if at all, after 9 p.m. ET.

Dow Jones Futures Today

Dow Jones futures rose 0.1% vs. fair value. S&P 500 futures and Nasdaq 100 futures climbed 0.1%.

The 10-year yield fell from Thursday’s close to just below 1.5%.

Zoom Video (ZM) and Five9 (FIVN) agreed to terminate their merger deal, after FIVN shareholders failed to approve the $14.7 billion takeover. Regulators were reviewing the deal, with Zoom’s China ties posing a potential national security risk. Zoom’s plunging stock price since the deal was announced made the deal unattractive to FIVN shareholders. ZM stock was little changed overnight while Five9 fell modestly.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Stock Market Thursday

The stock market once again opened higher but struggled to advance, closing near session lows for a third straight session.

The Dow Jones Industrial Average tumbled 1.6% in Thursday’s stock market trading. The S&P 500 index sank 1.2%. The Nasdaq composite retreated 0.4% after trading higher for much of the session. The small-cap Russell 2000 lost 0.9%.

The 10-year Treasury yield dipped 1 basis point to 1.53%, holding near recent peaks. Crude oil prices edged higher, while natural gas prices rose sharply yet again.

Apple stock and Microsoft fell nearly 1%. Facebook stock, Google and Amazon lost just a fraction. All are down sharply for the week.

Growth ETFs

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) slipped 0.4%, while the Innovator IBD Breakout Opportunities ETF (BOUT) retreated 2.2%. The iShares Expanded Tech-Software Sector ETF (IGV) closed just below break-even. Microsoft is a major component, while Snap stock is also a holding. The VanEck Vectors Semiconductor ETF (SMH) dipped 0.1%, with Nvidia and AMD stock helping to boost SMH.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) climbed 0.7% and ARK Genomics ETF (ARKG) 1.15%, but both are multi-month lows. Tesla stock is the top holding across ARK Invest ETFs.

Sector ETFs

SPDR S&P Metals & Mining ETF (XME) edged up 0.2% while the Global X U.S. Infrastructure Development ETF (PAVE) retreated 2.2%. U.S. Global Jets ETF (JETS) descended 1.7%. SPDR S&P Homebuilders ETF (XHB) skidded 3.2%, with builders, suppliers and housing-related retailers such as RH and Williams-Sonoma all losing ground. The Energy Select SPDR ETF (XLE) gave up 1.5% and the Financial Select SPDR ETF (XLF) 1.6%.

The SPDR S&P Retail ETF (XRT) tumbled 4.75% on Thursday. CarMax plunged 13% on its earnings miss, with AutoNation slumping 6%. Both tumbled below buy points. BBBY stock crashed 22% to a 52-week low after missing and guiding lower on supply-chain woes, on on the heels of Nike (NKE) and RH (RH). Along with a Kohl’s (KSS) downgrade on supply-chain issues, a slew of retailers sold off, including Macy’s (M), Williams-Sonoma (WSM), Bath & Body Works (BBWI), Gap (GPS), Revolve (RVLV) and more.

Apparel makers also were big losers, including Hanesbrands (HBI).

Tesla Deliveries

The EV giant will report third-quarter deliveries and production figures as soon as Friday, though they could come over the weekend or as late as next Tuesday. Tesla deliveries will hit roughly 232,000, according to the latest, upwardly revised analyst consensus. Tesla sold the Model Y in Europe for the first time, likely boosting sales in that region. Tesla exported most of its Shanghai production in July and August, mostly to Europe, but September looks to be a big figure.

Chip shortages may be restraining Tesla production, but if so it’s only slowing the growth in output so far. Meanwhile, global auto production has plunged, boosting Tesla demand and pricing

Tesla stock dipped 0.75% to 775.48 on Thursday, holding comfortably in range from a 764.55 handle buy point.

Nio Deliveries

Nio typically reports monthly sales at the first day of the following month, so expect figures on Friday. Xpeng and Li Auto also may follow suit. Nio and Li Auto have cut quarterly delivery targets, citing chip woes. Nio and Xpeng both reported lower sales in August than July.

Nio and Xpeng make EVs, while the Li Auto’s Li One has a small gas engine to extend range.

BYD, which has been ramping up output, should easily outstrip Nio, Xpeng and Li Auto sales combined for September.

Also, Nio began selling its ES8 in Norway on Thursday, joining rivals Xpeng and BYD in that key EV market.

On Thursday, Nio stock rose 1.4%. XPEV stock climbed 2.9% and Li Auto 2.2%. All three are near recent lows and below key moving averages. BYD stock climbed 2.8%, approaching its rising 50-day line.

Market Analysis

The S&P 500, after an inside day Wednesday, undercut Tuesday’s low and came within a point of undercutting its Sept. 20 low. It was the worst close since Aug. 19.

The Dow Jones is still above its Sept. 20 low, but then it never reclaimed its 50-day line last week. The Russell 2000 is back below its 200-day line.

The Nasdaq composite tried to rebound but faded to just above its Aug. 19 low. With tech giants such as Apple slumping and key sectors such as chips and software retreating, the Nasdaq has lost its upward momentum.

The FFTY is now down 8.2% so for the week.

The major indexes are all below their 50-day moving averages, trending lower over the past several weeks. The Nasdaq’s 21-day line is about to undercut its 50-day, with the S&P 500 already suffering that short-term bearish cross.

Leading stocks, with a few exceptions like Upstart (UPST) or Tesla stock, are trying to hang on or heavily damaged.

What To Do Now

Investors have little or no reason to increase exposure. When the stock market is living below the 21-day and 50-day line, good things aren’t happening. The general trend remains weak. Could Thursday’s low be the bottom, and the market rally roars back to record highs from here? Sure, but we also could be on the cusp of a market correction.

Most of the money is made in strong market uptrends. Making big bets against long odds is a strategy for heavy losses.

Keep your exposure light, focusing on stocks that are working or are longer-term winners. Focus on building up your watchlists and preparing for the next money-making market.

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