Dow Jones futures fell sharply Friday morning along with S&P 500 futures and Nasdaq futures as the post-Fed sell-off continues. The stock market closed lower on Thursday and robust growth leaders were sold off as government bond yields surged.
Tesla (TSLA), Celsius Holdings (CELH), shock wave medicine (SWAV), Enphase Energy (ENPH) and About semiconductors (ON) are five holdout stocks that are under severe pressure right now.
These stocks haven’t collapsed yet. It’s possible that the recent action will lead to bullish market shakeouts and tests of key support. But anyone who bought those names in the previous sessions is sitting on hefty losses with the risk that those holdouts will collapse in the coming days.
CELH stock and Shockwave Medical are on the IBD Leaderboard watch list. Tesla stock, Celsius, Shockwave, Enphase Energy are all on the IBD 50. ENPH stock and Onsemi are on the IBD Big Cap 20.
FedEx (FDX) released official first-quarter results during Thursday’s session after releasing disastrous preliminary numbers last week and pulling the forecast amid global economic weakness. On Thursday, FedEx announced higher package rates and cost-cutting measures to save $2.2 billion to $2.27 billion in fiscal 2023. The shipping giant stood by its EPS and revenue targets for fiscal 2025.
FDX stock rallied, rising 0.8% to 154.41 on Thursday after hitting a fresh two-year low during the day.
Costco Wholesale (COST) reported gains late Thursday.
Costco earnings and sales narrowly beat guidance for the fiscal fourth quarter. The storage giant said there are currently no plans to increase membership fees, despite some speculation an announcement could come on Thursday. Most of Costco’s profit comes from membership dues.
COST stock fell slightly early Friday. Shares fell 1.2% to 487.17 on Thursday, hitting a two-month low.
Dow Jones futures today
Dow Jones futures fell 1.1% from fair value. S&P 500 futures fell 1.15% and Nasdaq 100 futures fell 1.3%.
The 10-year government bond yield rose 6 basis points to 3.77%.
Crude oil futures fell almost 3%. Copper futures fell 4%.
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 Thursday
The stock market fell sharply for the day, led by techs and small caps, as government bond yields moved higher. The Dow Jones turned positive in the afternoon but faded back to the close.
The Dow Jones Industrial Average slipped 0.4% in trading on Thursday. The S&P 500 Index lost 0.85%. The Nasdaq Composite fell 1.4%. Small-cap Russell 2000 slipped 2.3%.
US crude prices edged up 0.7% to $83.49 a barrel, well below morning highs. US natural gas prices fell 8.9% to a two-month low.
The 10-year government bond yield rose 20 basis points to 3.71%, the highest since February 2011.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) slipped a little over 3%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 1.5%. The VanEck Vectors Semiconductor ETF (SMH) lost 2.8%.
The SPDR S&P Metals & Mining ETF (XME) is down 0.4%. The SPDR S&P Homebuilders ETF (XHB) lost 2.1%. The Energy Select SPDR ETF (XLE) lost 0.4%. The Health Care Select Sector SPDR Fund (XLV) rose 0.5%.
ARK Innovation ETF (ARKK) slumped 4.3% and ARK Genomics ETF (ARKG) 2.8%, reflecting more speculative story stocks. Tesla stock is a key position in Ark Invest’s ETFs.
The five best Chinese stocks to watch right now
Celsius shares fell 8.5% to 89.90 on Thursday, breaking through its 50-day moving average for the first time in three months and undercutting the lows of its recent consolidation. That was after CELH stock fell 3.9% on Wednesday. After tripling, the energy drinks leader can take a breather from the beginning of May to the end of August. In a few weeks, CELH stock could have a new base with a buy point of 118.29.
Its line of relative strength is just below record highs. The risk is that this relative winner becomes an outright loser.
SWAV shares tumbled 9.1% to 258.84 on Thursday, hitting its 50-day moving average. On Wednesday, shares of the medical device company fell 1.85% after turning down from an intraday high of 300.96. Perhaps Shockwave stock can find support here and stage a bullish recovery.
Enphase stock fell 6.9% to 283.63, breaching its 21-day moving average and testing its 10-week moving average for the first time since July. Shares fell just 15 cents on Wednesday after hitting 318.49 for the day. This could be a place for Enphase stock to find a foothold. The RS line for Enphase stock has just dropped after weeks of making new highs.
On Semiconductor’s stock fell nearly 5% to 64.96, breaking through its 50-day moving average for the first time in two months and just undercut recent lows. For the day on Wednesday, ON stock rose to 71.77, briefly flashing various buy signals before reversing lower and shedding 0.2%.
Tesla shares fell 4.1% to 288.59, below its 200-day moving average and finding support at its 50-day moving average. Shares were down 2.6% on Wednesday, falling from 313.80 on the day. This could be a healthy market shakeout, assuming TSLA stock can hold up at current levels. At Friday’s close, the recent short consolidation will provide a reasonable basis within a much larger pattern. The buy point would be 314.74 but on a weekly chart there will be a handle with a slightly lower entry at 313.90.
Meanwhile Tesla appears Having demand problems in China, partly due to increased production in Shanghai. With BYD Seal shipments lasting just a few weeks and the Nio ET5 launching on September 30, the Chinese EV market needs to be closely watched for TSLA stock investors.
Tesla vs BYD: Which EV Giant is the Better Buy?
Stock market analysis
The stock market correction continues to worsen, with major indices nearing their June lows and definitely losing touch with their 50-day moving averages.
Could the stock market take a plunge? Secure.
Government bond yields may need to cool down a bit for equities to recover. It wouldn’t be surprising if yields paused or even declined over a few days or even weeks. But the underlying forces driving government bond yields higher remain.
The Fed is aggressively raising rates, and it will continue to hike rates and keep them high even as policymakers send stronger signals that the US risks a full-blown recession in 2023.
It’s just a tough environment for stocks. If inflation starts to cool off quickly, markets may start to scale back rate hike forecasts. But that will take weeks. And inflation could cool as the economy continues to weaken.
Time the market with IBD’s ETF market strategy
The stock market correction is getting worse. There is a very real risk of major indices making new lows. Holdout stocks like Shockwave, Celsius, Tesla, and Enphase are coming under increasing pressure.
Investors shouldn’t get excited by a strong market open, an intraday rally, or even a day or two of solid gains. That can be tricky, as some of the stocks mentioned in this article are likely to make big moves as the market recovers.
Still, investors should wait for real signs of market strength via a follow-through day. Even then, there are good reasons to be cautious.
Keep working on watch lists. Focus on relative strength even when the charts look damaged.
Eli Lilli (LLY) and other drugmakers are showing some strength along with some biotechs.
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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