Dow Jones futures, S&P 500 and Nasdaq Futures all fell slightly overnight. The Federal Reserve wrapped up its two-day conference on Wednesday afternoon. AMD was the top overnight earner.
Stock market rallies had a quiet but encouraging session. Major indexes reversed their morning losses and rose. The Nvidia stock fell below recent lows on Tuesday morning but reduced losses. The market breadth was improved. The downtrend is still continuing.
Arista Networks' (ANET), which had a disastrous week last week due to Meta Platforms' (META) capital expenditure plans, was the big winner on Tuesday. Pinterest (PINS), and Cameco(CCJ) both blew past their earnings expectations. All of them flashed buy signal, but risks are high now.
Tesla (TSLA), rose modestly after a jury found that Autopilot was not responsible for a fatal crash.
ELF Beauty (ELF), however, plunged Wednesday night as it prepared to report earnings. Nvidia shares fell below recent lows on Tuesday morning but they cut losses.
Dow Jones Futures Today
AMD is a Nasdaq stock.
The yield on the 10-year Treasury note rose by several basis points, to 4.92%.
Keep in mind that overnight trading in Dow futures or elsewhere may not necessarily translate to actual trading during the next regular session of the stock market.
AMD, Nvidia's (NVDA), rival, reported earnings and sales that were better than expected for the third quarter. However AMD gave a weak outlook. AMD shares initially dropped after hours but recovered on the back of positive AI comments. In Tuesday's regular trading session, shares rose 2.4% to reach 98.50. However, they are still below the 50 and 200 day lines.
Paycom Software's (PAYC), despite a better-than-expected EPS, missed revenue and Q4 forecasts. PAYC's stock dropped more than 30%.
FDA Panel Examines Gene-Editing Therapy
A FDA advisory panel gave a generally positive opinion of the first gene-therapy treatment developed by Crispr Therapeutics and Vertex Pharmaceuticals for sickle-cell disease. The panel did not vote on the recommendation of the treatment, which is unusual. CRSP's stock was halted during Tuesday's session, and even into the overnight session. VRTX rose by 1.3% to 362.11 on Tuesday, bouncing back off the 50-day line. Vertex is nearing a 367-point buy point but earnings are due in the next week.
Tesla Autopilot Win
Tesla's stock rose by 1.8% on Tuesday to 199.96, moving away from a five-month-low after winning the Autopilot case involving a fatal crash in Riverside County. This is the first in a series of lawsuits involving the EV company's driver assistance software. TSLA, which has also risen with the broader markets, is still under its 200-day line.
China EV Sales
Li Auto, XPeng, and Nio will all report their October sales early Wednesday morning. Li Auto had already announced Tuesday that it was the first company to surpass 40,000 deliveries. BYD, the EV and battery company, should be reporting October sales as early as Thursday morning.
The four EV manufacturers, as well as many other China-based stocks, fell 3% to 4% on Tuesday following poor China economic data.
NVDA is listed on IBD Leaderboard. SwingTrader is home to CCJ. IBD 50 includes Arista Networks stock, Nvidia stock and LI. ANET is listed on the IBD Big Cap 20. Cameco was the IBD Stock of The Day on Tuesday.
The article includes a video that discusses Tuesday's market activity and analyzes ANET stock as well as Cameco, ELF Beauty and Cameco.
Fed Meeting Decision
The announcement of the central bank's policy meeting will be made at 2 p.m. The markets see no chance for a rate increase Wednesday and only modest odds on a move in December. Fed policymakers have stated that the surge in long-term Treasury rates has reduced the need to raise official interest rates.
Powell, the Fed's chief economist, is likely to reiterate this message in the Fed policy statement while leaving the door wide open for further tightening.
Stock Market Rally
Stocks closed higher on Tuesday after a rally from their morning lows.
In Tuesday's stock trading, the Dow Jones Industrial Average increased by 0.4%. ANET was the best performer in the S&P 500 index, which advanced by 0.65%. The Nasdaq Composite gained 0.5%.
Nvidia's stock fell 4.7% on Tuesday morning, following a report that the company may be forced to cancel AI chips orders worth more than $5 billion from Chinese companies due to tighter U.S. regulations. The AI chip leader recovered to close at 407.80, down only 0.9%.
The market breadth on Tuesday was much better, with winners beating losers by a wide margin. New lows continue to crush new highs.
The Russell 2000 small cap index rose 0.9%. Invesco's S&P 500 Equal Weight Index ETF rose by 0.8%, and First Trust Nasdaq 100 Equal Weighted Index Index ETF gained 0.9%.
Tuesday marked the third day of an attempt to rally the Nasdaq stock market, and the second day for the S&P 500. The Nasdaq could confirm the uptrend at any moment.
The composite index just crossed the 200-day level on Tuesday. However, several other resistance levels are looming. The other indexes have fallen below the 200-day level.
Currently, there are not many good stocks.
The U.S. crude prices dropped 1.6%, to $81.02 per barrel. This is a 10.8% drop for the month.
The 10-year Treasury was basically flat Tuesday at 4.87%, but jumped 30 basis points in October, marking the sixth consecutive monthly gain. The Federal Reserve is taking its cues from the 10-year Treasury yield, and not vice versa. It's unclear whether the Fed announcement and Powell's comments will have the same impact as they did in the past two year.
The iShares Expanded Tech Software Sector ETF (IGV), a fund that tracks the tech-software sector, jumped by 1.2%. VanEck Vectors Semiconductor ETF SMH grew by 0.7%. SMH is dominated by Nvidia, but AMD stock is also an important component.
ARK Innovation ETFs (ARKK) and ARK Genomics ETFs (ARKG), which reflect more-speculative stories, have risen 2.3% each. Tesla stock is a key holding in Ark Invest ETFs.
SPDR S&P Metals & Mining ETF XME fell by 0.6%. SPDR S&P homebuilders ETF XHB grew by 1.2%. Energy Select SPDR ETF XLE grew by 0.3%, and Health Care Select Sector SPDR Fund XLV grew 0.6%. VRTX is a holding of XLV.
XLI XLF popped up 1.1%.
Stocks soaring on earnings
ANET's stock soared by 14%, to 200.37. It cleared a 198.70 purchase point that was established after a consolidation. The stock was already a tradeable asset Tuesday morning, as it had risen decisively above its 50-day line. The relative strength line reached a new peak. Arista's stock fell last week after Meta, a key customer, announced lower capital expenditures than expected. Late Monday night, however, the networking giant announced better-than expected Q3 results. They also raised their Q4 revenue guidance. Arista's earnings increased 46% from a year ago for the second consecutive quarter. The EPS was up over 20% for the 11th consecutive quarter.
CCJ's stock jumped 8.1%, to 40.91. It exploded from the 50-day level to the top of a small consolidation. Investors can use 42.16 to buy, but it is possible to trade from the high of 39.77 on October 25. Cameco, a producer of uranium, reported a nearly 1,000% increase in earnings compared to a year ago. They also raised their sales forecast.
PINS stock soared 19%, to 29,88. It jumped above the 50-day line and the 200-day line, returning above key resistance levels at 29. This is a good starting point, as well as a 30.86 buy-point. Pinterest announced a booming profit, and an 11% increase in revenue. Both showed accelerated growth for the third consecutive quarter. Views were also outnumbered by user growth. Social media site gave also some positive Q4 guidance.
Investors could have purchased these stocks on Tuesday in all of these cases. But buying earnings gaps during a correction in the market carries a risk. Investors may want to wait until these stocks form handles or high handles.
What to Do Now
A rally is underway as the stock market tries to bottom out. Right now, it's just a correction.
Investors should buy something if there is a likely follow-through date in the near term, whether that's an ETF or stock. There's no need to rush into anything.
Market rallies that are confirmed don't work. It's difficult to imagine stocks making a significant run as long as Treasury yields continue their upward trend.
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