Futures contracts on Dow Jones will reopen on Sunday evening. Futures rose slightly on Friday as Treasury yields jumped after the March jobs report showed slowing growth in hiring and wages, but also falling unemployment. In the meantime, You’re here (TSLA) cut U.S. prices for all of its electric vehicles.
US stock exchanges were closed on Friday. Major indexes held up well in a shortened holiday trading week, with mid-week pullbacks looking healthy and normal. But many top sectors and stocks sold hard, including Tesla stocks.
The video embedded in this article discusses the weekly market action and analyzes the stocks of Google, BABA and Intuitive surgery (ISRG).
Report on the works
The Labor Department said nonfarm payrolls rose 236,000, just below estimates of 240,000. That’s down from February’s revised 326,000.
Private payrolls rose by only 189,000, well below views of 223,000. Manufacturing jobs unexpectedly fell by 1,000.
The unemployment rate also surprised, plunging to 3.5%, returning to long-standing lows. However, the labor force participation rate has reached a post-Covid high of 62.6%.
Hourly wages rose 0.3% from February, online. The annual gain cooled to 4.2%, below views of 4.3% and the lowest in years. The three-month annualized wage gain slowed to 3.2%.
The average workweek has been unexpectedly shortened to 34.4 hours.
Despite slowing wage gains and private hires, the odds of a May Fed rate hike jumped to 67% on Thursday from 49% on Wednesday.
Exxon Mobil (XOM) held early takeover talks with shale play Pioneer of natural resources (PXD), The Wall Street Journal reported Friday, citing sources. PXD stock has a market capitalization of $49 billion.
McDonald’s (MCD) cuts hundreds of jobs and cuts wages as part of major restructuring, The Wall Street Journal reported Friday. The fast-food giant had temporarily closed its offices on Monday and began notifying affected employees of the layoffs.
Samsung Electronics will cut the memory chip to a “significant” level after first-quarter operating profit fell more than 95%, much more than expected. This could be good news for Micron Technology (MU).
Taiwan semiconductor (TSM) will release its March and first-quarter sales early Monday.
Dow Jones Futures Today
Dow Jones futures rose 0.2% from fair value on Friday, reversing after small losses ahead of the jobs report. S&P 500 futures advanced 0.2%. Nasdaq 100 futures rose 0.1%.
The 10-year Treasury yield jumped 12 basis points to 3.41%. The 10-year yield hit a seven-month low on Thursday.
Hong Kong and European markets will be closed for Easter Monday.
Dow futures will reopen at 6 p.m. ET on Sunday, along with S&P 500 and Nasdaq futures.
Stock market rally
The stock market rally had a mixed week. The Dow Jones Industrial Average rose 0.6% in one week stock market trading. The S&P 500 index fell 0.1%. The Nasdaq fell 1.1% and the Russell 2000 2.5%.
U.S. crude oil prices jumped 6.65% to $80.92 a barrel, mostly on Monday after the surprise OPEC+ production cut. Crude futures jumped 20.9% in three weeks.
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) fell 3.5% for the week. The iShares Expanded Tech-Software Sector ETF (VIG) fell 1.6%. The Microsoft stock is a major holding of IGV. The VanEck Vectors Semiconductor ETF (SMH) lost 4.1%.
Reflecting more speculative history stocks, ARK Innovation ETF (ARKK) slipped 4.4% and ARK Genomics ETF (ARKG) fell 1.2%, although both rose on Thursday. Tesla stock is the top position among Ark Invest’s ETFs.
Tesla Price Cuts
Tesla slashed US prices for all of its electric vehicles overnight. It slashed prices of the Model S and X for the third time this year, both by $5,000 in this case. The Model S starts at $84,990 while the Model X now starts at $94,990.
Meanwhile, Tesla has slashed prices for the US Model 3 by $1,000 to an entry price of $41,990. The Model Y was reduced by $2,000 to $49,990.
Earlier in the week, Tesla again slashed prices for the Model 3 and Model Y in Australia.
Tesla cut global prices in January, with further US discounts on its S and X vehicles and additional European discounts in March. That, with new US EV credits, pushed Tesla deliveries in the first quarter at a record high. But they did not reach the FactSet views. Production again exceeded deliveries, with Model S and Model X production nearly twice as high as sales.
Many analysts predict that further Tesla price cuts are set to support demand, further squeezing its valuable margins.
Investors won’t have a chance to react to Tesla’s latest price cut until Monday. But Tesla stock fell 10.8% to 185.06 this week after the first quarter delivery report. Shares dipped below a buy point of 200.76 cup with handle and the 50-day moving average.
The base had formed below the 200 day line, which isn’t great. The buy point of 200.76 is no longer valid, but TSLA stock is working on a new handle, already present on a weekly chart, with an entry of 207.89. Of course, the 200-day line still looms just above it.
Tesla’s first-quarter earnings are expected on April 19, when investors will see how price cuts have so far affected profit margins.
Alibaba stock jumped 4.25% on Thursday to 102.74, breaking the downtrend of a cup-with-handle base, offering early entry. The official buy point for the handle is 105.15.
BABA stock surged the previous week after Alibaba announced it would split into six different units with their own CEOs and the ability to file IPOs.
Stock market rally analysis
Investors should judge the health of a market rally by major indices and stocks. But these give mixed signals. Major indexes look good. The Dow Jones rose, the S&P 500 barely fell and the Nasdaq showed a normal and constructive pullback, returning to the 12,000 level on Thursday.
Google stock had a solid week and Metaplatforms (META) continued to increase. Apple (AAPL) and Microsoft shares were little changed, bordering on buy zones. In the meantime, Exxon Mobil (XOM), Merck (M.K.R.) And UnitedHealth (A H) posted big weekly gains.
But there were a lot of big losers. Construction and industrials-related groups fell on Tuesday while growth stocks sold off on Wednesday. Many suffered significant damage, while others could reclaim their position fairly quickly. Thursday’s rebounds, often from key levels, were definitely encouraging.
Defensive growth and defensive stocks had a strong week, including medical, consumer staples and utilities.
Will the rotation between defensive and defensive growth stocks continue or was Thursday the start of a growth rebound?
Much of this may depend on how markets react to slowing economic data. Investors had cheered weaker economic reports, which could lead to Fed rate hikes ending sooner. But at least last week, markets were more concerned about recession risks.
Dow futures and Treasury yields reacted positively Friday to the March jobs report, which showed slowing hiring and slowing wage growth. But let’s see how the stock market rally reacts for real on Monday.
What to do now
Investors may have wanted to reduce their exposure last week. How much probably depended on the shares they owned.
If major stocks show strength in the coming days, investors may make further purchases. But don’t increase your exposure quickly and don’t focus too much on any one stock or sector, especially ones that are particularly volatile.
This is a good time to build your watchlists. With a rotation underway, be sure to cast a wide net to spot medicals and other reinforcing stocks.
Read The big picture every day to stay in tune with market direction and key stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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