Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures. Tesla (TSLA), Google-parent Alphabet (GOOGL), ServiceNow (NOW) and GE Aerospace (GE) lead an onslaught of earnings reports in the coming week.
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Tesla, Google Set To Report Earnings As Megacap Tech Stocks Take A Hit
President Biden Exits 2024 Race
President Joe Biden will “stand down” from the 2024 election, he said in a statement released Sunday afternoon, following weeks of concerns following his disastrous presidential debate last month. Biden endorsed Vice President Kamala Harris, giving his “full support and endorsement for Kamala to be the nominee of our party.”
Biden’s exit could roil financial markets, which have increasingly priced in former President Donald Trump’s return to the White House. While Trump would likely still be the favorite against Harris or whoever is the Democratic nominee, Biden’s exit makes that far less of a sure thing.
Stock Market Rotates To Retreat
The stock market rally’s rotation into the Dow Jones, small caps and various non-tech sectors shifted into a broad retreat by Friday.
The Nasdaq tumbled and the S&P 500 retreated amid chip woes, the CrowdStrike (CRWD) IT outage and more. Nvidia (NVDA) and many other leaders sold off.
Earnings Ramp Up
Google, ServiceNow and GE aren’t in buy range, but aren’t far from being actionable. So is Tesla stock, though it fell solidly Friday as former President Donald Trump, endorsed by Elon Musk, pledged to roll back EV policies.
The Google and ServiceNow earnings reports will be key for the tech sectors, ranging from artificial intelligence, cloud computing, online advertising and business software.
In addition to Tesla, Google, ServiceNow and GE, it’s going to be a huge earnings week: AppFolio (APPF), United Rentals (URI), KLA Corp. (KLAC), Tenet Healthcare (THC), are reporting, as well as oil machinery plays Weatherford (WFRD) and TechnipFMC (FTI). And there are hundreds more.
Dow Jones Futures Today
Dow Jones futures open at 6 p.m. ET, along with S&P 500 futures and Nasdaq 100 futures.
Futures, Treasury yields and more could swing on the latest wild twist in the 2024 presidential race.
Bitcoin briefly fell to $65,850 on Biden’s exit, but reversed to above $67,500, up a fraction vs. 24 hours earlier. The cryptocurrency had rallied again in recent days in part on rising odds for Trump, who has voiced support for crypto in his 2024 run.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
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Stock Market Rally
The stock market rally started the week well, especially outside the Nasdaq. But Nvidia and chip stocks in general tumbled Wednesday, with that weakness broadening out late in the week.
The Dow Jones Industrial Average rose 0.7% in last week’s stock market trading, but fell near weekly lows after hitting a record intraday high Thursday. The small-cap Russell 2000 advanced 1.7%, but was well off Wednesday’s multiyear high.
The S&P 500 index gave up 2%, falling below its 21-day line after hitting a record Tuesday.
The Nasdaq tumbled 3.65%, decisively below its 21-day. It’s now just 1.7% above its 50-day moving average, after being 8.9% above that key level on July 10.
While the 50-day line could provide support, there’s no guarantee that the Nasdaq stops there.
The Invesco S&P 500 Equal Weight ETF (RSP) dipped 0.1% after hitting a record high intraday Thursday.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) slumped 2.4% to test its 50-day line after hitting a record high Tuesday. While better than the Nasdaq 100’s 4% tumble, QQEW’s slide shows that the sudden deterioration in tech growth stocks goes beyond the megacaps.
The CBOE Volatility Index, or VIX, surged nearly 33% to 16.53, the biggest weekly gain since March 2023. Still, the market fear gauge is well below the April (21.36) or October 2023 (23.08) peaks.
The 10-year Treasury yield rose five basis points to 4.24% after hitting a four-month low on Wednesday.
U.S. crude oil futures fell 2.5% to $80.13 a barrel, skidding 3.25% on Friday.
Copper futures plunged 8.25%, its worst week in two years. When “Doctor Copper” falls, that’s not a great sign for the global economy.
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ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) sold off 4.7% last week. The iShares Expanded Tech-Software Sector ETF (IGV) shed 2.8%, with ServiceNow stock a key holding and CrowdStrike also a member. The VanEck Vectors Semiconductor ETF (SMH) dived 9.6%, with Nvidia stock the top component.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) edged down 0.4% last week and ARK Genomics ETF (ARKG) inched up 0.2%. Tesla stock is the No. 1 holding across Ark Invest’s ETFs.
SPDR S&P Metals & Mining ETF (XME) slumped 2.4% last week. The Global X U.S. Infrastructure Development ETF (PAVE) pared gains to just 0.35%. U.S. Global Jets ETF (JETS) fell 0.7%. SPDR S&P Homebuilders ETF (XHB) advanced 3.25%. The Energy Select SPDR ETF (XLE) rose 2.05% and the Health Care Select Sector SPDR Fund (XLV) nudged down 0.25%. The Industrial Select Sector SPDR Fund (XLI) rose 0.55%, but was near weekly lows.
The Financial Select SPDR ETF (XLF) gained 1.2% and the SPDR S&P Regional Banking ETF (KRE) leapt 7.5%.
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Tesla Stock
Tesla fell 4% on Friday to 239.20, its lowest close since July 2. However, shares are still above their 21-day moving average. On a weekly basis, TSLA stock fell a relatively modest 3.6%, trading within the prior week and showing constructive action after a massive run-up. Tesla has a 271 handle buy point on a consolidation going back several months to a year.
Former President Donald Trump, in his GOP nomination speech Thursday night, pledged to remove the de facto national EV mandate. Ending the mandate would likely help Tesla by reducing competition, though California and some other blue states have their own EV mandates. Also eliminating mandates would reduce Tesla’s EV credits revenue. Meanwhile, Trump has previously stated that he favors scrapping EV subsidies, which would likely hurt Tesla.
Further, Trump said he wants Chinese EV makers to set up factories in the U.S., which would be a big shift from President Biden’s position. EV giant BYD (BYDDF) rose 1.7% to 31.06 on Friday, retaking a 30.84 buy point.
Musk has strongly endorsed Trump and is donating massive funds to a pro-Trump Super PAC.
On Saturday, Trump said that he read that Elon Musk gives him $45 million a month, so “We have to make life good for people like him.”
Tesla reports Tuesday night. Earnings are likely to fall sharply, though revenue could edge higher. The focus, as usual, will be on the conference call with Musk holding forth on deliveries, future models and various moonshots.
Tesla Falls Before Earnings As Trump Says This; BYD In Buy Zone
Nvidia Stock
Nvidia plunged 8.75% to 117.93 for the week, hitting its lowest levels since early June. The AI chip leader held above the 50-day line but closed slightly below the 10-week line. NVDA stock could be working on a double-bottom base, but needs more time.
If Nvidia breaks decisively lower, it would be a big negative for the tech sector.
What To Do Now
The Nasdaq is struggling while the rest of the market also is starting to fall back. It doesn’t seem like a good time to be making new buys, especially with earnings ramping up. Be quick about cutting losers, which will help reduce overall exposure.
The silver lining is that tech leaders are no longer priced to perfection heading into the heart of earnings season. That provides more of an opportunity for big upside reactions. But there will be big earnings blowups along the way.
It’s definitely a time to be engaged and prepared. That means getting your watchlists and game plan up to date this weekend and paying attention come Monday morning.
Nvidia stock is on IBD Leaderboard and the IBD 50. Google stock is on IBD Big Cap 20.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
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