Dow Jones Futures: What The Tech Sell-Off Means For The Market Rally; Rivian Dives, FedEx Rises Late
Dow Jones futures tilted higher Thursday night, along with S&P 500 futures and Nasdaq futures, with FedEx (FDX) and Rivian earnings in focus overnight. A day after a powerful stock market rally, the major indexes were split, with big caps such as Apple (AAPL), Adobe (ADBE), Nvidia (NVDA), AMD (AMD) and Tesla stock leading the Nasdaq lower.
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Affirm Holdings (AFRM) dived and Block (SQ) — formerly Square — fell solidly as the Consumer Financial Protection Bureau (CFPB) launched an inquiry into “buy now, pay later” credit.
On the plus side, commodity and and financial-related groups did relatively well. Customers Bancorp (CUBI), Alcoa (AA), Charles Schwab (SCHW), CBRE (CBRE) broke out on Thursday.
Still, it was a worrisome follow up after Wednesday’s follow-through day, which confirmed a new market rally.
Rivian Earnings
Rivian (RIVN) reported a much-wider-than-expected loss while revenue came in at $1 million, about in line. It was the first Rivian earnings report since the company’s November IPO. Rivian, which had only had limited deliveries of its R1T electric pickups, said it’ll miss its 2021 production target by a “few hundred vehicles.” Furthermore, Rivian said new orders placed today probably won’t be filled until 2023.
Rivian expects to send the first batch of delivery vans this year to Amazon.com (AMZN), a major RIVN stock investor.
As expected, Rivian announced it will build a new assembly plant in Georgia, along with a battery factory.
With production light, sales minimal and losses heavy, Rivian stock dived 9% in extended trade, threatening a post-IPO low. RIVN stock sank 5% to 108.87 on Thursday.
The Rivian results and guidance were also relevant for EV giant Tesla (TSLA) and startup Lucid (LCID).
Tesla stock slumped 5% to 926.92 on Thursday, undercutting Wednesday’s lows. Shares are now 9.2% below their 50-day line and close to an old 900.50 buy point. Lucid stock sank 1.9% to 40.05. Both fell slightly overnight.
Meanwhile, General Motors (GM) fell overnight after Dan Ammann, CEO of GM’s majority-owned Cruise, left the self-driving car technology company.
FedEx Earnings
FedEx earnings and revenue beat views with the shipping giant also announcing a $5 billion stock buyback.
FDX stock jumped 5% overnight but is well off 52-week highs. FedEx edged down 0.9% to 238.52 on Thursday.
United Parcel Service (UPS) rose 1.5% overnight, signaling a break from a trend line. On Thursday, UPS stock rose 1.1% to 208.02 as it bounced from its 50-day moving average. E-commerce giant Amazon, a growing FedEx shipping rival, was little changed late. AMZN stock sank 2.6% in Thursday’s session.
CFPB Probes BNPL
The CFPB is seeking info from Affirm, Klarna, PayPal (PYPL) and Afterpay, which Block is acquiring. CFPB is looking into issues such as how much debt consumers can amass and buy now, pay later data-collection practices.
AFRM stock plunged 11%, hitting a three-month low and nearing its 200-day line. Affirm stock has tumbled nearly 50% from its early November peak after skyrocketing on several deals, including working with Amazon. SQ stock sank 4.6% to a 13-month closing low. PYPL stock lost 1%.
Tesla, Adobe, AMD and Nvidia stock are on IBD Leaderboard. AMD stock is on SwingTrader. Adobe stock is on IBD Long-Term Leaders. AMD stock and Nvidia are on the IBD 50. AA stock was the IBD Stock Of The Day.
Dow Jones Futures Today
Dow Jones futures rose 0.1% vs. fair value. S&P 500 futures climbed 0.1% and Nasdaq 100 futures advanced 0.1%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally
The stock market rally opened with modest gains but conditions quickly deteriorated, especially for techs.
The Dow Jones Industrial Average dipped 0.1% in Thursday’s stock market trading. The S&P 500 index gave up 0.9%. The Nasdaq composite retreated 2.5%. The small-cap Russell 2000 lost almost 2%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) skidded 3.3%, while the Innovator IBD Breakout Opportunities ETF (BOUT) edged down 0.6%. The iShares Expanded Tech-Software Sector ETF (IGV) retreated 3.1%. Adobe stock is a major IGV holding, with several other software leaders falling sharply Thursday. The VanEck Vectors Semiconductor ETF (SMH) slumped 4.35%, with AMD and NVDA stock key holdings.
SPDR S&P Metals & Mining ETF (XME) popped 2.1% and Global X U.S. Infrastructure Development ETF (PAVE) was just above break-even, with Alcoa stock owned by both ETFs. U.S. Global Jets ETF (JETS) slid 2.3%. SPDR S&P Homebuilders ETF (XHB) sank 1.6%. The Energy Select SPDR ETF (XLE) climbed 0.6% and the Financial Select SPDR ETF (XLF) rose 1.3%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) fell 3.7% and ARK Genomics ETF (ARKG) 4.8%. Tesla stock remains the No. 1 holding across ARK Invest’s ETFs.
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Tech Leaders Slump
Apple stock fell 3.9%, a bearish outside reversal and weighing on the Dow Jones, S&P 500 and Nasdaq. But the AAPL stock chart still looks fine for now
Adobe stock tumbled 10% on weak guidance, knifing through its 200-day moving average for the first time since May. The ADBE stock chart looks broken.
AMD and Nvidia stock were especially disappointing. After holding their 50-day lines, unlike many growth names, the chip leaders surged from that key level on Wednesday. But on Thursday, AMD stock lost 5.4% and Nvidia 6.8%. Most people who bought Wednesday’s rebounds are likely down on those positions, along with many other growth names that looked actionable.
Market Rally Analysis
Wednesday’s follow-through day signaled that big institutions were supporting the new stock market rally. But not all confirmed rallies work. When they fail, they usually start to show negative action quickly.
Technically, a market rally is in force as long as it holds above recent lows. But closing below the follow-through day low is a very negative signal.
The Nasdaq plunged through its 50-day line and wiped out Wednesday’s 2.15% gain. But it didn’t undercut Wednesday’s low.
The S&P 500 index, which nearly hit a record high intraday, found support at its 21-day line. The Dow Jones resisted selling for much of the session before dipping into the red. The small-cap Russell 2000 is near recent lows.
Losers crushed winners, back to the trend of the past several weeks. New lows easily trumped new highs on the Nasdaq, but new highs edged out on the NYSE.
Growth took yet another hit, with chip, software and EV plays hammered.
Commodity and financial groups did well, with Alcoa and Schwab among the standouts. But as the market sell-off intensifies, many of these names pared gains somewhat.
Overall, it was a disappointing session.
When It’s Time To Sell Your Favorite Stock
What To Do Now
There weren’t many great-looking charts flashing buy signals, especially among growth names, even at Thursday’s open. Investors could have bought metal or financial stocks breaking out, while medicals are still looking good.
But a confirmed market rally that immediately triggers a growth-led sell-off and sector rotation doesn’t instill confidence. The stocks and sectors that worked Thursday might continue to lead, or they could soon be out of favor.
Investors who bought growth stocks on Wednesday’s FTD have to consider where they might exit or at least start to scale out of those positions, if they haven’t already.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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