Dow Jones futures rose slightly Sunday evening, along with S&P 500 futures and Nasdaq futures.
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The stock market fell into a correction last week as a hawkish Fed rate-hike outlook sent Treasury yields soaring. The major indexes broke several key support levels while leading stocks suffered heavy damage.
Stocks bounced Friday morning, but fizzled to end lower even as yields eased slightly.
Tesla (TSLA) has forged a new handle buy point, but fell solidly Friday and sharply for the week. TSLA stock is in danger of breaking, joining many other leaders in the past week or two.
Meta Platforms (META), FedEx (FDX), General Electric (GE), Costco Wholesale (COST), Li Auto (LI), Arista Networks (ANET), Vertex Pharmaceuticals (VRTX), Synopsys (SNPS) and CrowdStrike (CRWD) are among stocks holding up relatively well, for the moment.
But few of these names would look actionable in a rip-roaring bull market. In the current environment, this is a time for window shopping vs. making new buys.
Meta stock is on IBD Leaderboard. SNPS stock is on IBD Long-Term Leaders. CRWD stock is on the IBD 50. CRWD stock is on the IBD Big Cap 20. Meta Platforms was Friday’s IBD Stock Of The Day.
The video embedded in the article discussed the weekly market action in depth as well as analyzing Tesla, Meta and Vertex stock.
Dow Jones Futures Today
Dow Jones futures rose 0.2% vs. fair value. S&P 500 futures advanced 0.2% and Nasdaq 100 futures climbed 0.2%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze leading stocks and the market on IBD Live
Stock Market Correction
The stock market suffered sharp losses across the board for the week.
The Dow Jones Industrial Average fell 1.9% in last week’s stock market trading. The S&P 500 index slumped 2.9%. The Nasdaq composite tumbled 3.6%.
The 10-year Treasury yield leapt 12 basis points to 4.44%. The yield hit 4.49% on Thursday, the highest since October 2007. The U.S. dollar extended a long weekly win streak, with gains continuing Friday.
U.S. crude oil futures rose 1 cent a barrel to 90.03 a barrel, falling from 2023 highs before rebounding slightly on Friday.
The market correction took hold after Wednesday, with the S&P 500 and Nasdaq closing below the low of their Aug. 29 follow-through days, a highly bearish sign. The S&P 500 and Dow have undercut their August lows, with the Nasdaq not far from it.
The small-cap Russell 2000 skidded 3.8% last week and the Invesco S&P 500 Equal Weight ETF (RSP) lost 3.3%. Both fell well below their 200-day lines to their worst levels since early June. Those reflect the weak breadth plaguing the market for a long time.
Arguably, the market was “due” for a bounce, but Friday’s morning gains fizzled. Even at session highs, Friday’s gains weren’t that meaningful, but it’s discouraging to see bulls struggle to make a stand.
Very few stocks are flashing buy signals right now.
Leading stocks have suffered a lot of damage. Nvidia (NVDA) is now decisively below its 50-day line. Celsius Holdings (CELH) plunged to just below its 50-day. A number of stocks that had looked promising, such as Uber Technologies (UBER), DraftKings (DKNG) and ServiceNow (NOW), sold off amid the market correction.
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ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) plunged 5% last week. The iShares Expanded Tech-Software Sector ETF (IGV) shed 3.2%, with CRWD stock a member. The VanEck Vectors Semiconductor ETF (SMH) sank 3.3%, the third straight hefty loss. SNPS stock is part of IGV and SMH.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) plunged 9.85% last week and ARK Genomics ETF (ARKG) sold off 8.5%. Tesla stock is the No. 1 holding across Ark Invest’s ETFs, though Cathie Wood’s Ark sold 170,000 Tesla shares from Tuesday-Thursday.
SPDR S&P Metals & Mining ETF (XME) retreated 3.3% last week. The Global X U.S. Infrastructure Development ETF (PAVE) sank 2.5%, round-tripping gains from a June breakout. U.S. Global Jets ETF (JETS) descended 4.6%, continuing a sharp descent. SPDR S&P Homebuilders ETF (XHB) stepped 3.45%. The Energy Select SPDR ETF (XLE) gave up 2.9% and the Health Care Select Sector SPDR Fund (XLV) slumped 1.5%, with VRTX stock a holding. The Industrial Select Sector SPDR Fund (XLI) gave up 3.1%, slicing below its 40-week, with GE and FDX stock both holdings.
The Financial Select SPDR ETF (XLF) shed 3.4% and the SPDR S&P Regional Banking ETF (KRE) tumbled 5.8%.
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Tesla Stock
Tesla stock tumbled nearly 11% to 244.88 this past week, round-tripping all of the prior week’s gains spurred by the bullish analyst call on the EV maker’s Dojo supercomputer and self-driving prospects. TSLA stock now has a handle, giving it a 278.98 buy point. But shares are now 4% below the 50-day line, with several recent declines coming on heavy volume. Analysts are rushing to slash third-quarter delivery estimates, with Tesla likely to release actual figures around Oct. 2.
Is Tesla the next leading stock to crack?
Stocks To Watch
Meta stock dipped 0.4% to 299.08, ending the week below the 50-day line. The internet giant now has a handle, giving it a lower buy point of 312.87, according to MarketSmith. The Facebook parent is expected to discuss its metaverse and artificial intelligence efforts at its annual Connect conference on Sept. 27-28.
GE stock fell 3.7% to 111.25, an outside week undercutting the 50-day in a tight flat base. LULU stock and Vertex rebounded intraday from near their 50-day lines. Arch Capital and Costco pulled back from near buy points. LPG stock rose toward a cup-with-handle buy point.
FDX stock gapped slightly above its 50-day line on FedEx earnings this past week, with Thursday’s high offering an early entry.
COST stock is pausing near a flat-base buy point, bouncing from near the 50-day line on Friday to end the week fractionally higher. Costco earnings are due Tuesday.
ANET stock fell 2.4% to 180.34, failing to reclaim the 50-day line Friday. Technically, Arista is in a prior buy zone, but investors likely should wait for more strength.
Synopsys stock declined slightly for a third straight week, off 1.1% to 446.85. The chip design software maker tried and failed to reclaimed its 50-day on Friday. SNPS stock has a buy point at 468.03 or 471.15, but breaking a short downtrend could offer an early entry.
VRTX stock rose solidly midweek, but faded to close up just 0.2% at 349.63, above the 50-day line within a flat base. The Sept. 20 high offers an early entry.
CRWD stock technically is in an old buy zone, but investors may want to see more strength. The cybersecurity leader tried to jump Thursday after giving strong long-term guidance, but fell back amid market woes. A move above Thursday’s high might be an aggressive entry.
LI stock fell below its 50-day line, rising back toward that level on Friday. The China EV startup has a double-bottom base, but a decisive move above the 50-day line would offer an early entry.
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What To Do Now
The stock market is in a correction. It’s not a time to be taking new positions and most leading stocks have suffered serious damage in any case. The few stocks that are holding up could easily break down if the broader market continues lower.
The correction could be over soon, or last for several weeks or even months.
Don’t try to guess when a new market rally will take hold. Your job is simply to be ready when that occurs. Keep your watchlists updated.
You’ll have some stocks that are close to being actionable, but you should have a number of stocks showing strong relative strength that aren’t quite in position.
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 and Threads at @edcarson1971 for stock market updates and more.
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