Dow rises but leaders falter, Tesla business sells base; What are you doing now

Dow futures fell slightly overnight, along with S&P 500 futures and Nasdaq futures. The stock market struggled higher on Wednesday as weak economic data raised recession fears for the second straight session.

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The major indices still don’t look too bad, with the Nasdaq sliding while the Dow rose.

But again, the decline in stocks decisively outweighed the winners. Once again, many of these losers have fallen hard. But on Wednesday, a lot of those big losers were blue chips, like on hold (Onon), MarketAccess (mktx) And pagerduty (P.D). C3. ai (Amnesty International) sold off for the second session, as AI stock has now kicked off a massive outside week to the downside.

Others, including several chip names, fell aggressively, now showing more damage to the chart after Tuesday’s relatively modest pullbacks.

Tesla (TSLA) slid for the third day in a row, triggering the automatic sell-out rule.

Megacap technologies such as apple (AAPL), Microsoft (MSFT), a parent from Google the alphabet (Google), Meta platforms (meta) And nvidia (NVDA) everything fell.

Meanwhile, banking stocks came under further pressure. Western Alliance Bancorp (WAL), which led to a decline in regional banks, although they trimmed their losses in the afternoon. Charles Schwab (SCHW) reached its lowest closing level in two years. While bank deposits may be relatively safe, the biggest problem now may be the banks’ long-term profitability as well as lending constraints that are rapidly slowing the economy.

Medical names look relatively strong, along with defensive growth or other defensive plays.

PagerDuty, On Holding, Meta and Nvidia stocks are in the running IBD Leaderboard. Microsoft and Google stocks are on the IBD Long-Term Leaders list. ONON stock is located in defect 50.

Despite relatively benign actions in major indices, weakness in growth and other blue-chip stocks is worrying. Investors should look to protect profits and cut losses.

Dow jones futures today

Dow futures fell 0.1% against fair value. S&P 500 futures were down 0.2% and Nasdaq 100 futures were down 0.4%.

The 10-year Treasury yield rose to 3.3%.

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 rise

The stock market rally witnessed an overall negative session, despite the mixed movement on the major indices.

The ADP employment report showed that private payrolls rose much less than expected in March, a day after a significant drop in job openings for February. The ISM Services Index for March fell more than expected, indicating a slowdown in rapid growth.

The Dow Jones Industrial Average rose 0.2% in stock market trading Wednesday. The S&P 500 fell 0.25%. The Nasdaq Composite fell 1.1%. Small-cap Russell 2000 gave up 1%.

US crude oil prices fell 0.1% to $80.61 a barrel.

The 10-year Treasury yield fell 5 basis points, to 3.285%. This is the lowest point in nearly seven months. The two-year Treasury yield fell 7 basis points to 3.76%, from 34 basis points in the past four sessions.

Exchange Traded Funds

Among the ETFs, the Innovator IBD 50 ETF (fifty(down 1.9%, while the Innovator IBD Breakout Opportunities ETF)fit) concession of 0.65%. iShares Expanded Technology and Software ETF (IGV) decreased by 1.3%. Microsoft stocks and a few heavyweights dominate IGV, while more speculative software names like PagerDuty have suffered bigger losses. VanEck Vectors Semiconductor Corporation (SMH) lost 1.75%, with NVDA stock taking a significant portion.

Reflecting more speculative stories, the ARK Innovation ETF (ARK)ark(down 3.6% and ARK Genomics ETF)ARKG) down 1.8%. TSLA stock is the highest-grossing stock ETF by Ark Invest. Some Ark funds also own PD shares.

SPDR S&P Metals & Mining ETFs (XME(Down 1.15% and US X Global Infrastructure Development Fund (ETF) )cradle) 1.7%. US Global Gates Foundation ETF (Planes) and the SPDR S&P Homebuilders ETF (XHB) fell 1.5%. Energy Defined Fund SPDR ETF (xle(Increased 1.5% and SPDR Healthcare Sector Fund)XLV) rose 1.7% to its best level since February 14.

Bank stocks

SPDR Financial Selection Fund (XLF(down 0.1%, with SCHW stock holding the top 10. SPDR S&P Regional Banking ETF)KRE), which includes WAL stock, sank 1% but finished lower.

Western Alliance stock fell as much as 19.4% after releasing some financial metrics but without disclosing deposits. Stocks pulled back from their lows as the California-based bank disclosed a deposit drop of 11% on March 31 versus the end of 2022, which isn’t as bad as some had feared. However, WAL stock closed down 12.4%.

Financial regulators have strongly indicated that they will protect all deposits in any bank that declines, even though investors in bank stocks may not be so well off. The biggest concern may be that banks will be much less profitable, since they have to pay more for deposits in the future. More broadly, lending is likely to be restricted, particularly from regional banks. This indicates a much faster economic slowdown than previously expected.

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Diving into the leading stocks

Here are some examples of selling leading stocks on Wednesday.

ONON stock fell 9.7% to 29.35 as a Baird analyst downgraded it to neutral. On Tuesday, the high-end sneaker maker eliminated a rare short-stroke pattern, just weeks after coming off a pedestal on strong fourth-quarter results and 2023 guidance.

PD stock, which lost a small portion on Tuesday to close near a buy point, fell 6.1% on Wednesday to 31.78.

MKTX stock fell 13.9% to 337.74, retreating below the 389.67 buy point line and the 50-day line. MarketAxess fell after the March trading metrics were released. Tradeweb Markets (TW), which also released data for March, fell 7.6% to undercut a buy point as well.

Meanwhile, AI stock fell 15.5% to 21.09. On Tuesday, C3.ai crashed by 26%. After skyrocketing 33% last week, AI stock has already managed to stage an outside week down 37% so far.

Megacap Techs

Apple shares fell 1.1 percent and Microsoft 1 percent, and this did not reduce the pain of the major indexes on Wednesday. Both are still in buy territory. META stock is down 1.5%, still stretched a bit. Nvidia stock gave up a 2.1% rally, still stretched significantly. Google stock reversed near a buy point, closing down just 0.2%.

Tesla stock fell 3.7% to 185.52, below the 50-day moving average, bringing its weekly loss to 10.6% so far. This follows the first-quarter delivery numbers on Sunday. Shares fell more than 7%-8% below the 200.76 cup handle buy point, triggering the automatic sell rule. TSLA stock could form a new handle in a few days with a buy point of 207.89. The 200 day EMA, around 215 currently, looms as quite a bit of possible resistance.

Market rally analysis

Investors should track the health of the stock market rally across major indices and blue-chip stocks. On Wednesday, the major indices closed mixed, but that masks the weakness of the leaders.

The Nasdaq Composite fell for the third day in a row, back below the 12,000 level, but still looking like a healthy pause. The S&P 500 looks similar.

The Dow rose slightly on the back of medical stocks as well as consumer staples such as Walmart (wmt).

Russell 2000 appears to be the weakest, trading below all of its moving averages, with significant negativity for banks.

The losers outperformed the winners by 2-to-1 on the NASDAQ and 3-to-2 on the New York Stock Exchange.

On Tuesday, the steel, building materials, construction and manufacturing groups were the hardest hit overall. Many of these stocks continued to fall on Wednesday, but growth and other leaders were the big losers.

Program names like PagerDuty, which held up or even rallied on Tuesday, slid off on Wednesday.

The chips, who went missing on Tuesday but seemed generally healthy, were roughed up on Wednesday.

ONON shares, MarketAxess and some other leaders fell.

On the plus side, homebuilders are holding their own, with mortgage rates dropping dramatically in recent weeks. However, manufactured housing construction Horizon champion (sky) fell 2.3%, down 9% for the week.

The broad medical sector is advancing, including medical products, large-cap pharma and biotechnology companies and now health insurance companies are on the rise. Pharmaceuticals are defensive growth games, delivering steady or sometimes strong growth that is relatively isolated from the economy due to government and private insurance covering most of the costs.

For direct defensive plays, consumer staples like Walmart and Hershey (HSY) are doing well. Utilities and REITs are on the rise, too.

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What are you doing now

The stock market rally is now struggling. Major indices look good, but blue chip stocks increasingly don’t. Even worse, the sell-off has often been fierce. As the leaders showed on Wednesday, some stocks will do well on a bad day, only to fall apart later.

Investors should reduce exposure, even if that is not the express goal. Minimizing your losers and taking at least partial profits from your winners will help you slim down overall.

Some stocks have been hit hard. Others just need a good day or two to set them up again. Still others, like medications, are already moving towards being actionable. So it is important to stay engaged and flexible. Get your watchlists And Your exit strategies are ready.

Read the big picture every day to stay in sync with market trend, leading stocks and sectors.

Please follow Ed Carson on Twitter at @employee For stock market updates and more.

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