Dow Jones futures were up slightly after the close, while S&P 500 futures and Nasdaq futures were down as Treasury yields continued to rise. Tesla Investor Day is underway as Salesforce.com, Snowflake and other software earnings led a busy night session.
The stock market rally suffered further damage on Wednesday as the 10-year government bond yield hit 4% for the day. Some leading stocks flashed buy signals on news. But the S&P 500 and the Nasdaq went down.
Apple (AAPL) fell back below its 200-day moving average as International Data Corp. now expects another slight decline in global smartphone sales in 2023, compared to its earlier forecast of a modest upturn.
Tesla Investor Day started with anticipation of important announcements. Despite speculation about the presentation of a new electric vehicle Tesla (TSLA) executives at the event said a next-generation platform or vehicle will come at a “later date.” CEO Elon Musk’s “Master Plan 3” involved the world making a big push for clean energy.
Late in the event, CEO Elon Musk confirmed that Tesla will create a Mexico plan.
Tesla stock fell solidly overnight as Investor Day had few headlines.
Well-known software manufacturers salesforce.com (CRM) splunk (SPLK), Crate (CRATE), octa (OCTA) and snowflake (SNOW) reported late Wednesday. CRM stocks and OKTA were big overnight gainers, while SNOW stocks, Box and Splunk declined.
Dow Jones futures today
Dow Jones futures rose 0.2% versus fair value. CRM stock is a component of Dow. S&P 500 futures were down 0.4% and Nasdaq 100 futures were down 0.5%. TSLA stock is an important component of the Nasdaq 100.
The 10-year government bond yield rose 3 basis points to 4.02%, above the key 4% mark.
Keep in mind that overnight action in Dow futures and elsewhere doesn’t necessarily translate to actual trading in the next regular trading session.
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Tesla Investor Day
The big Tesla Investor Day presentations took place on Wednesday evening.
The EV giant announced weeks ago that it would release more details about a next-generation EV platform at Tesla Investor Day, with much speculation that Tesla would unveil a low-cost model and perhaps give an idea of when production would begin could.
Executives said Tesla is aiming to reduce assembly costs in its next-generation vehicle platform by 50% and reduce factory footprint by 40%.
But Tesla hasn’t unveiled a next-generation vehicle, saying it will come at a “later date.”
During the Q&A segment, Musk confirmed that “Giga Mexico” is coming. Mexico’s president said on Tuesday that Tesla would make the announcement on Investor Day.
Tesla said the Mexican plant will build the upcoming next-generation vehicle. But that suggests a hypothetical, lower-cost electric vehicle won’t hit the market until 2025 or beyond. Even now, a cheaper Tesla would face competition from a number of rivals, particularly in China.
Tesla says it’s aiming to reduce silicon carbide by 75% for its next-generation power unit. This is not good news for silicon carbide games such as About semiconductors (AT), wolf speed (WOLF) and Aehr test systems (AHR). All three EV chip stocks fell late.
Many of Tesla’s plans, from Mexico to self-powered, could also serve to minimize the EV giant’s reliance on China.
Tesla stock
TSLA stock fell nearly 6% overnight on Tesla Investor Day. Tesla shares fell 1.4% to 202.77 on Wednesday, staying above the 21-day moving average.
Equities arguably have a cup and handle pattern that dates back to early November. That would suggest a buy point of 217.75. But investors should probably wait for TSLA stock to clear its 200-day moving average, currently around 221.
key income
CRM stock was up 16% late after Salesforce earnings topped views and the software giant issued an upbeat forecast, doubling its buyback to $20 billion. Salesforce shares rose 2.3% to 167.35 on Wednesday, extending the bounce off the 200-day moving average and moving above the 21-day moving average. CRM stock is now signaling a gap-up above a cup-with-henkel buy point of 178.94.
SNOW stock fell 7% in extended action as Snowflake’s earnings beat fourth-quarter prospects, but the data analytics firm issued a low outlook for the first quarter and full-year sales. Snowflake also announced a $2 billion share repurchase plan.
SPLK stock fell 3% after the close as Splunk’s earnings topped and the database and security software company forecast low first-quarter and full-year earnings. According to MarketSmith, Splunk stock was down 2 cents on Wednesday to 102.48 and held the 21-day price on a cup-and-handle basis. The buy point is at 110.05.
BOX stock plunged 10% overnight as Box beat earnings forecasts but was led low. The software storage company has been working on a new flat base on top of a previous flat base. The relative line of strength for BOX stock is at a multi-year high.
OKTA is up 14% in late trade as the cybersecurity company beat fourth-quarter guidance and headed for fiscal 2024 earnings. Okta stock is expected to revisit its 200-day mark, which now roughly coincides with a still-valid base buy point of 74.28. Shares rose 0.2% to 71.44 on Wednesday and held the 50-day price.
Stock market rally Wednesday
The stock market rally was mixed, but with a generally negative bias.
The Dow Jones Industrial Average rose slightly in trading on Wednesday. The S&P 500 index fell 0.5%. The Nasdaq Composite was down 0.7%. Small-cap Russell 2000 rose 0.1%.
Apple stock, a component of the Dow Jones, S&P 500 and Nasdaq, fell 1.4% to 145.31, back below the 200-day mark and hitting a one-month low. Microsoft (MSFT), NVIDIA (NVDA) and Tesla shares were also negative big cap stocks on Wednesday.
The 10-year government bond yield rose 8 basis points to 3.99%, touching 4% at times. February US manufacturing reports came in below expectations and still signaled a slight contraction. But the benchmarks for China’s manufacturing and service sectors skyrocketed.
Copper prices increased by 1.7%.
US crude prices rose 0.8% to $77.69 a barrel.
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Analysis of the market rally
The stock market rally had a mixed Wednesday, completing session lows. But the major indices are struggling at key levels.
The S&P 500 fell further from its 50-day moving average and almost touched its 200-day moving average on Wednesday morning. The Nasdaq fell back below its 200-day moving average, with the 50-day moving average not far below.
The Russell 2000 surged higher for a third straight session despite resistance at the 21-day moving average.
During the day, the laggard Dow Jones hit its worst reading since early November before clinching a gain.
Leading stocks offered cause for hope.
first sun (FSLR) and AxonEnterprise (AXON) with earnings gaps. Freeport-McMoRan (FCX), Wednesday’s IBD stock of the day, signaled a buy signal as a key mine reopened and copper prices rallied.
Most leaders continued to put up or hold. But can this continue if general trends do not improve?
The market rally is under pressure. The major indices can’t afford to lose much more ground. On the upside, the S&P 500 needs to regain its 50-day moving average while the 21-day moving average is a major test for the S&P 500, Nasdaq and Russell 2000.
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What now
Leading stocks have been resilient in the retreat, with more buy signals flashing over the past few days. But if the market continues to struggle, recent buy signals and breakouts would likely turn into fake outs.
Investors should not try to add exposure until the S&P 500 and Nasdaq call back their 21-day moving averages. If you wait and the market improves, some leading stocks will pass you first, but there are plenty of other opportunities.
So look for stocks that are actionable, but also ones that are establishing themselves.
On the other hand, if the market or your individual holdings deteriorate, you’ll want to keep going on the sidelines.
Be prepared, stay engaged and stay flexible.
Read The Big Picture every day to keep up to date with 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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