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Dow Jones Futures Fall: JPMorgan Earnings, UnitedHealth Top; Tesla cuts prices in the US and Europe

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Dow Jones futures fell on Friday, along with S&P 500 and Nasdaq futures. Tesla cut prices in the US and Europe, following big cuts in China and key Asian markets last week, sending TSLA shares down sharply. Earnings from JPMorgan, Bank of America, Delta Air Lines and UnitedHealth topped pre-opening previews. But these stocks were generally lower.




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The stock market rally gained more ground on Thursday, although the S&P 500 found resistance in a critical area.

The long-awaited CPI inflation report showed the easing of price pressures largely in line with expectations, although services price gains were a mixed picture. Still, the trend of decelerating inflation is expected to continue for several months, raising hopes that the Federal Reserve will soon end interest rate hikes.

Investors should look to add exposure carefully. This market is prone to pullbacks and you could be due for one. Meanwhile, many major stocks are now extended from at least early buy points. Exxon Mobil (XOM) and Celsius properties (CELH) are still actionable.

XOM and Celsius shares are on the IBD 50. CELH shares are on SwingTrader and on the IBD Leaderboard watchlist.

Tesla price cuts

Tesla has drastically cut prices in the United States, making more of its models eligible for tax credits of up to $7,500. Model 3 prices in the US have been reduced from 6% to 14%, depending on the trim. The base model Range Standard Range RWD has been reduced by $3,000 to $43,990, which means it would be $36,240 after IRA tax credits. The Performance version was cut from $9,000 to $53,990, coming under the $55,000 threshold for tax credits. The base Model Y was reduced by $13,000, or nearly 20%, to $52,990. The Performance variant was reduced to $56,990, also down from $13,000.

Meanwhile, Tesla has cut Model 3 and Y prices in at least Austria, France, Germany, the Netherlands, Norway, Switzerland and the UK.

The price cuts are expected to significantly boost sales in the US and boost Europe, where backlogs have been falling significantly. But they also raise concerns about Tesla’s prized profit margins.

On Jan. 6, Tesla significantly cut prices in China for the second time in less than three months, as inventories surged despite big holiday incentives and the temporary halt to production at the Shanghai factory.

Tesla shares are down more than 5% in premarket trading. General Motors (GM), ford (F), rivian (RIVN) and Lucid (LCID) fell 3% to 4% as Tesla’s price cuts could hurt its demand and prices for EVs and other vehicles.

main earnings

UnitedHealth (UNH) topped fourth-quarter views on Friday. UNH shares fell early on Friday. Stocks are down in 2023 along with other health insurers, although they rose on Thursday.

Delta Airlines (DAL) also beat fourth-quarter estimates and reiterated recent bullish guidance for 2023. But stocks were down solidly ahead of the open. DAL shares soared in 2023 as the airline group added to gains on Thursday on upbeat preliminary revenue of american airlines (AAL). Delta is well extended from the first few innings and is working on the right side of a long, deep base.

JPMorgan Chase (JPM) and Bank of America (BAC) led fourth-quarter previews, while Wells Fargo (WFC) had mixed results. Citigroup (C) is also on tap.

JPM shares fell modestly while BofA fell. Wells Fargo shares also fell. JPMorgan shares closed Thursday in a buy zone after a traditional breakout. Bank of America and Citigroup stocks are close to early entries into bottom bases. The WFC stock has more work to do.

Dow Jones Futures Today

Dow Jones futures are down 0.6% from fair value. JPM stock and UnitedHealth are components of the Dow Jones. S&P 500 futures fell 0.65%. Nasdaq 100 futures fell 0.7%. Tesla shares are weighing on the S&P 500 and Nasdaq futures.

Crude oil futures rose 1%.

The 10-year Treasury yield rose 2 basis points to 3.47%.

Keep in mind that overnight action in Dow futures and elsewhere does not necessarily translate to actual trading in the next regular stock market session.


Join the IBD experts as they analyze actionable stocks in the stock market rally on IBD Live


stock market rally

The stock market rally faltered on Thursday, with volatile premarket swings continuing into the morning. But as the session progressed, the major indexes calmed down and rallied before weakening slightly during the day.

The Dow Jones Industrial Average advanced 0.6% in stock market trade on Thursday. The S&P 500 index rose 0.3%. The Nasdaq composite rose 0.6%. The small-cap Russell 2000 jumped 1.7%.

US crude oil prices rose 1.3% to $78.39 a barrel, up 7.6% over the past six sessions.

Copper was up 0.8% on Thursday, rising 11.9% over the past six trading sessions.

The 10-year Treasury yield fell 11 basis points to 3.45%, close to recent lows. The two-year Treasury yield, which is more closely linked to Fed policy, hit a three-month low. Markets almost fully priced in a quarter-point rise in rates on Feb. 1, which would be down from the 50 basis points and 75 basis points at the previous two meetings. Investors are also strongly expecting another quarter-point rise in March to a range of 4.75% to 5%. At the moment, the markets are betting that this is the end.


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ETFs

Among growth ETFs, the Innovator IBD 50 ETF (FFTY) and the Innovator IBD Breakout Opportunities ETF (BOUT) were up 0.7%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 0.8%. The VanEck Vectors Semiconductor ETF (SMH) was up 1.5%.

The SPDR S&P Metals & Mining ETF (XME) jumped 2% and the Global X US Infrastructure Development ETF (PAVE) rose 0.8%. The US Global Jets ETF (JETS) was up 4.6%, with DAL shares and American Air the top holdings. The SPDR S&P Homebuilders ETF (XHB) was up 0.3%. The Energy Select SPDR ETF (XLE) advanced 1.9%. The Financial Select SPDR ETF (XLF) was up 0.2%, with JPMorgan, Wells Fargo, Citigroup and BAC stocking all major components. Health Care Select Sector SPDR Fund (XLV) was down 0.3%, with UNH shares the main share.

Reflecting stocks from more speculative stories, the ARK Innovation ETF (ARKK) was up 2.1% and the ARK Genomics ETF (ARKG) was up 3.45%. TSLA shares are a key holding in Ark Invest’s ETFs. Cathie Wood’s Ark has been carrying Tesla stock over the past few days and weeks.


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Market Rally Analysis

After swinging through the morning, the major indices finally rallied modestly, while small caps jumped.

The S&P 500 hit its 200-day moving average, closing just below that key level. The Nasdaq held support at its 50-day line and moved slightly higher from that area.

The Dow Jones and Russell 2000, above all of their moving averages, are working towards their December highs.

Overall, the market’s rally has taken big steps over the past five sessions. Investors see light at the end of the tunnel for Fed rate hikes.

Still, the major indices face further tests. The S&P 500 needs to decisively overcome the 200-day line, where it hit resistance multiple times. The December highs are the ultimate test for the indices. But after running for several sessions, with major indices around key levels, a break or pullback would not come as a surprise.

Major stocks are showing better action, but many are now extended, at least from the early entries or moving averages.

Exxon Mobil shares rose 1.7% to 113.22, just below a flat base buy point of 114.76, according to MarketSmith analysis. But XOM’s stock is in the range of the 50-day line. Shares in Celsius fell 0.2% to 106.40 but found support at the 21-day line. CELH shares are still actionable from Wednesday’s bounce, rebounding from the 50-day line and breaking a short trendline.

In a positive sign for the broader market rally, the chip sector has regained momentum, with the SMF ETF moving decisively above its 200-day line this week. Taiwan semiconductor (TSM), the largest holding in SMH, has topped its 200-day earnings line. This is despite revenue falling short and TSMC also being down in Q1. But few chip names, even those that are clearly market leaders, are actionable right now.


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What to do now

The stock market rally saw a strong stretch, moving above some key resistance areas and with the CPI inflation report out of the way.

Investors can add exposure gradually if conditions continue to improve. Major indices, sectors and leading stocks have tended to see big pullbacks just as they appear to be gaining momentum. And the market recovery is gaining momentum.

Earnings season can bring down the market rally or bring down specific sectors or stocks.

Investors who have been on the sidelines in recent days may feel that great opportunities have passed them by. It’s true that some stocks may be out of reach right now. But don’t chase extended names. Wait to see if they stop, back off, or set up new ground. Meanwhile, other actions will surface.

If this market rally has real legs, there are plenty of chances. If he stops quickly again, you’ll be glad you didn’t invest too much.

But it’s crucial to have your watchlists up to date. Cast a wide net to find stocks that are establishing themselves in different sectors. Then focus on actions that are “done” or almost done.

Read The Big Picture every day to stay in sync with market direction and key stocks and sectors.

Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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