Dow Jones futures fell modestly overnight, along with S&P 500 futures and Nasdaq futures as Magnificent Seven stocks Tesla (TSLA) and Google-parent Alphabet (GOOGL) fell on earnings.
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Small Caps Stand Out Amid Earnings Wave; GE, HCA Healthcare, Pentair In Buy Zones
The stock market rally had a mixed session Tuesday, with the major indexes edging lower into the close while small caps had another strong session.
Nvidia (NVDA) fell back, stopped at the 21-day line. Fellow Magnificent Seven stocks Microsoft (MSFT), Amazon.com (AMZN) and Meta Platforms (META) rose, but also hit resistance.
GE Aerospace (GE), Spotify (SPOT) Pentair (PNR) and HCA Healthcare (HCA) flashed buy signals Tuesday on earnings.
In addition to Tesla and Google, Dow Jones giant Visa (V), Seagate Technology (STX), Texas Instruments (TXN) and FTAI Aviation (FTAI) also reported late Tuesday. Visa, which has been a laggard, fell further overnight. Seagate, Texas Instruments and FTAI rose, all near 52-week highs.
Nvidia stock is on IBD Leaderboard and the IBD 50. GE stock is on SwingTrader. GE Aerospace was Tuesday’s IBD Stock Of The Day.
The video embedded in the article reviewed Tuesday’s stock market action and analyzed GE Aerospace, Pentair and HCA stock.
Dow Jones Futures Today
Dow Jones futures fell 0.25% vs. fair value, with Visa stock a Dow component. S&P 500 futures sank 0.4% while Nasdaq 100 futures lost 0.6%. Tesla stock and Google are huge S&P 500 members.
The 10-year Treasury yield rose to 4.26%.
Crude oil futures edged higher.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
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Tesla Earnings Miss
Tesla earnings missed views. Revenue climbed slightly vs. a year earlier. However, auto revenue fell nearly 7%, more than expected. That’s despite a whopping $890 million in regulatory credits vs. $442 million in Q1 and $282 million in Q2 2023. Q2 deliveries fell vs. a year earlier. Also, cheap financing, which Tesla has leaned on in recent months, carries a cost.
Elon Musk, who sounded halting on the Tesla earnings conference call, said the team won’t get too much into the product roadmap,” though he said new vehicles will be coming in the first half of 2025.
Tesla, in its earnings statement, said lower-cost models should start production in the first half of 2025, though mass production would presumably come later. The EV giant hasn’t shown images of the upcoming vehicles, let alone a prototype or any sort of specs.
Musk reiterated Monday comments made on social media that he expects the Optimus robot to do be doing “useful” tasks in Tesla factories by late next year. That’s pushing back from prior plans for the end of 2024.
Musk continued to stress the importance of autonomy to Tesla’s future.
He said the robotaxi event will now be held on Oct. 10. Musk had already confirmed that the Aug. 8 date was being pushed back.
Musk said it’s “possible” that unsupervised full-self driving could take place this year and said he would be “shocked” if it doesn’t happen this year. The Tesla CEO has said for almost a decade that full autonomy would likely happen “this year.”
Musk said Tesla may seek supervised FSD approval in China and Europe by year-end.
Tesla Stock Plunges
Tesla stock tumbled 8% in extended trade, signaling a move below its 21-day line. Shares fell 2% to 246.38 in Tuesday’s regular session. After a big run-up, TSLA stock has a 271 handle buy point on a consolidation going back several months to a year.
Google Earnings Beat
Google earnings beat views amid strong online search ad revenue, though YouTube ad revenue missed.
Google Cloud revenue jumped 29%, beating views. The cloud-computing unit is vying with larger rivals Amazon Web Services and Microsoft Azure.
Late Monday, cybersecurity startup Wiz rejected a $23 billion takeover offer from Google, seen as a effort to beef up cloud and security.
On the conference call, Google signaled heavy spending in Q3, which will pressure margins. The internet giant also will invest more on its autonomous driving unit Waymo.
Google stock turned modestly lower overnight on the call. Shares edged up 11 cents to 181.90 on Tuesday, but hit resistance at the 21-day line. Shares rebounded from the 50-day line on Monday. It was GOOGL stock’s first 50-day/10-week test since the earnings gap breakout in late April.
Other Tech Titans
Microsoft stock lost a fraction in the wake of Google’s results. Like Google, the Dow tech titan rebounded Monday from its 50-day line. On Tuesday, MSFT inched up 0.4%, but hit resistance at its 21-day.
Amazon stock edged lower late. Shares rose 2.1% on Tuesday to 186.41, stalling at the 50-day line but below a still-valid 191.70 buy point.
Meta stock fell slightly in extended trade. Shares ticked up 0.3% on Tuesday, hitting 50-day line resistance as it continues to recover from a tumble from record highs.
Microsoft, Amazon and Meta earnings are due next week.
Nvidia stock fell 1.5% late. Shares dipped 0.8% to 122.59 on Tuesday, hitting 21-day line resistance. NVDA stock is above its 50-day line.
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Stock Market Rally
The stock market rally showed mixed action Tuesday, though market breadth was modestly positive.
The Dow Jones Industrial Average dipped 0.1% in Tuesday’s stock market trading. The S&P 500 index fell 0.2%. The Nasdaq composite lost less than 0.1%.
The small-cap Russell 2000 jumped 1%.
U.S. crude oil prices fell 1.8% to $76.96 a barrel, tumbling 7.1% in the last four sessions.
The 10-year Treasury yield dipped 2 basis points to 4.24%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.4%. The iShares Expanded Tech-Software Sector ETF (IGV) edged up 0.2%. The VanEck Vectors Semiconductor ETF (SMH) fell 1.1%. Nvidia stock is by far the biggest component in SMH.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) inched up 0.2% while ARK Genomics ETF (ARKG) gained 2.1%. Tesla stock is the top holding across Ark Invest’s ETFs.
SPDR S&P Metals & Mining ETF (XME) climbed 0.7%. SPDR S&P Homebuilders ETF (XHB) advanced 0.4%. The Energy Select SPDR ETF (XLE) retreated 1.6%.
The Health Care Select Sector SPDR Fund (XLV) lost a fraction, with HCA stock a member. The Industrial Select Sector SPDR Fund (XLI) fell 0.2%, with GE stock the No. 1 holding.
The Financial Select SPDR ETF (XLF) edged up 0.2%, with Visa a major member. The SPDR S&P Regional Banking ETF (KRE) rose 1.6%.
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What To Do Now
The market rally is still acting well. It’s unclear if megacap techs such as Nvidia and Microsoft will rev higher or take a longer, well-deserved break. In the meantime, many stocks in the housing, financial and industrial sectors, and others, are showing strength.
Investors should have decent-to-heavy exposure, depending on what you’re holding. If you were quick to react to the market rotation out of big techs, you might be heavily invested. Others may have pared back losers without making many new buys.
The next two weeks of earnings and Fed-related news mean investors need to pay close attention. Be ready to act by keeping your watchlists and exit plans up to date.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
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