Dow Jones Futures: Tesla Rises Over Elon Musk, Chevron Prepares $75 Billion Buyback; Market Rally Shows This Bullish Trait Again


Dow Jones futures rose slightly after hours, along with S&P 500 futures and Nasdaq futures. Tesla ( TSLA ) rallied late as Elon Musk edged higher after mixed Q4 earnings. Service now (NOW) and Lam Research (LRCX) also reported after the close. Dow Jones giant Chevron (CVX) CVX shares have announced a mammoth buyback with a possible buy signal.




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United Leases (URI), Steel dynamics (STLD) and IBM (IBM) also reported Teradyne (TER) tonight too.

The stock market rally stumbled as of Wednesday morning Microsoft (MSFT) and Boeing (BA) was among the early losers on earnings. The major indexes tested or broke lower, but for the fourth session in a row, they hit intraday highs or recently closed at lows. The main reason: Boeing rose slightly and MSFT shares pared losses.

URI stock is on the IBD Leaderboard watch list. United Rentals, Lam Research and STLD stocks are in the IBD Big Cap 20.

Dow Jones Futures today

Dow Jones futures rose 0.1% at fair value, with CVX shares and IBM both blue chips. S&P 500 futures rose 0.15%, while Nasdaq 100 futures rose 0.3%. Tesla stock, LRCX, NOW and STLD stocks are strong on the S&P 500 and Nasdaq 100.

Investors will get their first reading on fourth-quarter economic growth early Thursday. The GDP report will also include the quarterly PCE price index, which provides a strong signal for the December PCE inflation reading on Friday morning. Durable goods orders, new home sales and jobless claims are also in focus on Thursday.

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

Tesla earnings

Tesla earnings slightly beat analyst estimates, which have fallen significantly over the past few weeks. Revenue just missed, according to FactSet. Tesla made $324 million in revenue without self-driving.

Auto gross margin fell to 25.9% from 27.9% in the third quarter and 30.6% a year ago. This was below consensus. Gross margins are expected to fall significantly in 2023 after sharp worldwide price cuts earlier this month.

CEO Elon Musk was bullish on the conference call. He said that after the price cuts, the orders were double the production. But the question is how strong the demand will be in the coming weeks and months. Musk said two million deliveries are on target for 2023.

Tesla produced 1,369,611 EVs in 2022, with 1,313,851 EVs produced. In the last three quarters, the product has exceeded shipments by an increasing amount.

Tesla said the Cybertruck will go into production later this year. It said it will reveal more details about an upcoming car at its March 1 investor day. It could be a smaller, cheaper EV or an updated Model 3 with lower production costs.

On Tuesday, Tesla said it would invest $3.6 billion in a Nevada gigafactory to mass-produce Semi cars and 4,680 batteries. But much of the announcement reflected key features of Tesla’s unfulfilled plans from 2014.

TSLA shares rose nearly 6% in extended trading. Shares rose 0.4% to 144.43 in Wednesday’s regular session, hitting the 50-day/10-week line after rebounding from bear market lows on Jan. 6.


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Chevron stock buyback

The Dow Jones energy giant said Tuesday it will buy back $75 billion in Chevron CVX shares. This is 20% of the shares in circulation. Chevron will increase its quarterly dividend by 6% to $1.51 per share.

The oil major will announce its earnings on Thursday.

Shares of CVX rallied more than 2% to above 183 and bounced back from the 50-day line. Shares have a buy point of 189.78 from a shallow cup base. But investors can use a move above Monday’s high of 182.55 as an entry.

Other Major Earnings

ServiceNow earnings were flat while revenue adjusted. The business software giant also gave high-level guidance on subscription revenue. NOW shares fell slightly after hours after paring initial losses. Shares rose 1.2% to 448.77 on Wednesday after dipping below their 200-day line during the day.

Lam Research company’s revenue exceeded quarterly forecasts. LRCX shares fell modestly in the long run. Shares closed up 0.2% at 448.40 on Wednesday. The Lam Research fund works on a bottom base with most of the 50-day and 200-day lines. A buy point is 504.65, but a move above Monday’s high would suggest a slightly lower entry.

Teradyne’s earnings beat views, but guidance also disappointed. TER shares fell too late. The stock rose 0.4% to 103.44 on Wednesday, hovering above its 200-day line.

LRCX and TER gains follow ASML gains ahead of Wednesday’s open KLA Corp. (KLAC) should end late Thursday.

Steel Dynamics’ earnings beat views. STLD shares rose after hours. Shares rose 2.2% to 110.41 on Wednesday. Shares of Steel Dynamics tried to clear a brief consolidation last week with a 113.22 buy point, but pulled back.

Nucor earnings are due Thursday morning. NUE shares rose 1.7% to 156.67. Nucor stock is near a buy point with a 160.03 cup handle.

United Rentals revenue was missed while in line with the revenue generated. But the heavy equipment rental giant gave bullish guidance through 2023. URI stock rose solidly overnight. Shares fell 0.3% to 392.48 on Wednesday, just outside a buy zone from a 374.01 buy point in a consolidation that runs through the end of 2021. URI can be key for heavy equipment manufacturers such as revenue and instructions. Caterpillar (CAT).

IBM’s earnings beat views while revenue beat. IBM shares fell slightly after hours. Shares fell 0.5% to 240.61 on Wednesday. IBM shares have formed a flat base with a 153.31 buy point after a strong two-month run, but are currently trading below the 50-day line.


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Stock market rally

The stock rally got off to a weak start, but rebounded to close little changed near the day’s best levels.

The Dow Jones Industrial Average rose slightly in stock trading on Wednesday. The S&P 500 ended just below breakeven. The Nasdaq fell 0.2%. The small-cap Russell 2000 rose 0.3%.

The price of crude oil in the United States increased by 2 cents to $80.15 per barrel. Natural gas fell 5.9% to its lowest level since June 2021.

The 10-year Treasury yield fell 1 basis point to 3.46%.

ETFs

Among rising ETFs, the Innovator IBD 50 ETF ( FFTY ) rose 0.2%, while the Innovator IBD Breakout Opportunities ETF ( BOUT ) fell 0.3%. The iShares Expanded Tech-Software Sector ETF ( IGV ) fell 0.2%, with Microsoft shares and NOW as key components. VanEck Vectors Semiconductor ETF (SMH) rose 0.1%. LRCX stock is an SMH holding

Reflecting stocks on more speculative stories, the ARK Innovation ETF ( ARKK ) rose 0.1%, while the ARK Genomics ETF ( ARKG ) rose 0.5%. Tesla stock is a major holding in Ark Invest’s ETFs. Cathie Wood’s Ark is loading.

The SPDR S&P Metals & Mining ETF ( XME ) rose 1.25%, while the Global X US Infrastructure Development ETF ( PAVE ) was flat. US Global Jets ( JETS ) rose 1.1%. SPDR S&P Homebuilders ( XHB ) rose 0.4%. The Energy Select SPDR ETF (XLE) settled just below break-even and the Financial Select SPDR ETF (XLF) rose 0.8%. The Healthcare Select Sector SPDR Fund ( XLV ) won a share.


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Stock Market Rally Analysis

The stock market rally sold off Wednesday morning, but rebounded well from the lows. Major indices closed near highs for the fourth session in a row.

The S&P 500 fell 1.7% on the day, breaking below its 200-day line and nearing its 50-day line on the day. But the benchmark index closed essentially flat.

The Nasdaq composite and Russell 2000 bounced back from lows, comfortably above their 50-day lines. The Dow Jones dipped below its 50-day line during the day, but once again closed above.

Dow giants Microsoft and Boeing slipped in the open, but bounced back to make little change. According to Microsoft management, many names related to the falling cloud have mitigated the losses.

Leading stocks generally performed healthy, including chip gear, travel, medical and housing stocks. One of the biggest complaints about leading stocks is that a slightly longer break or pullback last week would have been beneficial.

A number of recent breakouts have pulled back below buy points but may still work, e.g SLB (SLB), Imping (PI) and Medpace (MEDP). At the same time, some other bottomed-out stocks are in long consolidations, such as Boeing and Shift4 Payments (FOUR).

The overall market rally action was encouraging. The major indices still have to clear their late 2022 highs decisively, but they are moving towards those levels.

Earnings season remains active, with Tesla and ServiceNow weighing heavily in overnight trading.

Several key economic reports on Thursday, Friday and next week, along with the announcement of the Fed’s February 1 meeting, will also move markets beyond earnings.


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What to do now

Just because the major indexes and many leading stocks found support on Wednesday doesn’t mean they will continue to do so. After a few weeks, it may become apparent that investors are increasing their exposure or heading for the exits. But now it is not clear.

Therefore, be cautious in adding exposure and follow the rules of loss mitigation.

Be sure to work on your watchlists. Cast a wide net: Various sectors are showing strength, which is a bullish sign for the market rally.

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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