Dow Jones Futures: S&P 500 Flirts With Bear Market As Apple Breaks, Tesla Tested; These Stocks Rally

Dow Jones futures rose overnight, along with S&P 500 futures and Nasdaq futures. The stock market saw big intraday swings Thursday, with the S&P 500 nearly entering a bear market before the major indexes rebounded to close narrowly mixed, while beaten-up small caps and story stocks rebounded.

X

Apple (AAPL) and Tesla stock, the two megacaps that had been holding up reasonably well until the past week or so, continued to come under pressure. Apple stock tumbled to a seven-month low. Tesla (TSLA) broke below its February low of 700 to its worst levels since late August, though it did pare losses substantially.

Northrop Grumman (NOC), Penske Automotive (PAG), Dollar Tree (DLTR) and Cigna (CI) are all worth watching. All have relative strength lines at 52-week or record highs, reflecting their outperformance vs. the S&P 500 index.

NOC stock is slightly below its 50-day moving average, but within a shallow cup-with-handle base. PAG is forging a handle at the top of a long consolidation. DLTR stock is fighting around its 50-day line, with a possible trendline entry. Cigna stock is trading tightly in a long cup-with-handle base, according to MarketSmith analysis.

Penske Automotive late Thursday raised its quarterly dividend by 3 cents to 50 cents a share. It also increased its PAG stock buyback plan, which had $46.3 million remaining, to $250 million.

DLTR stock is on the IBD Leaderboard watchlist.

Dow Jones Futures Today

Dow Jones futures advanced 0.55% vs. fair value. S&P 500 futures climbed 0.7% and Nasdaq 100 futures jumped 0.95%.

The 10-year Treasury yield climbed 7 basis points to 2.89%.

Crude oil prices rose 1%.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

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

Stock Market Thursday

The stock market had a wild trading session. The major indexes hit fresh 2022 lows and also traded solidly higher at various points, before finally closing narrowly mixed.

The Dow Jones Industrial Average fell 0.3% in Thursday’s stock market trading. The S&P 500 index dipped 0.1%. The Nasdaq composite rose less than 0.1%. The small-cap Russell 2000 popped 1.25%.

U.S. crude oil prices erased early declines to close up 0.4% to $106.13 a barrel.

Gold, copper and palladium suffered significant losses. Growing concerns about global economic growth are weighing on oil and industrial commodities.

The 10-year Treasury yield tumbled 10 basis points to 2.82%, the fourth straight decline after reversing from a 3-year-high 3.17% on Monday.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) closed flat, while the Innovator IBD Breakout Opportunities ETF (BOUT) edged up 0.1%. The iShares Expanded Tech-Software Sector ETF (IGV) climbed 0.9%. The VanEck Vectors Semiconductor ETF (SMH) advanced 0.5%.

SPDR S&P Metals & Mining ETF (XME) skidded 2.15% and the Global X U.S. Infrastructure Development ETF (PAVE) rose 0.8%. U.S. Global Jets ETF (JETS) slumped 2.1%. SPDR S&P Homebuilders ETF (XHB) popped 3.4%. The Energy Select SPDR ETF (XLE) climbed 0.4% and the Financial Select SPDR ETF (XLF) retreated 0.75%. The Health Care Select Sector SPDR Fund (XLV) gained 1%

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) jumped 5.6% and ARK Genomics ETF (ARKG) 5.1%. A lot of beaten-down techs rallied Thursday after massive losses in recent days and weeks. TSLA stock remains the No. 1 holding across Ark Invest’s ETFs

Apple Stock

Apple stock, a Dow Jones, S&P 500 and Nasdaq heavyweight, weighed heavily on the major indexes, falling 2.7% to 142.56. That’s after tumbling 5.2% on Wednesday. As recently as Tuesday, the RS line was right around record highs, even as AAPL stock had fallen below its 200-day line. Now the RS line is falling sharply.

On Thursday, Apple iPhone maker Foxconn warned of slowing demand for consumer electronics, including smartphones. Last month, Taiwan Semiconductor (TSM), which makes chips for Apple and many others, also cited slackening consumer electronics demand.

Tesla Stock

Tesla stock sank 0.8% to 728. Intraday, shares fell to 680, undercutting the Feb. 24 low of 700, and back to levels not seen since August. TSLA stock hit 1,092.22 intraday on April 21 following earnings, but has plunged since then. The RS line for Tesla stock is just above recent lows.

It’s notable that Tesla stock was unable to rebound Thursday, given the gains in many other beaten-down EV stocks and ARK-type story plays, but the sell-off in recent weeks isn’t unusual.

Five Best Chinese Stocks To Watch Now

Market Analysis

The stock market searched for direction on Thursday. With Apple stock erasing big losses and Tesla moving higher by mid-morning after undercutting lows, it looked like the major indexes were finally going to bounce.

But Apple and Tesla quickly faded while the key indexes quickly sold off to hit fresh lows. The S&P 500 came within a few points of a 20% decline to reach a bear market. The Nasdaq is down more than 30% from its November all-time high.

The major indexes did rally in the final 40 minutes, with the Nasdaq just sneaking into the green as the closing bell rang. Tesla stock slashed losses, while Apple only pared its latest big decline.

While the major indexes whipsawed, small caps and highly valued growth plays staged a solid relief rally. But these stocks have suffered massive losses in recent weeks.

Advancers narrowly beat decliners in Thursday’s session, but the trend has been highly negative in recent days and weeks. New lows obliterated new highs.

With investor fears shifting from inflation toward growth concerns — in part due to Fed rate hikes to rein in inflation — even commodity plays have faltered. Oil and gas stocks are an area of strength, but some have faltered while even many leaders are fighting for support at their 50-day lines.

Time The Market With IBD’s ETF Market Strategy

What To Do Now

The market needs a lot more than a one-hour rebound, or a good day or two. It needs several strong sessions to indicate some sort of sustained rally. Even that might only end up being a bear market rally to the 21-day or 50-day lines before reversing lower again.

There is no reason to be involved in this market, aside from long-term winners.

Work on your watchlists. Focus on stocks with strong relative strength, such as Northrop, Dollar Tree and Cigna. Note those that are setting up near buy points, but don’t get too hung up on that right now. If this market correction/bear market continues for some time, resilient stocks will have time to form better patterns over time.

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

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

YOU MAY ALSO LIKE:

Want To Get Quick Profits And Avoid Big Losses? Try SwingTrader

Best Growth Stocks To Buy And Watch

IBD Digital: Unlock IBD’s Premium Stock Lists, Tools And Analysis Today

Tesla Vs. BYD: Which Booming EV Giant Is The Better Buy?