Dow Jones Futures: GOP Set to Win House in Midterms; Elon Musk is selling more Tesla shares

Dow Jones futures were little changed overnight, along with S&P 500 futures and Nasdaq futures. Midterm election results come as Tesla CEO Elon Musk sells more TSLA stock.


The stock market rally on Tuesday morning was boosted by lower Treasury yields and a weaker dollar. Major indices posted strong gains as Bitcoin and other cryptocurrencies fell in the wake of a surprise Binance-FTX takeover deal. But stocks have rallied slightly so far.

Bitcoin related stocks like cryptocurrency exchanges Coinbase (COIN), trading software Robinhood markets (HOOD), the guardian of cryptocurrency Silvergate Capital (SI) and Bitcoin miner Digital Marathon (MARA) has been sold.

Looking ahead, the CPI looms large.

Basic Earnings

Walt Disney (DIS), Occidental Petroleum (OXY), Tesla (TSLA) competitor Lucid Motors (LCID) and Array Technologies (ARRY) reported Tuesday evening.

While Disney+ subscriber growth was strong, Disney shares fell sharply overnight and were shorted, as were earnings. Warren Buffett owns more than 20% of OXY shares Berkshire Hathaway (BRKB), fell to a low on mixed earnings. LCID shares fell amid weak Q3 results and a drop in Lucid Air bookings. ARRY stock was in the gap higher on strong earnings and guidance.

In other news, Meta platforms (META) will begin layoffs Wednesday morning, according to multiple reports.

Tesla shares

Tesla CEO Elon Musk announced on November 4, 7 and 8 that he sold 19.5 million shares for $3.95 billion. That could be to help pay for the latest Twitter deal, though Musk said in early August that stock sales were the last thing he would need until then. .

Musk’s recent stock sale likely contributed to the recent decline in Tesla stock. Concerns about rising Chinese subsidies and Elon Musk’s Twitter reign could also hurt TSLA stock.

Tesla shares fell 2.9% to 191.30 in Tuesday’s session, after settling slightly above May 2021 lows, falling to 186.75 on the day.

Midterm elections

The results of the midterm elections are announced on Tuesday evening. Republicans are a virtual lock to take back the House, but it’s not shaping up to be a massive GOP wave. The Senate is up for grabs, but final results in key races could be days away.

Either way, President Joe Biden and the Democrats will no longer have full control of the White House and Congress. Financial markets do better with a blockade in Washington. Stocks also traditionally do well in the third year of a presidential term.

So a divided Congress could be positive for Wall Street and good news for defense firms, private prisons and drug makers. Then again, the markets may have already priced some in.

Dow Jones Futures today

Dow Jones futures were little changed compared to fair value, with DIS stock pulling in on the blue chips. S&P 500 futures rose 0.1%, while Nasdaq 100 futures rose 0.3%.

Consumer inflation in China rose less than expected. Wholesale prices have fallen.

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

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

Stock market rally

The stock market rallied higher on Tuesday morning, but gave it back in the afternoon as the Bitcoin meltdown spilled over into stocks. The S&P 500 and Nasdaq briefly turned negative before recovering.

The Dow Jones Industrial Average rose 1% in Tuesday’s trading. The S&P 500 index rose 0.6%. The Nasdaq composite advanced 0.5%. The small-cap Russell 2000 posted gains.

Tesla shares were near May 2021 lows during the day.

Shares of Apple and Microsoft rose 0.4%, Google shares rose 0.5% and Amazon fell 0.5%. All are up this week, but after crashing last week.

The yield on the 10-year treasury decreased by 9 basis points to 4.13%.

The US dollar fell significantly for a third day, hitting its lowest level since late September.

The price of crude oil in the United States fell by 3.1% to 88.91 dollars/barrel. Natural gas futures continue their massive daily swings, losing 11.6%.

Bitcoin Dives

Despite the weaker dollar, Bitcoin fell as the world’s No. 1 cryptocurrency exchange Binance agreed to buy liquidity-strapped rival FTX. This is the doubts that the Binance-FTX deal will face the huge withdrawal of FTX over the past few days. Just a few months ago, FTX and its founder Sam Bankman-Fried were seen as potential saviors for other ailing crypto firms.

Bitcoin fell to $17,484.20, its lowest since November 2020, and is currently trading around $18,500. The pioneering digital currency fell below $20,000 on Monday night. Ethereum, Dogecoin and other cryptocurrencies also showed similar or larger losses.

The FTX token crashed by 80% on Tuesday after heavy losses in recent days and weeks.

COIN shares fell 10.8% to a four-month low. Binance’s purchase of FTX could create a major new competitor for Coinbase, while also relieving it of Bitcoin’s problems and worries about cryptocurrency-related businesses.

Bankman-Fried’s HOOD shares fell 19%. MARA shares fell 5.3% to their lowest level since July. After the shutdown, Marathon Digital reported a bigger-than-expected loss, with revenue down 75%.

SI shares fell 23% to their lowest level since December 2020.

Tesla still owns some Bitcoin, while Elon Musk has owned Dogecoin for a while.

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Among the top ETFs, the Innovator IBD 50 ETF ( FFTY ) gained 0.3% and the Innovator IBD Breakout Opportunities ETF ( BOUT ) rose 0.1%. The iShares Expanded Tech-Software Sector ETF ( IGV ) rose 1.3%, with the MSFT fund as the main component. VanEck Vectors Semiconductor ETF (SMH) rose 2.2%.

The SPDR S&P Metals & Mining ETF ( XME ) rose 1.9%. Energy Select SPDR ETF (XLE) rose 0.1%. The Healthcare Select Sector SPDR Fund ( XLV ) rose 0.5%.

Reflecting more speculative story stocks, the ARK Innovation ETF ( ARKK ) fell 0.4% and the ARK Genomics ETF ( ARKG ) rose 1.4%. Tesla shares remain the top holding among Ark Invest’s ETFs.

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Market rally analysis

The stock market rally took a hit last Thursday amid outspoken comments from Fed Chairman Jerome Powell. But even with Bitcoin’s struggles, it has bounced back over the past three sessions.

The Dow Jones cleared last week’s high after retracing its 200-day line on Monday.

The S&P 500 rose slightly above its 50-day line, although it is still below the short-term high of Nov. 1.

The Nasdaq, weighed down by Tesla and tech woes, resisted at its 21-day moving average. It is still below the 50-day and away from the 200-day line.

But the Direxion Nasdaq-100 Equal-Weight ETF ( QQQE ) rose a little more than 1% to break above its 50-day line.

Falling Treasury yields helped lift stocks on Tuesday, with a weaker dollar a key driver over the past three sessions.

Mid-term election results could drive market action, but Thursday’s CPI inflation report could be key. A cautious CPI reading could raise hopes for a slower Fed rate hike and lower peak rate. But another hot inflation number could trigger a heavy selloff in stocks and bonds.

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Leading Stocks

There weren’t many new buying opportunities on Tuesday.

GlobalFoundries (GFS) broke above trendline and very low after gains.

Albemarle (ALB) cleared an early entry, but quickly hit an official buy point and closed just below that key level. However, ALB stock is well above its 50-day line after a big move from its intraday lows on Nov. 3.

Crocs (CROX) briefly withdrew a buy point UnitedHealth (UNH) closed in a buy range.

Several LNG stocks are close to purchase points.

Technical vulnerability is still a concern. Chip stocks are convincingly moving above the 50-day line with the SMH ETF. Megacap technologies like apple ( AAPL ) is trying to bounce back, but after a big selloff. The same goes for cloud software.

Market Timing with IBD’s ETF Market Strategy

What to do now

The stock market rally is showing resilience after last week’s sharp losses, with the Dow Jones and S&P 500 retaking key levels. Investors may still want to be cautious as the CPI inflation report approaches. Also, although many are starting to build, there aren’t many stocks that are currently viable.

Investors should be ready to take action by engaging and building your watchlists. Growth stocks are still generally frowned upon, so be sure to cast a wide net to find stocks and sectors that are emerging leaders.

Be sure to be aware of earnings that remain active. Some stocks made big gains, while others bounced back strongly after initial declines. But there have also been some high-profile sales, as shares of Disney and Lucid showed overnight.

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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