Futures Mixed: Tesla Sells Off On Elon Musk Warnings

Dow Jones futures and S&P 500 futures fell slightly Thursday morning, but Nasdaq futures edged higher. The 10-year Treasury yields kept running toward 5%. Meanwhile,  Tesla (TSLA) tumbled on weak earnings and several warnings from CEO Elon Musk on the Cybertruck and more. Netflix (NFLX) surged on strong subscriber growth and price hikes.


Taiwan Semiconductor (TSM) and  Lam Research (LRCX) also reported.

Meanwhile, Costco Wholesale (COST) CEO Craig Jelinek will step down on Jan. 1. COO Ron Vachris will take over. COST stock edged lower.

Adobe (ADBE), Arista Networks (ANET), Microsoft (MSFT) and Meta Platforms (META) are four stocks  to watch near buy points. ANET stock and Meta Platforms are on IBD Leaderboard. Meta stock is on SwingTrader. ADBE stock, Arista Networks and Meta are all on the IBD 50. MSFT stock is on the IBD Long-Term Leaders list.

The stock market rally suffered sharp losses Wednesday as Treasury yields spiked to 16-year highs and many earnings reports or guidance disappointed.

Dow Jones Futures Today

Dow Jones futures fell 0.1% vs. fair value. S&P 500 futures lost 0.1%. Nasdaq 100 futures rose 0.1%. Tesla, Netflix and LRCX stock are all S&P 500 and Nasdaq 100 members.

The 10-year Treasury bond yield jumped  to 4.97%. That’s after climbing 6 basis points to 4.9% on Wednesday.

Crude oil futures fell slightly. On Wednesday, crude prices rose 1.9% to $88.32 a barrel.

Fed chief Jerome Powell will speak at noon at the Economic Club of New York. While several policymakers have signaled no need for another Fed rate hike, Powell may leave the door open.

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

Stock Market Wednesday

The Dow Jones Industrial Average fell 1% in Wednesday’s stock market trading, back below the 200-day line. The S&P 500 index retreated 1.3% and the Nasdaq composite lost 1.6%, both below their 21-day lines. The small-cap Russell 2000 tumbled 2.1%.

Leading stocks and most sectors struggled, with the exception of energy.

Stocks To Watch

Adobe stock is slightly below a 570.24 flat-base buy point. The relative strength line, the blue line in the charts provided, tracks a stock’s performance vs. the S&P 500 index. ADBE stock was tilted lower early Thursday.

Meta stock is just below a 326.20 buy point. It’s still holding above an early entry of 312.87. The RS line has also been hitting highs. Meta stock rose a fraction in premarket action.

Microsoft stock is working on a 366.78 consolidation buy point, reclaiming the 50-day line recently. Shares are close to a 340.86 early entry. The RS line is not at a high, but improving. MSFT stock edged higher before the open.

ANET stock is just below a 198.46 cup-with-handle buy point, according to MarketSmith analysis. The RS line also have been at multiyear highs. ANET stock nudged higher Thursday morning.

Adobe earnings likely aren’t due until December, but Microsoft reports on Oct. 24 and Meta on Oct. 25. Arista earnings are on Oct. 30. Arista’s top customers are Meta and Microsoft.

Tesla Earnings

Tesla earnings per share fell 37% to 66 cents, the worst level in two years and well below lowered views. Sales grew 9% to $23.35 billion, also missing. Blame siding deliveries vs. Q2 and steady price cuts all year.

Worse, a subdued Elon Musk gave several warnings and cautions on the Tesla earnings call.

Yes, the Tesla Cybertruck will hold a delivery event on Nov. 30. But Musk said, “I want to temper expectations for Cybertruck. It’s a great product, but financially it’ll be 12-18 months to be a significant positive cashflow contributor.” Ramping up production “will be extremely difficult.” He later said, “We dug our own grave with Cybertruck.”

Musk also:

Signaled Tesla’s long-term forecast for 50% annual delivery growth no longer applies.

Won’t go “full bore” on a planned Mexico EV factory, suggesting economic factors are at play. That suggests no Mexico factory or cheaper EV until at least 2026.

Stressed concerns about high interest rates and economic conditions weighing on demand.

Musk still sees self-driving, robotics and artificial intelligence being huge winners, but gave no timelines on those longer-term moonshots.

Tesla Stock

Tesla stock has surged in 2023 as investors bet that the EV maker’s growth story was intact, despite near-term growth woes. But the Tesla earnings call cast doubt on that bull case.

TSLA stock sold off nearly 7% early Thursday.

Shares slumped 4.8% to 242.68 Wednesday, falling below their 50-day line. Tesla stock has a 278.98 cup-with-handle base for now, but the handle may soon no longer be valid.

The 200-day line is the next likely area of support, with the Aug. 18 low of 212.36 just below that.

Netflix Earnings

Netflix added 8.76 million streaming subscribers, smashing views, while earnings also topped. Revenue was in line. The streaming media giant plans to hike prices yet again.

NFLX stock leapt more than 10% early Thursday. Shares fell 2.7% on Wednesday to 346.19, round-tripping a breakout that started five months earlier.

Lam Research Earnings

Lam Research earnings solidly beat fiscal Q4 views, while revenue also topped. The chip-equipment maker guided in line for fiscal Q1.

LRCX stock fell modestly in overnight trade. Shares declined 1.2% to 642.24 on Wednesday. LRCX stock has a 726.52 consolidation buy point.

KLA Corp. (KLAC) and Applied Materials (AMAT) edged lower in premarket action after both fell about 1% on Wednesday. Both have been holding up, not far from buy points.

ASML (ASML), which slumped Wednesday on a forecast for flat 2024 sales, rebounded Thursday morning.

Taiwan Semiconductor Earnings

Taiwan Semiconductor earnings topped Q3 views. TSM stock rose solidly before the ope.n Shares fell 1.5% on Wednesday, back below the 50-day line. The foundry giant, which makes semiconductors for Nvidia, Apple (AAPL) and many more, is also a huge chip-equipment buyer.

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

Please follow Ed Carson on X/Twitter at @IBD_ECarson, Threads at @edcarson1971 and Bluesky at @edcarson.bsky.social for stock market updates and more.


Best Growth Stocks To Buy And Watch

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

Tesla Vs. BYD: EV Giants Vie For Crown

Source link