Dow Jones futures trended higher overnight, along with S&P 500 futures and Nasdaq futures. The stock market rally suffered sharp losses on Tuesday, with the Nasdaq and S&P 500 falling below key levels.
Economic reports revived fears of recession and inflation. A report from intel (INTC) Chip price cuts on PC weakness hit Intel stock and peers modern micro devices (AMD), as well as PC manufacturers and Microsoft (MSFT).
In the meantime, Exxon Mobile (XOM), Apex Pharma (VRTX), Enphase Energy (ENPH), parent of Google alphabet (GOOGL) and Tesla (TSLA) are five stocks to watch, but for different reasons.
XOM stock rose modestly and flirted with buy signals during the day after the diversified energy giant outperformed most oil and gas companies. VRTX stock fell back below a buy point. ENPH stock plummeted in the blink of an eye as solar stocks declined. Google and Tesla stocks fell well below recent buy points.
Google stock is on IBD Long-Term Leaders. Vertex and Enphase stocks are included in the IBD 50 and IBD Big Cap 20. Exxon is Tuesday’s IBD stock of the day.
The video embedded in this article shows stocks from Exxon Mobil, Google and VRTX.
Dow Jones futures today
Dow Jones futures rose 0.1% from fair value. S&P 500 futures were up 0.1%. Nasdaq 100 futures were up 0.1%.
The 10-year government bond yield fell 3 basis points to 3.18%.
Keep in mind that overnight action in Dow futures and elsewhere doesn’t necessarily translate to actual trading in the next regular trading 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 higher, buoyed by China cutting quarantine times for inbound travelers. But the major indices soon faded, led by the Nasdaq.
The Dow Jones Industrial Average fell 1.6% in trading on Tuesday. The S&P 500 Index slipped 2%, with ENPH stock among the worst performers. The Nasdaq Composite lost 3%. Small-cap Russell 2000 is down 1.85%.
Two economic reports went live at 10am ET. The consumer confidence index fell to its lowest level since February 2021 in June, while its expectations indicator touched a nine-year low. An inflation expectation gauge hit a record high dating back to 1987. Meanwhile, the Richmond Fed manufacturing index was much weaker than expected, the latest negative regional factory report ahead of ISM’s US manufacturing index on Friday.
Intel is reportedly cutting processor prices for Alder Lake as PC maker orders come in much weaker than expected. Intel stock fell 2.2%. Archrival AMD’s stock fell 6.2%, its lowest close in a year and just above the intraday low set on June 17. Dell Technologies (DELL) and HP Inc. (HPQ) both lost 2.6%. Windows maker Microsoft slumped 3.2%.
US crude prices rose 2% to $111.76 a barrel. OPEC+ will hold its final meeting starting Wednesday
The 10-year government bond yield rose 1 basis point to 3.21%.
Among the best ETFs, Innovator IBD 50 ETF (FFTY) fell 2%, while Innovator IBD Breakout Opportunities ETF (BOUT) lost 2.1%. The iShares Expanded Tech-Software Sector ETF (IGV) tumbled 3.7%, with Microsoft stock leading the way. The VanEck Vectors Semiconductor ETF (SMH) slipped 2.5%, with Intel and AMD stocking key components.
The SPDR S&P Metals & Mining ETF (XME) and Global X US Infrastructure Development ETF (PAVE) were both down 1.7%. The US Global Jets ETF (JETS) gave up strong opening gains and fell 0.8%. The SPDR S&P Homebuilders ETF (XHB) lost 2.1%. The Energy Select SPDR ETF (XLE) was up 2.7%, with XOM stock a big component. The Financial Select SPDR ETF (XLF) is down 1%. The Health Care Select Sector SPDR Fund (XLV), which includes VRTX shares, fell 1.7%.
ARK Innovation ETF (ARKK) plunged 5.9% and ARK Genomics ETF (ARKG) 5%, reflecting more speculative story stocks. TSLA stock remains a top position among Ark Invest ETFs.
The five best Chinese stocks to watch right now
stocks to look at
Exxon Mobil shares surged as high as 93.24 for the day, trading above the 50-day and 21-day moving averages while breaking a steep downtrend. That offered an aggressive entry. XOM stock pared gains to close 2.8% at 91.50 but held above the 50-day moving average. Exxon stock has held up better than many oil and gas companies trying to recover from their 200-day moving averages. Ideally, however, investors want XOM stock to move sideways and form a new base for a while before attempting to buy in.
Vertex stock fell 3.9% to 276.17, below an early entry of 279.23, after just hitting a record 293.17 on Friday. VRTX stock could still be okay as Tuesday’s pullback comes with smaller volume and after a series of big gains over the past week. But it’s worth watching. The relative strength line for VRTX stock is still near highs.
Enphase stock fell 7.5% to 190.65 and found renewed support around its 21-day moving average. ENPH stock is still in a deep grip within a double bottomed base. Official buy point stands at 217.33 although investors could use a move above Monday’s high of 210.10 as an early entry. But ENPH stocks and other solar stocks are volatile, a trait that’s harder to manage in the current market climate.
China EV giant in the buy zone as it seizes Tesla’s crown
Tesla shares slipped 5% back below its 21-day moving average to 697.99. On Monday, TSLA stock turned slightly lower after encountering resistance at its 10-week moving average. Unlike most megacap stocks, Tesla stock held up above its late May lows in June. Later this week, perhaps on Saturday, Tesla will release second-quarter delivery numbers, which should show a significant decline from the first quarter, reflecting a Shanghai plant closure and a slow recovery.
Tesla has cut hundreds of employees from its Autopilot team as part of sweeping layoffs at the EV giant, Bloomberg reported. CEO Elon Musk, fearing a likely recession, has repeatedly promised full self-driving “this year” for nearly a decade. Tesla’s Full Self-Driving, which costs $12,000, is a Level 2 driver assistance system, a far cry from a Level 5 self-driving system.
Google shares fell 3.3% to 2,240.15, back below its 50-day moving average after clearing that key level on Friday. GOOGL stock also avoided breaching its May lows in the June sell-off.
Analysis of the market rally
Major indices started Tuesday with decent gains but quickly moved lower. The Dow Jones, S&P 500 and Nasdaq Composite all fell below their 21-day moving averages.
The Nasdaq and S&P 500 fell below their next-day lows on Friday. This is a very bearish signal. Research shows that there is a 90% chance that the rally will fail in this case. The rally will not officially end until indices break their recent lows.
The Dow Jones didn’t close below its daily lows, but it’s not far off.
Tuesday saw many ugly reversals and stocks fell back or below key levels.
Many megacaps, not just Tesla stock and Google, have encountered resistance around the 50-day or 10-week moving average, including MSFT stock. Apple (AAPL) and Amazon.com (AMZN). So do the XLV and ARKK ETFs.
Leading stocks were having a bad day, with broad weakness. Pharmaceutical stocks retreated despite being defense growth stocks. Health insurers didn’t lose much ground but gave up some bullish opening gains.
Oil and gas stocks could bounce back, but after recovering from lows late last week, many may need time to recover. XOM stocks are looking better, but even energy stocks can struggle when the broader market sells off.
Time the market with IBD’s ETF market strategy
As the market rally quickly faces selling pressure, investors should not add exposure that may already be small. Instead, they might want to retire some new positions. Many, like VRTX stock, are likely underwater as the Nasdaq is below its FTD low and the S&P 500 is almost there.
Like driving in fog, it’s hard to predict what’s in store for the stock market, but the risks are high.
Keep working on watch lists. Stay engaged and ready to act.
Read The Big Picture every day to keep up 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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