Dow Jones futures were up slightly after the close along with S&P 500 futures and Nasdaq futures FedEx (FDX) and Nike (NKE) result at the top.
The stock market rally rebounded slightly on Tuesday, sparking a four-day losing streak.
In the meantime, Apple (AAPL) flirted with undercutting its bear market bottom a day later Amazon.com (AMZN) did.
Tesla (TSLA) kept crashing. TSLA stock has now rounded off gains since the August 2020 stock split.
On the bright side, oilfield services play Schlumberger (SLB), Halliburton (HAL) and ProFrac (ACDC) are showing strength with Schlumberger stock and ACDC stock flashing early buy points on Tuesday.
The video embedded in the article discussed Tuesday’s market action, analyzing SLB stock, Halliburton and ProFrac.
Nike, FedEx revenue
Dow Jones giants Nike and FedEx reported earnings late Tuesday that also give a glimpse of the holiday shopping season.
Nike’s earnings and sales beat expectations, but inventories rose 43% year over year. Margins fell due to discounts. NKE stock was up 13% after the close, signaling a return above the 200-day moving average. Shares rose 0.2% to 103.21 on Tuesday.
FedEx revenue topped views, but revenue lagged. FDX stock was up 5% in extended trading. Shares closed down 2.6% to 164.35, below the 50-day moving average.
Dow Jones futures today
Dow Jones futures were up 0.65% from fair value, with NKE stock offering a boost. S&P 500 futures were up 0.6%. Nasdaq 100 futures gained 0.7%.
The 10-year government bond yield rose 3 basis points to 3.71%.
Keep in mind that overnight action in Dow futures and elsewhere doesn’t necessarily translate to actual trading in the next regular trading session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
stock market rally
The stock market rally erased opening losses and closed slightly higher.
The Dow Jones Industrial Average rose 0.3% in trading on Tuesday. The S&P 500 index rose 0.1%, with Tesla stock the worst performer in the index. The Nasdaq Composite rose 1 point. Small-cap Russell 2000 gained 0.5%.
Apple shares fell as low as 129.89, within 1% of their June bear market low of 129.04. Shares rallied to close 7 cents at 132.30. Amazon shares edged up 0.3% after briefly undercut Monday’s fresh bear low.
US crude prices rose 1.2% to $76.09 a barrel. Natural gas prices fell 9% after falling more than 11% on Monday.
The 10-year government bond yield rose 10 basis points to 3.68% after falling 10 basis points on Monday. The Bank of Japan turned mildly hawkish on Tuesday, sending Japan’s 10-year yield up as much as 0.5%.
The 2-year yield, which is more closely linked to Fed policy, was basically flat at 4.27%.
Investors will receive November’s PCE inflation report on Friday, with economists expecting another notable fall in headline and core inflation.
Among growth ETFs, iShares Expanded Tech-Software Sector ETF (IGV) was up 0.5%. The VanEck Vectors Semiconductor ETF (SMH) lost 0.6%.
Mirroring more speculative story stocks, ARK Innovation ETF (ARKK) fell 0.2% to hit a fresh five-year low. ARK Genomics ETF (ARKG) rose 0.8%. Tesla is a key holding among Ark Invest’s ETFs.
The SPDR S&P Metals & Mining ETF (XME) was up 2.6% and the Global X US Infrastructure Development ETF (PAVE) was up 0.4%. The US Global Jets ETF (JETS) gained 0.4%. The SPDR S&P Homebuilders ETF (XHB) fell 0.55%. The Energy Select SPDR ETF (XLE) rallied 1.5% and the Financial Select SPDR ETF (XLF) rose 0.4%. The Health Care Select Sector SPDR Fund (XLV) ended slightly lower.
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Stocks near buy points
Oil services companies are rebounding even as crude prices hover near one-year lows, perhaps in anticipation of stronger prices in 2023. Exxon Mobile (XOM) and rafters (CVX) recently released their investment plans for the next year, indicating strong demand for service companies like Halliburton, Schlumberger, ProFrac and others.
SLB stock rose 3.9% to 51.76, moving back above the 50-day and 21-day moving averages and appearing to have broken a tight down-sloping trendline, suggesting an early entry. Schlumberger stock is back in a still valid buy zone from a deep cup base. SLB stock is said to have a new base with a buy point of 56.14 after this week.
Oil services giant Halliburton rallied above its 21-day moving average and is up 3.8% to 37.42, still close to its 50-day moving average. HAL stock has a buy point of 40.09 from a 47%-deep cup-and-handle basis, according to MarketSmith analysis. It has no obvious early entry. The handle will be long enough to be its own base after this week.
ProFrac stock jumped 6.9% to 23.23, back above its 50-day and 21-day moving averages and breaking a recent downtrend, similar to SLB stock. That could serve as an early start. ACDC stock should have fresh consolidation after this week with a buy point of 27.10. ProFrac stock went public at $18 a share. Since then it has had three bases, with the breakouts not working for long.
Tesla shares fell 8.1% to 137.80, hitting another two-year low. Shares of the EV giant are down 67% since peaking in November 2021 and down 29% in December alone.
Tesla stock has now rounded off its rise since the 5-for-1 stock split in August 2020. (TSLA stock split 3-for-1 also in August 2022.)
Tesla China sales fell for the second straight week, according to weekly registration data. That’s despite ever-increasing year-end incentives, which are due to end on January 1 along with China’s electric vehicle subsidies.
Elon Musk’s Twitter saga raises concerns of significant damage to the Tesla brand. Many long-time respected TSLA bulls are increasingly critical of Musk.
Evercore and Daiwa Capital Markets on Tuesday cut price targets on TSLA stock, both citing Twitter. Oppenheimer downgraded Tesla on Monday.
Tesla stock failed to recover on Monday, despite Elon Musk saying he will step down as Twitter CEO after polling Twitter users on the matter.
Shares continued to fall on Tuesday, even as major indices and many leading stocks tried to take a stand. The extensive selling over the past few weeks suggests major institutions are unloading or reducing TSLA holdings.
Late Tuesday, Musk said he would step down as Twitter boss once he found a successor and that he would lead the software and server teams.
Eventually, Tesla stock could bounce back and put in another run, but that could take months or even years.
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Analysis of the market rally
After a sharp sell-off from the December 13 highs, the stock market rally narrowly ended its losing streak.
Major indices looked oversold and ‘due’ for a rebound. They got one, although it wasn’t much.
The Dow Jones found support at the 50-day moving average, but the other key indices made no significant technical moves.
The stock market rally remains under pressure.
AAPL stock recovered from near bear market lows, but that doesn’t mean it will continue to do so.
Many leading stocks found support at key levels. But whether they hold up and bounce back strongly depends largely on the broader market.
Energy stocks might be a partial exception as they trade on underlying crude oil or natural gas prices. Oil service companies like SLB Stock and coal producers like Consolidated Energy are currently outperforming.
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It’s not a good time to buy stocks. While the major indices held up and some top stocks didn’t break up, the market rally is still weak.
The S&P 500 regaining the 50-day MA appears to be a minimal sign of strength, with the 200-day and December highs being much larger tests.
Even if the market recovers, Tesla’s continued collapse on Tuesday shows that not all stocks will follow suit.
If you feel compelled to play this market, take pilot positions and be ready to take quick profits and cut losses.
Keep looking for stocks that are holding and find support at key levels. Stocks with strong relative strength in weak markets can lead the next upleg.
Read The Big Picture every day to keep up to date with market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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