Dow Jones futures fell slightly after hours along with S&P 500 futures and Nasdaq futures. Tesla (TSLA) tumbled sharply late Wednesday after steep price cuts led to a sharp drop in earnings, and gross margin and free cash flow far exceeded expectations. He said he hopes to become
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Ram Research (LRCX) and Las Vegas Sands (LVS) was also reported on Wednesday night, showing a slight rise in LRCX and a breakout for LVS stocks. taiwan semiconductor (TSM), Dr. Horton (DHI) and some financials are due early Thursday.
Stock market gains remained ostensibly quiet on Wednesday, with major indices slightly mixed. netflix (NFLX) retreated with disappointing subscriber growth.
Megacap technicians held up well. apple (AAPL) rose 0.7% to 167.63, hitting an eight-month high. Apple stock has cleared his three-week tight entry at 166.94. microsoft (MSFTMore) added a few cents, but it’s still in the buy zone, Google’s parent company alphabet (Google) is slightly lower just below the buy point. Amazon.co.jp (AMZN) rose nearly 2% to a two-month high, but is still below the 200-day line. meta platform (meta) fell 1%, but is still close to an 11-month high.
METAIn Stock IBD leaderboard and swing trader. MSFT shares are long-term leaders in IBD. LRCX inventory is IBD Big Cap 20.
dow jones futures today
Dow Jones futures fell about 0.1% against fair value. S&P 500 futures were down 0.2% and Nasdaq 100 futures were down 0.3%. Tesla stock is a major constituent of the S&P 500 and Nasdaq 100.
Note that overnight trading on Dow futures or elsewhere does not necessarily lead to actual trading on the next regular stock market session.
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Tesla earnings
Tesla’s revenue fell 21% year-over-year, in line with the forecast. Revenue rose 24% to $23.31, just below his $23.73 billion in FactSet views. This was down sequentially from her $24.3 billion in the fourth quarter.
Heavy price cuts boosted demand, but at the expense of profits and margins.
Gross margin declined to 19.3% from 23.8% in the fourth quarter and 29.1% in the same period last year. Automotive gross margin, excluding regulatory credits and leases, plummeted to 18.3% from 23.8% in the fourth quarter.
Tesla said 20% would be the “lower bound” for gross margins on cars excluding credit and leasing.
Free cash flow decreased 80% year-over-year to $441 million, compared to the $3.2 billion forecast. Tesla had negative cash flow, excluding $467 million in automotive regulatory credits.
Continued price cuts may continue to put pressure on gross profit margins.
Tesla made its second U.S. price cut of the month late Tuesday. The Model Y price has been reduced by $3,000 from $46,990. The Model 3’s base price has been slashed by $2,000 to $39,990. Most Model 3 and Y variants qualify for the $7,500 tax credit, but after April 18, the base Model 3 will only get you $3,750.
Tesla also cut prices in Europe and several other major markets in April.
Elon Musk hints at more pain in the margins
During Tesla’s earnings call, Chief Executive Elon Musk said he would emphasize increased production and suggested further price cuts are possible. He said many cars would be better off shipping at a lower profit margin now, perhaps at zero profit, and then higher profit margins when Tesla hits full promotion. Musk said Tesla expects he will achieve fully self-driving cars in 2023. He predicts that fully autonomous driving will be years away.
Musk also said there will be a Cybertruck “delivery event” in the third quarter. It is unknown when the Cybertruck will go into mass production.
Tesla bulls also have high hopes for the company’s energy storage business. Energy Generation and Storage revenues increased 148% in the first quarter to $1.53 billion.
tesla stock
TSLA shares fell 6% in long-term trading. The stock fell 2% on Wednesday to 180.59, below the 50-day moving average. Tesla shares have a buy point of 207.89 from a handle cup base formed just below the 200-day moving average, investors are looking for a definitive break above the 200-day line (currently around 213) You may prefer to use it as his TSLA stock entry. His third buy point for Tesla stock is a strong move above the 50-day line.
Other income
LRCX shares edged higher in late trading. Lam Research’s earnings outperformed guidance in the second quarter of the fiscal year, but the chipgear giant posted a low in the third quarter. Shares fell 0.9% to 491.02 on Wednesday. The flat base buy point for LRCX stock is 548.95.
LVS’s share price climbed solidly above 62 overnight after Las Vegas Sands’ earnings outperformed the view and kicked off the Macau-focused casino results. The stock on Wednesday was 2 cents higher at 59.36. According to MarketSmith’s analysis, the buy point for Las Vegas Sands stock is 60.40 on a cup-with-handle basis.
TSM shares fell 1% to 87.23 on Wednesday ahead of Thursday’s results. The big question is whether Taiwan Semi will cut back on its capital spending plans. TSM stock has a buy point of 99.09 in a potential early entry consolidation but needs to cross the 50-day line.
DHI’s share price fell 0.3% to 101.86 on Wednesday, but is still up nearly 4% this week and remains in the buy zone above the 99.09 cup handle entry. DR Horton’s earnings are expected to fall 52% of his.
stock market rally on wednesday
Stock market rally started low, improved steadily and mixed slightly in major indices
The Dow Jones Industrial Average fell 0.2% in stock market trading on Wednesday. The S&P 500 Index is down less than 1 point. The Nasdaq Composite rose slightly. Small-cap Russell 2000 rose 0.1% on him.
US oil prices fell 2.1% to $79.16 a barrel.
The 10-year Treasury yield rose 3 basis points to 3.6%. UK inflation fell slightly in March, but he remained at 10.1% for views. For sub-10% readings. The market is so close to finalizing his Fed rate hike of 0.5 percentage points on May 3, and it’s entirely possible that another move will happen in late June. This partly reflects the easing of bank concerns.
ETFs
Innovator IBD50ETF (FFTY) fell 1.2% while the Innovator IBD Breakout Opportunities ETF (game) fell 0.7%. iShares Expanded Tech Software Sector ETF (IGV) fell 0.25%, with MSFT shares becoming the leading holding. VanEck Vectors Semiconductor ETF (SMH) gave up nearly 1%. TSM strains and Lam Research are large components of SMH.
Reflecting more speculative story stocks, the ARK Innovation ETF (arc) fell 0.1%, while the ARK Genomics ETF (ARKG) increased by 1.2%. Tesla stock is the top holding across Ark Invest ETFs.
SPDR S&P Metals & Mining ETF (XME) retreated 1.4%, while the Global X US Infrastructure Development ETF (pave) 0.4% immersion. US Global Jets ETF (jet) increased by 1.6%. SPDR S&P Homebuilders ETF (XHB) added 0.3%. Energy Select SPDR ETF (XLE) fell 0.35% while the Health Care Select Sector SPDR Fund (XLV) increased by 0.3%.
Financial Select SPDR ETF (XLF) increased by 0.2%. SPDR S&P Regional Banking ETF (Kure) jumped 3.9% on some solid earnings reports.
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Market rally analysis
Equity market rally remains within recent range but not far from 2023 highs. Major indices continue to trade tight, but are on an ice age uptrend.
Losers slightly outnumbered winners on the NYSE and Nasdaq. Market width has improved over the past two weeks, but not by much. Wednesday’s new highs were just above new lows, but they have lagged across the board, especially on the Nasdaq.
Many growth stocks struggled, hardware tech play bumped into on-demand concerns.technology provider CDW (CDW) warns of slowing IT spending.chip gear giant ASML (ASML) outperformed Q1 views, but cited customer concerns. extreme network (EXTR) plummeted, impacting other networking strategies with analyst downgrades related to IT spending. Storage companies also struggled.
Chip makers are struggling as SMH tests the 50-day line again as ASML weighs heavily on the sector.that is NVIDIA (NVDA) holds up.
Medical products continued to lead on Wednesday. intuitive surgery (ISRG) blown out of the revenue base. edwards life sciences (east and west) break out of the bottomed base, Dexcom (DXCM) also flushed the early entries. But they both have earnings next week.
Homebuilders and related stocks continue to perform well, mostly inside action. DR Horton’s earnings are a must-watch for the sector.
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what to do now
Market gains are flat. There aren’t many stocks flashing buy signals, and some of them quickly go up significantly or even go down. Therefore, investors should be cautious about adding new buys now and be prepared to cut losses.
Earnings season adds uncertainty to markets, various sectors, and individual stocks. Amazon, Google, Microsoft and Meta Platforms will all be reported next week, and Apple the week after that. Hundreds of other companies will report as well.
So be proactive and flexible.
If the market rally accelerates in both the major indices and the leading stocks, the buying opportunities are numerous and likely to take hold. It’s time to pick up the exposure. Now is the time to gear up, build your watchlist and explore setups across sectors.
Read The Big Picture daily to understand the market direction and key stocks and sectors.
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