Dow Jones futures were little changed after hours, as were S&P 500 and Nasdaq futures after a bad day of stock market gains. IPO kava group (Cava), d local (DLOs) and backed by Warren Buffett New Holdings (Nu) earnings rebounded late.
X
Major indexes fell sharply on Tuesday after weak Chinese economic data, warnings from the banking sector and higher US Treasury yields. The S&P 500 Index fell just below the 50-day line for the first time in months, and the Nasdaq Index fell below its key level.
Nvidia (NVDA), but extended its big rally on Monday to finish higher. Parent company of Google alphabet (Google) and Amazon.com (AMZN) fell on Tuesday, but is still in buy territory. meta platform (meta) finding important support. Three other “Magnificent Seven” stocks — apple (AAPL), microsoft (MSFTMore) and Tesla (TSLA) — well below the 50-day line. Late Monday, Tesla unveiled Model S and Model X models that are much cheaper and have shorter range.
Nvidia and META stocks are on IBD Leaderboard, has CAVA stock on its leaderboard watchlist. Microsoft stock is included in his IBD long-term leader stocks.Metaplatform and Google stock IBD Big Cap 20.
Video embedded in this article reviews Nvidia stocks and new SwingTrader stocks Oracle (ORCL) and On hold (Onon).
IPO earnings
Mediterranean-style restaurant chain Cava has reported earnings for the first time since its June IPO, with sales soaring 62.5% and topping the list for most views.
CAVA shares rose sharply in late trading. Shares fell 3% to 46.40 in regular trading on Tuesday. CAVA shares initially cleared the IPO benchmark buy point of 47.89 on July 12 and then climbed to 58.10 before reversing that gain.
DLO shares soared more than 30% overnight after reporting better-than-expected second-quarter results. The Uruguay-based payments company has also appointed Pedro Arndt as co-CEO.Arndt resigns as CFO of Latin American e-commerce and payments giant Mercado Libre (Meri) last week. DLocal, which went public in June 2021, surged 13% to 15.50 on Tuesday, regaining its long-lost 200-day line.
Nu Holdings posted a strong after-hours rally following a strong second quarter, and a near-probable breakout. Brazilian payments IPOs for the second half of 2021 fell 0.4% to 7.91 on Tuesday. The buy point on a flat basis for NU stock is 8.29 with support on the 10-week line.
the goal (target), TJX Co., Ltd. (TJXMore), the Chilean parent blinker international (eat) reported early Wednesday morning with Chinese internet giants JD.com (JD) and Tencent Holdings (chehi). TJX shares are trading solid just above the 5% buy zone, but other stocks need a repair.
dow jones futures today
Dow Jones futures changed little compared to fair value. S&P 500 futures were up 0.1% and Nasdaq 100 futures were up 0.15%.
Note that overnight trading such as Dow Futures does not necessarily translate into actual trading in the next regular stock market.
IBD experts analyze hot stocks during the stock market rally on IBD Live.
stock market rise
The stock market rally faced multiple headwinds. China released a number of weak economic reports for July, but the People’s Bank of China unexpectedly cut some rates. Fitch said it could downgrade dozens of U.S. banks. US economic data was mixed, with strong retail sales but weak manufacturing and housing data.
The Dow Jones Industrial Average fell 1% in stock market trading on Tuesday, closing below the 21-day line for the first time since July 7. The S&P 500 index fell 1.2%, breaking below the 50-day line for the first time since March 29. The Nasdaq Composite Index fell 1.1%, below its 50-day level. The small-cap Russell 2000 fell 1.3%, falling below 50 days for the first time in more than two months.
US oil prices fell 1.8% to $80.99 a barrel. Copper futures fell 1.7%, falling in eight of the last 11 trades. The woes in the Chinese economy, especially in the real estate sector, are weighing on industrial goods.
The 10-year Treasury yield rose four basis points to 4.22%, a new high for 2023, after surging to 4.27% on Tuesday morning. That’s just below the 15-year high of 4.33% set in October last year.
ETFs
Among Growth ETFs, Innovator IBD 50 ETF (FFTY) fell 0.8%. iShares Augmented Technology Software Sector ETF (IGV) fell 0.9% in Microsoft shares and key members of ORCL. VanEck Vectors Semiconductor ETF (SMH) fell 1.2%, despite gains in the top NVDA holdings.
A stock that reflects a more speculative story, the ARK Innovation ETF (Arkuk) gave up 1.75% and the ARK Genomics ETF (Argu) fell 0.75%. Tesla shares are the number one holding of all Ark Invest ETFs.
SPDR S&P Metals & Mining ETF (XME) fell 2.4%. US Global Jets ETF (Jets) fell 2.2%. SPDR S&P Homebuilders ETF (XHB) just dropped 0.3%. Energy Select SPDR ETF (XLE) lost 2.1% and the Healthcare Select Sector SPDR Fund (XLV) fell 0.4%.
Industrial Select Sector SPDR Fund (XLI) dropped 1.3%, testing the 10-week line.
Financial Select SPDR ETF (XLF) fell 1.8%. SPDR S&P Regional Banking ETF (KRE) fell 3.3%. Both are falling towards the 50-day line.
Top 5 Chinese stocks to watch right now
Magnificent Seven Stock
Of the seven brands in the Magnificent Seven, only Nvidia lives up to its name.
NVIDIA shares performed well on Tuesday, rising 0.4% to 439.40, but closed at an intraday high of 452.68. This was followed by a strong rebound of 7.1% on Monday to regain the 50-day line. Wall Street analysts are battling it out to be the leader in AI chips.
NVDA shares offered aggressive entries above the 21st line and the short-term trendline on Tuesday morning, but closed below those levels. Investors may use Tuesday’s high as a concrete entry.
However, NVIDIA’s earnings release is on August 23rd.
Google shares fell 1.2% to 129.78, but remained within the buy point range of 127.10 for the Cup With Handle. Reflecting the recent outperformance of the S&P 500, the relative strength line has strengthened despite GOOGL shares holding steady over the past few weeks.
AMZN shares fell 2.1% to 137.67 on Tuesday, but remain range bound after the earnings gap increase on Aug. 4. Amazon stock has not extended beyond the 50-day line, but it is sensible above 136.65, which could be seen as a handle entry into a long and deep price consolidation. Investors may use Tuesday’s high of 141.28 as a new trigger point.
META shares fell 1.4% to 301.95, with support at the 10-week line but just below the 21-day line. This is the third 10-week line test since the breakout in March, so a rebound in the 10-week line is not a buy signal. Investors may buy the meta once it crosses the 21-day line and breaks out of a short downtrend, but ideally it would be to build a solid foundation.
Meanwhile, Apple shares fell 1.1% and MSFT shares 0.65%, trying to find a footing after falling below the 50-day line after earnings. Tesla shares fell 2.8% to 232.96, the lowest in two months. Shares have fallen since the second-quarter results in late July.
Timing the Market with IBD’s ETF Market Strategy
market rise analysis
The Nasdaq is below the 50-day line, but not definitively below that level. Tuesday was an inside day for the Nasdaq, but not being able to sustain or extend Monday’s rally doesn’t bode well.
To make matters worse, the S&P 500 and Russell 2000 have also fallen below these key levels.
Market widths were decidedly weaker on Tuesday, with the Nasdaq rise and fall lines falling significantly over the past few weeks.
Invesco S&P 500 Equal Weight ETF (RSP) fell 1.3% on Tuesday and fell below the 50-day line after a small drop on Monday, trailing the S&P 500 on both days.
Market rally is still under pressure and trying to hold out. While some stocks such as Nvidia and Oracle have risen and others such as Meta, Google and AMZN have held up, all major stocks have suffered, not just tech stocks. Homebuilders and the housing sector overall are doing well.
There are signs that the market is oversold, suggesting a further rally is possible. However, the market can always be oversold and any rebound could be as short-lived as it was on Monday.
The market’s rally appears to be more reliant on Nvidia as other chip and AI areas struggle. That’s not a very good sign. Nvidia’s earnings report has a lot of potential.
Catch Your Next Big Win With MarketSmith
what to do now
Not many stocks are giving buy signals, but this is probably for the best. Investors should take a defensive mindset, at least on new purchases, until the market shows renewed strength.
Don’t get too excited even on a strong opening or a good day like Monday. In positive scenarios, exposure should be added gradually.
Read “The Big Picture” daily to stay on top of market direction and key stocks and sectors.
Follow Ed Carson on Twitter. @IBD_ECarson Stock market updates and more.
You may also like:
Best growth stocks to buy and watch
IBD Digital: IBD’s Premium Stock Listings, Tools and Analysis Now Available
Tesla vs. BYD: EV giants vie for the throne, but which one is better to buy?
