Dow Jones Futures: Apple Leads Market Rally; Tesla China Sales, PayPal Deal, Bitcoin In Focus
Dow Jones futures tilted lower Wednesday morning, along with S&P 500 futures and Nasdaq futures. Tesla China sales jumped in August, PayPal (PYPL) made a “buy now, pay later” deal while Bitcoin and crypto exchange Coinbase remained in focus.
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The stock market rally was mixed Tuesday, though Apple stock, Tesla (TSLA) and some other big-cap leaders fared well. Software and industrial names retreated. Bitcoin and other cryptocurrencies tumbled, though they and Bitcoin-related stocks such as Coinbase (COIN) pared losses somewhat.
Overnight Earnings, Movers
Coupa Software (COUP), Smartsheet (SMAR) and UiPath (PATH) headlined earnings reports after the close.
Coupa easily beat EPS views and guided higher. Smartsheet also topped while guiding fiscal 2022 EPS in line. UiPath topped views and offered in-line to slightly higher guidance. COUP stock initially surged more than 10% overnight, but pared gains early Wednesday to 4.5%. SMAR stock, slightly extended from a buy zone, fell 3% in extended trade. PATH stock tumbled 8% before the open, threatening post-IPO lows.
Meanwhile, Bumble (BMBL) fell 5% in premarket trade. The dating app where women choose the matches will offer 15 million shares on behalf of existing holders. BMBL stock, which came public in February, hit 60.87 intraday Tuesday, briefly clearing a 60.44 bottoming base buy point. But shares reversed to close down 3.6% to 57.77.
Global-e Online (GLBE) will sell 12 million shares on behalf of existing holders. GLBE stock, another 2021 IPO, fell overnight but turned higher before Wednesday’s open. Shares have been on a big run, but have pulled back over the last several sessions.
Apple Stock Leads Big Techs
Apple (AAPL) rose 1.55% to 156.69, hitting a new high. The Dow Jones tech titan said it will hold a product launch event on Sept. 14, with new versions of the iPhone and Apple Watch expected to be unveiled. Meanwhile, Ford (F) hired Doug Field, who had been in charge of the secretive Apple Car project. Field previously was a top Tesla executive and decades ago worked at Ford.
Apple stock is still above a 150.10 buy point, within the 5% chase zone that goes to 157.61, but it’s starting to feel a little extended. On the plus side, the relative strength line for AAPL stock hit a seven-month high. The RS line, the blue line in the charts provided, track a stock’s performance vs. the S&P 500 index.
Netflix (NFLX) popped 2.7% to 606.71, breaking out above a 593.39 buy point from a long consolidation, according to MarketSmith analysis. NFLX stock has risen in 16 of the last 17 sessions.
Amazon.com (AMZN) rose 0.9% to 3,509.29, rebounding from its 50-day and breaking a trend line, both offering early buy signals. The official buy point is 3,773.18 in an eight-week consolidation, but AMZN stock has been moving sideways for at least a year.
PayPal stock advanced 1.4% to 293.26 on Tuesday. PYPL stock rose from its 50-day line and cleared a downward-sloping trend line, offering an early entry. PayPal stock has an official flat-base buy point of 310.26.
On Wednesday, PayPal agreed to acquire Japanese “buy now, pay later” startup Paidy for about $2.7 billion. That follows a $29 billion Square (SQ) deal for Australia’s AfterPay, and Amazon.com (AMZN) teaming up with Affirm (AFRM). PayPal already has an in-house BNPL offering. PYPL stock advanced 1% early Wednesday.
Facebook (FB) climbed 1.6% to 382.18. FB stock reclaimed a 377.65 buy point from a flat base.
Tesla stock rallied 2.6% to 752.92 on Tuesday, still in range from a 730 aggressive entry. The RS line for TSLA stock, though still well off all-time levels, is at a four-month best.
Tesla China Sales
Tesla China sales for August totaled 44,264 in August, according to the China Passenger Car Association, July’s 32,968. August sales included 31,379 exports, mostly to Europe. Local sales totaled 12,885 up substantially from July’s 8,621. Tesla’s decision to make Shanghai its export hub makes it hard to gauge Tesla’s actual demand in China, especially on a month-to-month basis. In September, all or nearly all of Tesla Shanghai production will be for local markets.
Tesla rivals Nio, Li Auto, Xpeng (XPEV) and local giant BYD (BYDDF) all previously reported August sales. All four reported hefty increases vs. a year earlier, but Xpeng and Nio reported declining sales vs. July. Li Auto and especially BYD reported sizeable sequential gains.
Tesla stock rose 1% before the open, near the edge of its buy zone. Nio, which announced plans to sell up to $2 billion in shares at the market, slumped 3%. XPEV stock and Li Auto lost a fraction. BYD stock, which flashed a buy signal Tuesday, was not yet trading.
Bitcoin Tumbles
Bitcoin plunged on Tuesday from nearly $53,000 on Monday to as $42,921.27 before rebounding to trade around $47,000 for much of the day. The Bitcoin price was around $46,600 early Wednesday.
El Salvador, as promised months ago, deemed Bitcoin as legal tender as of Tuesday. The Latin American country also bought some Bitcoin, but there were many protests against the move.
Ethereum, Dogecoin and other alt-coins also sold off hard Tuesday.
Marathon Digital (MARA) lost 9.3% on Tuesday, Riot Blockchain (RIOT) gave up 6.7%. Grayscale Bitcoin Trust (GBTC) skidded 7.2% and Grayscale Ethereum Trust (ETHE) tumbled 13.5%.
COIN stock fell 4.2%. Coinbase fell 3% early Wednesday after disclosing that the SEC plans to sue the cryptocurrency exchange if it goes ahead with its plan to offer an interest-bearing product. The product involves paying customers to let Coinbase lend out their Bitcoin and crypto holdings. Many other crypto exchanges offer similar products, raising questions about whether they’ll pass regulatory muster going forward.
Coinbase CEO Brian Armstrong took aim at the SEC’s “sketchy behavior” in a long Twitter thread overnight.
Apple stock, PayPal and Tesla are on IBD Leaderboard. Tesla stock, Xpeng and PayPal also are on SwingTrader. PYPL stock is on IBD Long-Term Leaders.
The video embedded in this article reviewed Tuesday’s market action and analyzed Apple stock, PayPal and DocuSign (DOCU).
Dow Jones Futures Today
Dow Jones futures fell 0.1% vs. fair value. S&P 500 futures lost 0.1% and Nasdaq 100 futures declined 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 had a mixed session, but weighted to the downside.
The Dow Jones Industrial Average fell 0.8% in Tuesday’s stock market trading. The S&P 500 index dipped 0.3%. The Nasdaq composite edged up 0.1%. The small-cap Russell 2000 declined 0.7%.
The 10-year Treasury yield jumped 5 basis points to 1.37%. Crude oil and copper prices fell modestly.
While Apple, Tesla, Amazon, Netflix and Facebook stock provided some support, most stocks gave up ground.
On the downside, software leaders such as DocuSign and CrowdStrike (CRWD) retreated. DOCU stock fell 6%, more than wiping out Friday’s bullish 5.3% move after earnings. CRWD stock slipped 2.9% after pulling back from record highs after its earnings.
Meanwhile, Dow Jones giants Boeing (BA) and 3M (MMM) weighed on the Dow Jones industrial average. Deere (DE), which closed just above a buy point Friday, slumped 4.5%.
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Top Exchange Traded Funds
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) dipped 0.1% after surging 11.7% over the prior two weeks. The Innovator IBD Breakout Opportunities ETF (BOUT) slumped 1%. The iShares Expanded Tech-Software Sector ETF (IGV) retreated 1.1%. The VanEck Vectors Semiconductor ETF (SMH) edged down 0.2%.
SPDR S&P Metals & Mining ETF (XME) rose 0.2% and Global X U.S. Infrastructure Development ETF (PAVE) sank 1.3%. U.S. Global Jets ETF (JETS) ascended 0.3%. SPDR S&P Homebuilders ETF (XHB) fell 1.6%. The Energy Select SPDR ETF (XLE) pulled back 0.6%. The Financial Select SPDR ETF (XLF) also declined 0.6%, even with Treasury yields rising.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) dipped 0.3% and ARK Genomics ETF (ARKG) fell 1.6%. Tesla stock is the No. 1 holding across ARK Invest ETFs. COIN stock and PATH stock also have become notable ARK holdings.
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Market Rally Analysis
The stock market rally had a mixed session. The Nasdaq hit a fresh high, while the S&P 500 is just below all-time levels. The Dow Jones fell to just above its 50-day line, but isn’t far from new highs either.
The small-cap Russell 2000 dipped but is pausing after comfortably clearing its 50-day line in recent days. Overall breadth has still improved in the market rally over the past couple of weeks.
Big techs are doing well. Tesla stock headlines an uptrend in EV plays, which also include China’s BYD and Xpeng, as well as various battery and lithium plays. Shipping stocks are doing well. Some hot IPO stocks have kept running.
But market leadership remains relatively narrow. Some software names are giving headfakes and have been over the past couple of months. Industrials are slumping. Retail and apparel names are looking weaker. Housing stocks aren’t broken, but they aren’t working either. Financials are holding their own, but not moving a lot in the past several sessions. Energy stocks are pulling back after some bullish moves.
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What To Do Now
The stock market rally remains healthy. Some early buying opportunities, such as BYD, PayPal and Amazon stock, cropped up on Tuesday.
If you’ve got some big recent winners, especially from the clutch of IPOs sprinting higher, you might consider taking partial profits if they become significantly extended from short-term moving averages.
But selling winning stocks, especially on the way up, is definitely an art. Taking partial profits can be smart portfolio management, locking in some gains and freeing up capital for new buys. But if you have true conviction in a company or stock, you might look for ways to carefully add to a position along the way. That can deliver knockout winners that make a year.
Ultimately, you have to adopt sell rules that work for you.
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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