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Dow Jones Futures Drop as Yields Continue to Rise; Twitter Crashed On The Latest Elon Musk Twist

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Dow Jones futures fell early Friday, along with S&P 500 futures and Nasdaq futures, with Tesla CEO Elon Musk’s Twitter deal in focus and possible security review.




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The stock market rally initiative started strong on Thursday, but hit key resistance as Treasury yields continued to rise on fresh economic data.

Snapchat parent blow up (SNAP) dived with an emphasis on other social media companies, again amid mixed results and lack of guidance. Meta Platforms (META) and Pinterest (PINS).

excitement (TWTR) was unaffected by the divestment of Snap due to Musk’s looming takeover. But earlier on Friday, TWTR stock fell sharply amid a report that the Biden administration was reviewing security reviews of various Musk deals, including the $44 billion takeover.

In Thursday’s session, tesla (TSLA) slumped to a 16-month low after mixed earnings and mixed signals late Wednesday.

tech giants Apple (AAPL), Microsoft (MSFT), Google parent Alphabet (GOOGL), Meta Platforms, amazon.com (AMZN) and Nvidia (NVDA) gained resistance on its 21-day moving averages, just like the S&P 500 and the Nasdaq. All heavily damaged, most near recent lows.

As the rally attempt continues, this is still a bear market until proven otherwise. Investors should avoid making new purchases in the current environment.

Snap Stock Crashes Again

blow up (SNAP) topped its third-quarter earnings outlook. But revenue was up less than 6%, a record low and just below consensus. But Snapchat parent will not provide guidance.

Despite the $500 million buyback announcement, SNAP stock fell 28% in premarket trading. That’s after falling 43% and 39% respectively after the previous two earnings reports.

Commodity stock, to be reported next Wednesday, tumbled modestly in expanded trading. PINS stock was sold on Thursday after turning down the 50-day and 200-day lines. Both will report next week.

Earning

Earlier on Friday, the oilfield services giant Schlumberger (SLB) reported better-than-expected third-quarter earnings. Schlumberger stock rose slightly before the open. SLB stock is rising fast to the right of the 38%-deep cup bottom, but not yet tradable.

Dow Jones component American Express (AXP) outperformed EPS outlooks but slightly missed some revenue estimates. AmEx reaffirmed its full-year revenue targets. AXP stock dropped solidly before the open not far from bear market lows.

Dow stock Verizon Communications (VZ) is also open. VZ stock is also close to 52-week lows.

Dow Jones Futures Today

Dow Jones futures fell 0.4% to fair value as AXP stock dragged the blue chips. S&P 500 futures fell 0.4%. Nasdaq 100 futures fell 0.7% and META stock was a significant negative.

The 10-year Treasury yield rose 3 basis points to 3.26%. The dollar crossed a 32-year high of 150 yen for the dollar.

Crude oil futures rose 4%, while natural gas fell 4%.

Keep in mind that overnight action in Dow futures and elsewhere does not necessarily translate into real trading in the next regular stock market session.


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Stock Rally

The stock market rally rose in the first hour of trading, but waned as Treasury yields rose again.

The Dow Jones Industrial Average fell 0.3% in Thursday’s trading. The S&P 500 index fell 0.8 percent. The Nasdaq composite fell 0.6 percent. The small-cap Russell 2000 fell 1.3%.

The 10-year Treasury yield jumped 10 basis points to 4.23%, hitting a new 14-year high after jumping 13 basis points on Wednesday. Indicator Treasury yield is on track for 12 consecutive weeks of earnings.

Ahead of the opening, the Department of Labor reported that initial jobless claims fell last week, challenging opinions for a third straight win. The Philly Fed manufacturing index remained negative in October, slightly worse than outlooks, but the employment subindex pointed to strong labor demand. That’s not what the Federal Reserve wants to see.

The two-year Treasury yield is around 4.6%, which the Fed recently signaled the fed funds rate could peak. However, currently the markets are forecasting between 4.75% and 5% after the February meeting.

The expired November crude futures contract rose 0.5% to $85.98 a barrel, but pulled back from morning highs. December crude fell 1 cent to $84.51. Natural gas prices fell 1.9%, bringing their sharp losses to their worst close since late March.

ETFs

Among the top ETFs, the Innovator IBD 50 ETF (FFTY) fell 0.9%. The iShares Extended Technology-Software Industry ETF (IGV) rose 0.8%. The VanEck Vectors Semiconductor ETF (SMH) added 0.8%.

Reflecting more speculative stocks, the ARK Innovation ETF (ARKK) and ARK Genomics ETF (ARKG) fell 0.4%. TSLA stock remains the largest holding among Ark Invest’s ETFs.

The SPDR S&P Metals & Mining ETF (XME) rose 0.5% and STLD stock gained a significant hold. The US Global Jets ETF (JETS) tumbled 0.8%. The SPDR S&P Homebuilders ETF (XHB) fell 2.5%. The Energy Select SPDR ETF (XLE) was up 0.1% and the Financial Select SPDR ETF (XLF) was down 1.6%. The Healthcare Selected Sector SPDR Fund (XLV) fell 0.8%.


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Musk-Twitter Deal Review?

US government officials are considering subjecting Musk’s Twitter deal and Starlink satellite network to national security reviews, Bloomberg reported late Thursday. This follows Musk’s threats to cut Starlink’s access to Ukraine, and Russia-friendly peace proposals.

Musk’s foreign investors are also being examined.

Bloomberg said officials are looking for ways to review the deals, including using the Committee on Foreign Investments in the US (CIFUS).

Management negotiations are at an early stage. It’s unclear if any scrutiny will come before Musk’s takeover of Twitter happens. Even if the review delays or prevents a takeover, Musk could have to pay significant penalties to exit the deal.

Still, Twitter stock fell more than 6% before opening amid uncertainty on Friday.

TWTR stock rose 1.2% on Thursday to 52.44, just below the $54.20 acquisition price.

Musk had wanted to get out of the deal, but changed his mind last month as the odds of winning in court seemed slim.

Musk and Twitter appear to be moving towards closing the deal by the court-appointed Oct. 28 deadline. Musk is reportedly looking for new equity partners to fund his takeover on Twitter to avoid fresh TSLA stock sales.

Tesla Stock

Tesla stock fell 6.65% on Thursday to break a 16-month low at 207.28. Shares fell slightly earlier on Friday.

Late Wednesday, Tesla earnings narrowly topped third-quarter views, while revenue fell short. Elon Musk promised an “epic” fourth quarter and said demand was strong, but acknowledged that China and Europe showed some weakness.

Tesla plans to produce many more vehicles than it delivered in Q4, after sales surpassed 22,000 in Q3. The EV giant says it’s doing this to smooth out deliveries against the typical end-of-quarter frenzy. But this move comes as the increase in production capacity and backlogs in China fade.

New EV loans should support Tesla’s US sales in 2023.


Tesla Vs. BYD: Which EV Giant Would Buy Better?


Market Rally Analysis

The stock market rally venture got off to a strong start on Thursday, with the Nasdaq gaining nearly 1.5% in the first hour. However, the Nasdaq, S&P 500 and Russell 2000 faced resistance once again at the 21-day moving average. Dow Jones remains above 21 days.

Technical resistance coincided with Treasury yields rising once again.

Despite trading close to weekly lows, major indexes are still rising solidly this week. If there had been a sustained decline or stagnation in yields, the market rally could have begun. But if yields continue to rise, it’s easy to imagine indices returning to bear market lows.

The market rally attempt still needs a follow-up day to confirm the uptrend.

Most of Thursday’s winners were stocks with dire charts, including those driven by earnings. Slide Research (LRCX) and AT&T (T).

Energy stocks continue to be the clear leader. But many have been extended from their 50-day streak. Energy stocks are prone to large fluctuations with underlying oil and gas prices.

Some steel stocks are showing their courage. medical names such as human (HUM), Cardinal Health (CAH) and Vertex Pharmaceuticals (VRTX) mixed. Despite their growing relative power lines, many medical practitioners are not making much progress.


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what to do now

Market volatility increases investor risk. Stocks may look promising, but may see strong gains fade in a matter of minutes or hours. And that’s with indices that are solidly high for the week. Had it been flat or down, the negative feedback could have been much more painful.

Put the volatility aside and there are still no good reasons to invest significantly right now. The market rally did not have an ongoing day. The S&P 500 and Nasdaq are struggling at the 21-day line.

Next week, Dow Jones stock will be released by Apple, Microsoft, Google, Meta Platforms, Amazon, boeing (BA), Intel (INTC) and hundreds of other companies will report. These gains can be a catalyst for big market gains, sharp losses or more whiplash action.

The market can go up at any time. If a confirmed rally begins, a number of shares can be traded quickly. So stay busy and keep your watch lists fresh.

Read the Big Picture daily to stay in tune with the market direction and leading stocks and industries.

Please follow Ed Carson on Twitter at: @IBD_ECarson for stock market updates and more.

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