Dow Jones futures were little changed overnight, along with S&P 500 futures and Nasdaq futures.
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The stock market rally lost modest ground on Tuesday as Treasury yields rose again. Major indices did not fall sharply due to megacaps like MSFT stock. Meta platforms (Meta) and in particular Tesla (D.S.L.A), but market breadth was remarkably weak. The Dow Jones and Russell 2000 fell below their 50-day ranges.
Homebuilders and other housing stocks sold off sharply on Tuesday due to higher yields. Energy stocks did well as crude continued to rise.
Microsoft (MSFT), Meta and Tesla shares, with General Electric (GE) and MongoDB (MTP) are trading near buy points.
After closing, software makers Zscaler (ZS) and asana (Teacher) revenue statement along with the platform of software developers GitLab (GTLB)
Despite ZScaler’s better-than-expected earnings and strong guidance, ZS shares fell slightly after hours. Zscaler stock has formed a bearish consolidation with an entry around 162.67 or 164.29. ZS stock rose 275% to 162.74 in the regular session on Tuesday.
ASAN shares fell modestly in extended action after Asana topped earnings estimates. The work management software maker has a 26.27 consolidation buy point, but investors could use a trendline entry above 23 as an initial entry. Asana shares rose 5 cents to 21.64 on Tuesday, just below the 50-day line. Asana income may be important to peers Monday.com (MNDY) and Smartsheet (Greece), with a later report on Thursday.
GTLB shares rose solidly in overnight trade on the back of GitLab earnings and views. Shares rose 1.2% to 49.74 on Tuesday. GitLab stock has a 54.60 buy point from a cup base within a major consolidation.
META share is active IBD Leaderboard. Microsoft stock is on the IBD Long-Term Leaders list. MDB stock and Zscaler are available IBD 50.
Video embedded in article Tuesday’s market action and analysis Oracle (ORCL), Dole Brothers (TOL) and GE stock.
Dow Jones Futures Today
Dow Jones futures were slightly above fair value. S&P 500 futures were lower and Nasdaq 100 futures were down 0.1%.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
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Stock market rally
Although the Nasdaq in particular resisted the selloff, the stock market rally felt the impact of Tuesday’s rise in Treasury yields.
The Dow Jones industrial average fell 0.6% in stock market trading on Tuesday. The S&P 500 index retreated 0.4%, with TSLA stock the No. 1 performer. The Nasdaq composite fell 0.1%. The small-cap Russell 2000 fell 2.1%.
U.S. crude rose 1.3% to $88.69 a barrel after Saudi Arabia said it would extend its voluntary production cuts by 1 million barrels a day until the end of the year, while Russia will continue its own production curbs. Crude futures rose 9.9% on an eight-session winning streak.
The 10-year Treasury yield rose 9 basis points to 4.27% after similar gains on Friday.
The dollar had another strong session, with US yields rising and more weak economic data from China and Europe.
ETFs
Among growth ETFs, the innovator IBD 50 ETF (FFTYfell 0.5%. iShares Expanded Technology-Software Sector ETF (IGV) Microsoft stock advanced 0.45% with a major component. VanEck Vectors Semiconductor ETF (SMHrose 0.2%.
Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKKARK Genomics ETF ( ) rose 0.9%ARKGfell 1.8%. Tesla shares are the No. 1 holding across Arc Invest’s ETFs.
SPDR S&P Metals & Mining ETF (XMEretreated 1.3% and the Global X US Infrastructure Development ETF (sidewalkfell 2.7%. US Global Jets ETF (JETS) decreased by 1.7%. SPDR S&P Homebuilders ETF (XHB) sold 3.9%. Energy Select SPDR ETF (XLErose 0.5% and the Health Care Sector SPDR Fund (XLVHe gave 1%.
Industrial Select Sector SPDR Fund (XLI) retreated 1.7%, with GE stock a significant XLI component.
Fund Selection SPDR ETF (45) fell 1%. SPDR S&P Regional Bank ETF (Create2.3% lost.
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Stocks near buy points
Microsoft shares rose 1.5% to 333.55 on Tuesday, moving above the 50-day moving average for the first time in a month. But it wasn’t a decisive move above that key level, and Tuesday’s volume was lower. With a little more strength, the Dow Jones tech titan could be viable. According to MarketSmith analysis, MSFT stock has a consensus buy point of 336.78.
META stock rose 1.3% to 300.12, finally closing above the 50-day high after hitting resistance for several sessions. The Internet giant is on track to have a base with a 326.29 buy point.
Tesla shares rebounded from the 21-day moving average and returned to 256.49 with a 50-day 4.7% pop. Shares fell 5.1% on Friday after Tesla unveiled Model 3 upgrades in China, but cut Model S, Model X and full self-driving prices. Investors can use last week’s high of 261.18 as an initial entry for TSLA stock, which has an official buy point of 299.29.
GE stock fell 1.2% to 112.88, below the 21-day line and just above the 50-day/10-week line. GE has a 117.96 buy point off a flat base, the first real consolidation of the January breakout. Investors can use 115.85 as an initial entry for GE stock.
MongoDB shares rose 0.3% to 394.13, holding a 50-day line. On Friday, shares hit 414 intraday on strong MongoDB earnings. But MDB shares rose 3% to 392.88, the session’s lowest. The database software company has a 439 buy point, but investors can use Friday’s high from the 50-day and trendline as an initial entry.
Market rally analysis
The stock market rally showed resilience in the face of higher Treasury yields, at least on the surface. Tesla shares and other megacaps limited losses in major indexes.
But breadth was anemic, especially given relatively slim losses in large-cap indices. Losers led winners nearly 3-to-1 on the Nasdaq and 7-to-2 on the NYSE. New lows beat new highs.
The Russell 2000 fell below its 50-day line. Invesco S&P 500 Equal Weight ETF (RSP) slipped 1.2%, worse than the S&P 500, after closing a whisker below its 50-day low on Friday.
The Dow Jones fell just below its 50-day low.
The Nasdaq and S&P 500 still have some distance above the 50-day line, but not by much.
Energy stocks outperformed, while the broader technology sector was OK. But housing plays had a rough ride, with homebuilders and related names among the biggest losers on Tuesday. Steel makers, industrialists and traveling plays also retreated.
Clearly, stocks take their inverse cues from Treasury yields. If yields continue to rise, the market bullishness is likely to run into trouble.
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What to do now
A change from last week, with losses dominating Tuesday, and not much buying.
But several stocks are in a position to perform, including Tesla, Meta and GE, among others. Make sure they are on your watch list.
Be prepared to add exposure, but don’t get caught up in the excitement. You should be ready to pull back if the market or a particular level stumbles.
Read the big picture every day to stay in tune with market direction and leading stocks and sectors.
Follow Ed Carson on X/Twitter @IBD_ECarson For stock market updates and more.
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