Dow Jones Futures: Inflation report looms for market rally; Elon Musk sells more Tesla shares

Dow Jones futures rose overnight, along with S&P 500 and Nasdaq futures, with the July CPI inflation report available ahead of Wednesday’s open. Elon Musk sold $2.9 billion worth of Tesla stock on August 5.




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The stock market rally lost ground, pulling back from resistance levels as Micron Technology (MU) triggered a sell-off in chip stocks.

On the upside, some natural gas stocks showed strength, including Range Resources (DRR), EQT Corp. (EQT) and Equine (EQNR), all of which broke downtrends in the handles, flashing potential early entries. However, the RRC stock was the only one moving on an OK volume. LNG (GLNG) broke through some short-term levels, still close to its 50-day line, but profits are expected on Thursday.

Apple (AAPL) and Microsoft shares edged higher on Tuesday.

continued its recent bearish reversal while

Elon Musk sells Tesla shares

You’re here (TSLA) CEO Elon Musk sold 3.3 million shares on Aug. 5 for a value of nearly $2.9 billion, according to SEC filings released late Tuesday.

On Friday, August 5, TSLA stock slipped 6.6% below its 200-day line. On Monday, Tesla stock attempted to reclaim its 200-day line, but pared its intraday gains to just 0.8%. On Tuesday, shares fell 2.4% to 850.

So far, Musk has no clue why he’s selling more Tesla shares. It is possible that the sale of shares aims to raise funds for its 44 billion dollars Twitter (TWTR), which Musk is trying to get out of. It’s also unclear if there will be any additional sales of TSLA stock by Musk in the near future.

Meanwhile, on Tuesday, China Li-Auto (LI) sold hard. Tesla stock slipped 2.4% to 850. Li Auto stock fell 7%, undermining its recent consolidation and approaching 200 days. Li Auto’s earnings are August 15.

Among Li’s Chinese rivals, Nio (NIO) fell 5% on Tuesday, crossing its 50-day line, while the giant BYD (BYDDF) fell 2.5%, starting to live below its 50-day rise.

Key wins

Celsius (CELH) and Exelixis (EXEL) headlined notable post-close earnings, as well as declining growth plays Coinbase (PIECE OF MONEY), Roblox (RBLX) and Commercial counter (TTD).

CELH stock rose slightly overnight after initially falling. Celsius’ triple-digit earnings EPS and sales growth topped second-quarter views. But the gross margins appeared a little light. Celsius stock fell 7.8% on Tuesday to 93.38 as it retreated from the Aug. 2 high of 109.74. A huge three-month run was capped off by jumping in early August over a PepsiCo (PEP) investment and distribution agreement.

EXEL stock edged higher in extended trade after Exelixis earnings beat expectations. Shares fell 2.3% to 21.06 on Tuesday. Exelixis stock works on a messy handle mug base with a buy point of 22.57. Investors could use a descending trendline to find a slightly lower entry.

COIN stock fell sharply overnight, with Coinbase posting lower-than-viewed revenue and a much worse-than-expected loss. The cryptocurrency exchange slipped almost 11% to 87.68 on Tuesday. Coinbase’s stock has doubled since late June, but is well below its April 2021 opening day peak of 429.54.

RBLX shares plunged in prolonged action as Roblox reported a bigger-than-expected loss amid lower revenue. Reservations and user growth also missed out. Shares fell 3.35% to 47.26 on Tuesday. RBLX stock had more than doubled since its low in early May. But shares of the video game platform are well below their November 2021 peak of 141.60.

TTD stock surged as Trade Desk met BPA views but beat earnings views and gave bullish indications. Trade Desk stock fell 0.9% to 54.50 on Tuesday, but rose from a 39-week low of 52 on July 14.

EQNR stock is on the IBD Leaderboard watchlist. RRC stock is on SwingTrader and is today’s IBD stock for Tuesday. Microsoft (MSFT) is a long-term leader in IBD. CELH and Equinor shares are on the IBD 50.

The video embedded in the article covered Tuesday’s market action and analyzed RRC stock, Wholesale Costco (COST) and Hyatt (H).

Dow Jones Futures Today

Dow Jones futures climbed 0.1% relative to fair value. S&P 500 futures tipped higher. Nasdaq 100 futures rose 0.1%.

The Labor Department releases the July CPI inflation report at 8:30 a.m. ET. Inflation data will surely have a big impact on Dow Jones futures and Treasury yields.

Remember that overnight action on futures contracts on Dow Jones and elsewhere does not necessarily translate into actual trading in the next regular trading session.


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Inflation report

Economists expect July’s consumer price index to post a 0.2% increase from June, after peaking 1.3% the previous month. The CPI inflation rate is expected to decline to 8.7% from June’s 40-year high of 9.1%. This reflects lower gasoline prices, which will also provide some relief in August.

But the core CPI, which excludes food and energy, should post a gain of 0.5% after advancing 0.7% in June. Core inflation should rise to 6.1% from 5.9%.

Markets are pricing in a 67.5% chance of another 75 basis point Fed rate hike on Sept. 21, followed by quarter-point moves in November and December.

Stock market rally

The stock market rally lost ground on Tuesday, led by chip stocks.

Micron cautioned against revenue and reducing capital expenditures. It happened a day later Nvidia (NVDA) cut its sales forecast. MU shares fell 3.7% while chip stocks were big losers on Tuesday, especially memory-focused equipment makers such as Lam Search (LRCX).

Apple stock edged up 5 cents to 164.92, continuing to trade tightly above its 200-day line. Apple’s relative strength line is already at a new high. Microsoft rose 0.7% to 282.30, still below its 200-day mark.

The Dow Jones Industrial Average plunged 0.2% in trading on Tuesday. The S&P 500 index lost 0.4%. The Nasdaq composite fell 1.2%. The small-cap Russell 2000 fell 1.3%.

US crude oil prices reversed lower, closing down 0.3% at $90.50 a barrel. Natural gas prices rose 3.2%.

The 10-year Treasury yield rose 3 basis points to 2.8%. The 2-year Treasury yield climbed 5 basis points to 3.27%. The yield curve is inverted from 1 year to 10 years, a warning of recession.

AND F

Among the top ETFs, the Innovator IBD 50 ETF (FFTY) fell 2%, while the Innovator IBD Breakout Opportunities ETF (BOUT) fell 0.4%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 1.5%, with MSFT stock being IGV’s top holding. ETF VanEck Vectors Semiconductor (SMH) fell 4.2%. The MU share is a notable holding of SMH.

Reflecting more speculative stocks, ARK Innovation ETF (ARKK) slipped 5.45% and ARK Genomics ETF (ARKG) 5.4%. Tesla stock remains a major holding in Ark Invest’s ETFs.

The SPDR S&P Metals & Mining ETF (XME) rose 0.8% and the Global X US Infrastructure Development ETF (PAVE) fell 0.5%. The US Global Jets ETF (JETS) fell 1.7%. The SPDR S&P Homebuilders ETF (XHB) fell 3.3%. ETF Energy Select SPDR (XLE) climbed 1.8% and ETF Financial Select SPDR (XLF) 0.5%. The SPDR healthcare sector fund (XLV) fell 0.3%.


Five best Chinese stocks to watch now


Market rally analysis

The stock market rally retreated on Tuesday as major indexes pulled back from various resistance levels.

The Nasdaq, which erased strong morning gains on Monday, led Tuesday’s drop. It has pulled back on a trendline dating back to January, but is still above its early June highs. The Russell 2000, which broke its June highs on Monday, is back in this resistance zone. The S&P 500 and the Dow Jones, which tested those levels on Monday morning, are also falling.

A break in market recovery around current levels could be positive. Many top stocks that ran on the right side of the bases could use grips and a tighter action.

The main indexes could also begin to pull back more markedly. This does not necessarily mean that bear market lows should be reduced. It is also possible for the market to pull back and then drag in a tricky range for a substantial period.

The liquidation in the semi-finals is a bad sign. Chip stocks usually play a large role in any significant market rally. Chips’ recent lead had been encouraging.

On the upside, aerospace/defense, energy and healthcare insurers held up well or continued to grow. Overall, biotechnology fell slightly after strong gains.

Wednesday’s inflation report will provide near-term catalyst, but how stocks open won’t necessarily be how they close.


Time the Market with IBD’s ETF Market Strategy


What to do now

The market rally met with some resistance. It could be temporary or the beginning of a bigger retreat. Either way, investors may want to reduce their exposure and take partial profits. If this is just a pause, new buying opportunities will soon arise.

There are buying opportunities in natural gas plays such as Range Resources. If you’re snacking, that should probably be in the context of not increasing net exposure. And be nimble. Energy prices and market conditions could change quickly.

Keep working on watchlists. This is a confirmed market rally with a number of stocks trying to build up. You want to be ready.

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

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

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