Dow Jones Futures: Business Report Is Big Market Test; Tesla cuts China prices

Dow Jones futures rose slightly on Thursday, along with S&P 500 futures and Nasdaq futures. All eyes are on the December jobs report ahead of the open.


Tesla (TSLA) announced major price cuts in China for the Model 3 and Model Y following demand concerns and increased competition.

World Wrestling Entertainment (WWE) and Aehr Test Systems (AEHR) bounced in extended trading on Thursday Bed Bath & Beyond (BBBY) continued to read breaking news.

Ahead of a big jobs report, the stock market suffered heavy losses Thursday on warmer-than-expected labor data, including jobless claims. Major indices fell back from key levels.

Microsoft (MSFT), meanwhile, extended Wednesday’s big selloff Tesla ( TSLA ) gave up much of the previous day’s jump. In the meantime, UnitedHealth (UNH), Cigna (CI) and other health insurers continued their terrible start to the new year.

The video embedded in this article analyzed and reviewed market activity United Therapeutics (UTHR), Trane Technologies (TT) and CI shares.

Investors should wait until there are clear signs of market strength before adding exposure. Friday’s jobs report could provide a catalyst, but in what way?

Dow Jones Futures today

Dow Jones futures rose 0.3% at fair value. S&P 500 futures rose 0.3%. Nasdaq 100 futures advanced 0.3%.

The jobs report will sway Dow futures, Treasury yields and more before the open, setting the tone for Friday’s trading.

Remember that an overnight move in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.

Job Report

The Labor Department will release its December jobs report at 8:30 a.m. ET.

Economists expect nonfarm payrolls to rise by 200,000, cooling from November’s 263,000. That would be the weakest since December 2020, but still solid. The unemployment rate should remain stable at 3.7%. Average hourly earnings are expected to rise a strong 5% from a year ago, though slightly down from November’s 5.1%.

Friday’s jobs report will follow several hot labor readings this week, from still-high jobs on Wednesday to stronger-than-forecast ADP employment data and a drop in jobless claims on Thursday.

The Federal Reserve wants to see slower hiring and wage growth to ease inflationary pressures. Fed policymakers have also repeatedly expressed concern that a stock and bond market rally could derail their inflation fight, including in Fed minutes of Wednesday’s December meeting.

Markets still expect the Fed to slow rate hikes again at its Feb. 1 policy meeting, just a quarter-point step. But the odds dropped from 69% to 61% on Wednesday.

Tesla price cuts in China

Tesla has announced major price cuts for the Chinese market. Tesla has cut the price of the Model 3 to 229,900 yuan ($33,454), down 13.5% from 265,900 units at the end of October. The new base Model Y price is 259,900 ($37,819), down 10% from 288,900 at the end of October. Both were down about 18% before the cutoff in late October.

Tesla has extended year-end incentives worth 10,000 yuan in early 2023. So the effective discount is not as large as the sticker price suggests. However, this is a huge reduction.

On Jan. 2, Tesla reported record fourth-quarter deliveries, but while inventories rose, views fell sharply. Despite price cuts in October and big end-of-year incentives, Chinese demand lagged.

One factor is increasing incentives. Tesla Model 3 is now closer to the model BYD (BYDDF) stamp starting at 225,800 yuan ($32,857). When the BYD Seal first went on sale, the Chinese price of the Model 3 was about $10,000 more.

How much sales growth will Tesla achieve and how long will it last? How about competitors like BYD? Nio (NIO) and others respond? The Chinese EV market will be fiercely competitive in 2023.

Tesla shares lost 2.9%. That’s after hitting market lows, down 5.1% from Tuesday’s 12% level.

Corporate News

Former WWE CEO Vince McMahon, who retired last year after a sexual harassment scandal, plans to turn around and sell the entertainment company, The Wall Street Journal reported Thursday. McMahon will nominate himself and two others to the WWE board, sources told the WSJ.

Shares of WWE jumped 11% in late trading, rising above the 50-day line and not far from the Nov. 28 peak of 81.63. Shares rose 2.3% to 72.04 on Thursday, up 5.1% for the week as WWE stock retreated from its 50-day line.

Aehr earnings soared 220% compared to a year ago. The chip testing firm’s exposure to the EV market grew 54% to $14.8 million in fiscal Q2. AEHR shares rose 14% overnight. Shares fell 3.55% to 17.27 on Thursday, outperforming even the early entry. AEHR shares are down 14% to start 2023 after a decline in the last five weeks of 2022.

Bed Bath & Beyond plans to file for bankruptcy in the coming weeks, The Wall Street Journal reported Thursday. After the struggling home furnishings retailer issued a warning of “continuing concern” on Thursday. BBBY shares fell 8% overnight after losing 30% in the regular session.

Join IBD’s experts as they analyze the stocks that made the most of the stock rally on IBD Live

Stock Exchange Thursday

The stock market rally closed near session lows, backed off by a drop in jobless claims.

The Dow Jones Industrial Average fell 1% in Thursday’s trading. The S&P 500 index fell 1.2%. The Nasdaq composite lost 1.5%. The small-cap Russell 2000 lost 1.1%.

Microsoft shares fell 3% a day after the Dow Jones tech giant fell 4.4% as UBS raised concerns about the development of Azure cloud computing.

Shares of UnitedHealth, a Dow component like Microsoft, lost 2.9% to their lowest close since June. Shares are down 7.6% to start 2023, crossing the 200-day line. Cigna shares fell 2% on Tuesday after falling below its 50-day line. CI shares are down 8.2% this week.

The price of crude oil in the United States increased by 1.1% to 73.67 dollars per barrel after falling until 2023. Natural gas futures fell 10.8% to a one-year low.

The 10-year Treasury yield increased by 1 basis point to 3.72%. The 10-year yield hit 3.78% on Thursday morning after jobless claims data, but found resistance at the 50-day line. The two-year yield, which is more closely tied to Fed policy, rose 6 basis points to 4.45%. The 3-month Treasury rate rose 11 basis points to 4.62%. A highly inverted yield curve sends a bearish signal.

Tesla Vs. BYD: EV giants vying for the crown, but which one is better to buy?


Among the top ETFs, the Innovator IBD 50 ETF ( FFTY ) was down 0.2%, while the Innovator IBD Breakout Opportunities ETF ( BOUT ) was down 0.15%. The iShares Expanded Tech-Software Sector ETF ( IGV ) fell 3.2%, with MSFT shares as its main holding. VanEck Vectors Semiconductor ETF ( SMH ) lost 1.8%.

The SPDR S&P Metals & Mining ETF ( XME ) rose 0.5%. The US Global Jets ETF (JETS) rose 1.1%. The SPDR S&P Homebuilders ETF (XHB) lost 0.75%. The Energy Select SPDR ETF (XLE) advanced 1.8%, while the Financial Select SPDR ETF (XLF) advanced 0.75%. The Healthcare Select Sector SPDR Fund ( XLV ) fell 1%. The UNH fund is XLV’s largest component, and Cigna is a notable holding.

Reflecting more speculative story stocks, the ARK Innovation ETF ( ARKK ) was down 2.4% and the ARK Genomics ETF ( ARKG ) was down 0.9%. TSLA stock remains the top holding among Ark Invest’s ETFs. Cathie Wood’s Ark has increased its Tesla holdings in the past few months.

Five Best China Stocks to Watch Now

Market rally analysis

After modestly rising to key resistance levels on Wednesday, the major indexes fell back on Thursday.

The Dow Jones, which closed above its 21-day and 50-day moving averages on Wednesday, retreated on Thursday. While the S&P 500 and Russell 2000 retreated from their 21-day lines, the Nasdaq also retreated.

Shares of Microsoft, Tesla and UnitedHealth dragged down the S&P 500, but losses were broad-based. The Invesco S&P 500 Equal Weight ETF ( RSP ) fell 1% after Wednesday’s pullback, falling below the 21-day, 50-day and 200-day lines.

The biotech, industrials, housing, medical products, infrastructure/building products and mining sectors continue to show relative strength, along with some retail and energy names, along with China stocks, which have surged. Many flashed buy signals on Tuesday or Wednesday, but most retreated or turned lower.

A market rally for the major indices continues but has not made much headway. Since the decline from recent highs since mid-December, the major indexes have been resisting the upside, but by no means breaking apart.

Friday’s business report could disrupt this sideways movement, leading to a decisive move above or below key levels. But this can also be temporary.

Market Timing with IBD’s ETF Market Strategy

What to do now

Prepare, prepare… and wait.

If you keep trading the market and look for promising setups, it’s hard not to jump into promising stocks as they flash buy signals. In a sustained market rally, this will often work. But in the current turbulent market environment, this is simply not the case.

It is possible that the December jobs report will lead to a big market rally. This could be a signal to do some buying in individual stocks or sector/market ETFs, but not to increase risk dramatically.

Despite challenging market conditions, many stocks are showing strength. So prepare your watch lists.

Read The Big Picture daily to stay in sync with market direction and leading stocks and sectors.

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


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