Dow Jones futures were up slightly Friday morning, along with S&P 500 futures and Nasdaq futures, with a sizable July jobs report. Tesla (TSLA) shareholders approved the 3 to 1 stock split on Thursday night.
The stock market rally ended mixed on a relatively quiet Thursday for the major indexes, but with some big earnings momentum.
Vertex Pharmaceuticals (VRTX), Amgen (AMGN) and Neurocriminal Biosciences (NBIX) reported better-than-expected earnings Thursday night as biotech remains the top sector. All closed near major buy points and support levels.
Dow Jones Futures Today
Dow Jones futures are up 0.3% above fair value. S&P 500 futures rose 0.2 percent and Nasdaq 100 futures gained 0.25%.
The Labor Department will release the July jobs report at 8:30 a.m. ET. The jobs data is sure to sway future yields on Dow and Treasuries.
Economists expect to see nonfarm payrolls rise 250,000 in July employment report, down from 372,000 in June. That still shows healthy hiring amid a slowing economy.
Stay tuned for the household survey, which showed a notable drop in employment in June. It is more prone to errors than payroll, but usually shows the labor market changing first.
Meanwhile, the unemployment rate is expected to hold steady at 3.6%, with annual hourly earnings growth slowing to just 5%.
Unemployment claims rose to 260,000 in the latest week, the highest in nine months. Employment opportunities, although still high, have declined rapidly over the past two months.
The Federal Reserve, especially Fed Director Jerome Powell, has argued that a soft landing is possible. Investors over the past few weeks are starting to buy into the idea that the economy will weaken just enough enough to push the Federal Reserve to slow and then halt a Fed rate hike, without triggering a massive drop in demand and employment.
Income from biotechnology
VRTX stock fell in overnight trading as Vertex earnings topped the views and the biotech giant raised its full-year product revenue target. Shares fell 0.1% to 274.85, below the 50-day line and buy points are at 276.10 and 279.23.
AMGN stock loses 1% in protracted actions after Amgen’s earnings top and the company largely reaffirmed its full-year guidance. Shares fell 0.1% to 246.98 on Thursday, trading near the 50-day line. Amgen stock has a 253.87 handle buy point. The biotech giant announced a $3.7 billion acquisition of the ChemoCentryx (CCXI) before opening Thursday.
NBIX shares fell slightly after Nervous criminal’s income and top revenue. The company raised revenue guidance for its flagship drug, but also omitted a treatment that didn’t work well. Shares rose 2% on Thursday to 95.93, recovering from a 50-day high. NBIX stock has a 100.10 handle buy point.
Tesla Share Split, Annual Meeting
Tesla shareholders approved a 3-for-1 stock split at its annual meeting Thursday night, two years after the 5-for-1 stock split. Tesla proposed a TSLA split in June. It’s unclear whether the split will actually have much of an effect on Tesla stock. The TSLA stock split will make playing options cheaper.
At the annual meeting, CEO Elon Musk said “this year, I swear,” Tesla will solve the problem of self-driving, laughs.
Musk hinted that the Cybertruck’s price and specifications will be different from what Tesla initially touted in 2019, citing inflation. Extended pricing and specs seem highly unlikely, while material costs and 4680 battery lag have added to the show.
Musk also expects output to increase in the second half of the year. The Shanghai plant is being upgraded to increase capacity, while Tesla has two new factories in Berlin and Austin that have been built at freezing speed. Musk said Tesla may eventually have 10-12 factories and could make an announcement on the location of the next factory later this year.
Tesla stock rallied a fraction overnight. Shares rose 0.4% to 925.90 in normal trading Thursday, just above the 200-day line. TSLA stock rallied on the news of the stock split, but that likely reflects a broad market recovery and Tesla’s better-than-expected earnings on July 20. long distance from the 1.208.10 buy level. A consolidation near the 200-day line or the higher handle could create a buying opportunity.
China EV Stock
Meanwhile, China’s electric vehicle makers are showing some strength. BYD (BYD), reported explosive July sales on Wednesday, up 2.6% to 38.10 on Thursday, back on the 50-day line. BYD stock is likely to have a fresh base in a week, but a move above the August 1 high of 38.35 could offer early entry.
Nio (NIO) increased 3% to 20.90, up from 50 days. NIO stock remains below the 200-day line.
Stock Market Rally Thursday
The stock market rally didn’t have much of an impact on the major indexes in the July jobs report.
The Dow Jones Industrial Average fell 0.3% on Thursday stock market trading. The S&P 500 index fell 0.1%. The Nasdaq Composite Index rose 0.4 percent. The small-cap Russell 2000 lost 0.2%.
U.S. crude oil prices fell 2.3% to $88.50 a barrel, hitting their lowest level since before Russia invaded Ukraine in late February. Gasoline futures prices fell 4.1%, signaling a further decline in pump prices.
The yield on the 10-year Treasury note fell 7 basis points to 2.68%.
Among the Best ETFsThe Innovator IBD 50 ETF (FFTY) rose 0.35%, while the Innovator IBD Breakthrough Opportunity ETF (BOUT) is 1 cent higher. iShares Expanded Technology-Software Sector ETF (IGV) increased by 0.2%. VanEck Vectors Semiconductor ETF (SMH) increased by 1%.
SPDR S&P Metals & Mining ETF (XME) rose 1% and the US Global Infrastructure Development ETF X (SAVE) add 0.8%. US Global Jets ETF (JETS) increased to 0.5%. SPDR S&P Homebuilders ETF (XHB) increased by 1.7%. SPDR Select Energy ETF (XLE) fell 3.7% and the financial SPDR ETF (XLF) decreased by 0.3%. SPDR Fund for the Healthcare Sector (XLV) back 0.5%.
Reflecting a more speculative narrative on stocks, the ARK Innovation ETF (ARKK) raised 0.8% and the ARK Genomics ETF (ARKG) rose 1.7%, both at three-month highs. Tesla stock is a large stock on Ark Invest ETFs. Cathie Wood’s Ark funds also own small stakes in BYD and Nio stocks.
Market aggregation analysis
The stock market had a mixed session on Thursday, trading in a tight range. After the recent strong gains, notably tech-led progress on Wednesday, a drop or pause would not come as a surprise and could be a good thing.
The Nasdaq composite is holding comfortably above its early-June high, with the Dow Jones, S&P 500 and Russell 2000 just below that resistance.
While the major indexes were quiet on Thursday, there was more movement in industry groups and individual stocks.
Oil and gas stocks once again faced difficulties when energy prices dropped, especially crude oil. It’s hard to see the sector having a meaningful uptick without a bullish underlying price.
Biotech had another strong session, with the IBB ETF up 2.2% after gaining 3.8% on Wednesday.
While there were some earnings winners on Thursday, the losers showed the danger of having little stepping stone to results. Aris Water Solutions (ARIS) fell 21% on earnings after Wednesday’s close in buy zone. Fortinet (FTNT) down 16%, Eli Lilly (ONLY) and Electric Quantum (PWR) fell slightly, but further from the buy point.
Lantheus (profit) had an active session, hitting a record 81.43 shortly after opening, falling to 66.26 minutes later, quickly turning positive again before closing down 6.1% down to 71.24.
What to do now
The market rally is working, but investors have reason to be cautious about rapidly increasing stock rates. A pullback could provide a temporary setback for the indices, but could be a major loss for many individual names. There is still a sizable risk that the bull market will soon dry up and retreat significantly, although perhaps not the recent lows.
Be careful about income.
Continue working on the watch list. Stick with the market, but you don’t have to be glued to a computer screen all day.
Read Big picture every day to stay in sync with market trends and top stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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