Dow Jones Rises as Bulls Try to Save Market Rally; Tesla falls after Autopilot move

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The Dow Jones rose slightly Wednesday morning while the S&P 500 and Nasdaq rose after Tuesday’s bear market selloff. Treasury yields fell.




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General Mills (GIS) rose on strong earnings, clearing an early buy point. Bed bath and beyond (BBBY) plunged on big quarterly losses, plus the homewares retailer and single “meme” stock ousted its chief executive.

fedex (FDX) unveiled long-term financial targets ahead of an investor day. FDX stock rose slightly.

Chinese electric vehicle manufacturer Nio (NIO) skidded in refuting a short seller report. You’re here (TSLA) fell by cutting autopilot jobs. Nio and Tesla will report weekend sales, as well as Xpeng (XPEV), Li-Auto (LI) and BYD (BYDDF).

Assets received (UPST) and Carnival Corp. (CCL) fell on Morgan Stanley’s big price target cuts.

Dow Jones today

The Dow Jones rose 0.4%. The S&P 500 climbed 0.2%. The Nasdaq advanced 0.2%, returning higher after strong early losses.

First quarter GDP fell at an annual rate of 1.6% compared to the previous revision of a 1.5% decline. Analysts had expected a decline of 1.4%. Notably, consumer spending growth was revised down to a lackluster 1.8% from 3.1%.

Fed Chief Jerome Powell reiterated his vow to fight inflation aggressively, with no guarantee of a soft landing.

The 10-year Treasury yield fell to 3.15% from 3.21%.

Crude oil prices rose almost 2%. OPEC+ meetings are on Thursday, but it’s unclear whether the cartel will make any big supply moves that affect prices significantly.

Bitcoin slipped to the $20,000 level. Bitcoin price hit an 18-month low of around $17,800 on June 18, but bounced back above $21,000 late last week.


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Stock market rally

The Dow Jones Industrial Average fell 1.6% in Tuesday’s stock trading. The S&P 500 index slipped 2%, with Enphase Energy (ENPH) among the worst performers. The Nasdaq composite fell 3%. The small cap Russell 2000 was down 1.85%.

The Nasdaq dipped below lows on its Friday tracking day. This is a strong bearish signal. Research shows that there is a 90% chance that the rally will ultimately fail when this happens. The rally isn’t officially over until the indices hit their recent lows.

The Dow Jones did not close below its lows of the day, but it is not far off.

Tuesday’s move caused the market to “trend higher under pressure.”


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General Mills

General Mills earnings rose 23% to $1.12 per share. Revenue climbed 8% to $4.89 billion. Both beat analyst opinions on the fourth fiscal quarter. The grain giant also increased its quarterly dividend by 3 cents to 54 cents per share.

GIS stock rose nearly 5% to 73.51, working a buy point of 74.09 from a cup base, according to MarketSmith analysis. General Mills shares rebound near their 50-day line. A move above Tuesday’s intraday high of 71.71 would offer early entry.

The GIS stock relative strength line is at an all-time high.

Bed bath and beyond income

Bed Bath & Beyond announced a much worse than expected first quarter loss. Revenue fell 25% to $1.46 billion, also missing.

Mark Tritton has resigned as CEO and from the board. Board member Sue Gove will act as interim CEO.

BBBY shares plunged 18% to hit a new two-year low.

FedEx Targets

Shipping giant FedEx, ahead of Wednesday’s Investor Day, forecast annual earnings per share growth of 14% to 19% through fiscal 2025, with a consolidated operating margin of 10%.

It is committed to paying an adjusted dividend of at least 25%

FDX stock fell 3%. Shares topped the 200-day moving average last week after reporting better-than-expected earnings.

Big price target reductions

Morgan Stanley downgraded Upstart stock to underweight and cut its price target from 88 to 19. UPST stock plunged 9% to 32.67.

Morgan Stanley also cut its Carnival share price target to 7-13, but introduced the possibility that shares could plunge to zero in a worst-case scenario. CCL shares slipped 15% to 8.80.

Tesla Autopilot cuts out

Tesla is closing an office in San Mateo, Calif., eliminating 200 low-level positions from its Autopilot team. The electric vehicle giant is making massive layoffs as CEO Elon Musk fears a recession.

Tesla stock fell almost 2%. On Tuesday, Tesla stock fell 5% to 697.99, back below its 21-day line.

In early July, possibly Saturday, Tesla will release second quarter worldwide production and delivery numbers. Investors can expect a substantial drop from the first quarter, due to the closure of the Shanghai factory and the slow recovery from Covid lockdowns in China.


Tesla vs. BYD: Which electric giant is the best buy?


Nio refutes short seller’s report

Nio said a report released Tuesday by short seller Grizzly Research “is without merit and contains numerous errors, unsubstantiated speculation, and misleading conclusions and interpretations.”

Grizzly accused Nio of accounting fraud to inflate revenues and net margins. Nio shares fell 2%.

Nio will release June sales on Friday, along with fellow Chinese EV startups Li Auto and Xpeng. Electric vehicle and battery giant BYD is expected to release June sales on Saturday and Sunday.

Li Auto’s stock rose more than 1%, returning to around a buy point after falling on Tuesday following a massive climb. Meanwhile, XPEV stock lost 2%.

BYD stock fell 3% to 40.17, holding above a buy point of 39.81 cup with handle.

Read The Big Picture every day to stay in tune with market direction and top stocks and sectors.

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

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