Dow Jones futures edged lower overnight, along with S&P 500 futures and Nasdaq futures.
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The new stock market correction suffered heavy losses again Thursday, as the 10-year Treasury yields soared in a day two reaction to the Fed meeting. The S&P 500 undercut its August lows, with the Nasdaq and Dow Jones coming close.
Leading stocks came under more pressure. Nvidia (NVDA), looking a lot like the Nasdaq, is nearing its August lows. Celsius Holdings (CELH) sold off hard for a second day, undercutting the 50-day line. Adobe (ADBE), Uber Technologies (UBER), DraftKings (DKNG), Visa (V) and Amazon.com (AMZN) gapped below their 50-day averages after holding that level for a few days.
Tesla (TSLA) has roundtripped recent gains, but is holding key support while forging a new buy point. Meta Platforms (META) also has a new, lower entry. General Electric (GE), Lululemon Athletica (LULU), Dorian LPG (LPG), Vertex Pharmaceuticals (VRTX), Arch Capital Group (ACGL) and Costco Wholesale (COST) also are stocks holding up relatively well — for now.
Investors should have limited exposure and not be looking to make new buys until the market shows real strength.
Nvidia stock, Meta, Tesla, Uber and Celsius are all IBD Leaderboard stocks, with DKNG stock on the Leaderboard watchlist. Tesla, Celsius, Lululemon and Meta stock are on the IBD 50. Tesla stock is on the IBD Big Cap 20. Dorian LPG was Thursday’s IBD Stock Of The Day.
Dow Jones Futures Today
Dow Jones futures fell 0.1% vs. fair value. S&P 500 futures and Nasdaq 100 futures declined 0.1%.
The 10-year yield rose slightly to 4.5%.
Overnight, the Bank of Japan meets, with a lot of uncertainty over whether the new BoJ governor will further ease the ultra-easy monetary policy.
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 Correction
The stock market correction worsened, with surging Treasury yields pressuring the major indexes.
The Dow Jones Industrial Average fell 1.1% in Thursday’s stock market trading. The S&P 500 index retreated 1.6% and the Nasdaq composite skidded 1.8%, a day after both undercut the low of their Aug. 29 follow-through days, a highly bearish sign.
The S&P 500 undercut its August lows, hitting its worst levels in nearly three months. The Nasdaq hit its worst close since early June; the Dow marked its lowest finish in over two months.
Market breadth, weak for a long time, was abysmal Thursday, with losers and new lows dominating.
The small-cap Russell 2000 sank 1.6% and the Invesco S&P 500 Equal Weight ETF (RSP) tumbled 1.7%. Both are at their worst levels since early June and losing sight of their 200-day lines.
U.S. crude oil prices fell 3 cents to $89.63 a barrel. Copper prices declined 2.1%.
The 10-year Treasury yield gapped up 13 basis points to 4.48%, the highest yield since October 2007. The two-year Treasury yield, more closely aligned with the Fed rate outlook, rose 3 basis points to 5.15%, a fresh 17-year high.
As a soft landing thesis takes hold with Wall Street and the Fed, the yield curve is becoming less inverted.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) slumped 2.6%. The iShares Expanded Tech-Software Sector ETF (IGV) skidded 2.4%. The VanEck Vectors Semiconductor ETF (SMH) retreated 2%. Nvidia stock is the top weight in SMH.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) tumbled 3% and ARK Genomics ETF (ARKG) 2.65%. Tesla stock is the No. 1 holding across Ark Invest. DKNG stock is a top-10 holding. Cathie Wood’s Ark has trimmed its Tesla and DraftKings stakes recently.
SPDR S&P Metals & Mining ETF (XME) slipped 2%. U.S. Global Jets ETF (JETS) descended 1%. SPDR S&P Homebuilders ETF (XHB) stepped down 2.5%. The Energy Select SPDR ETF (XLE) fell 1.4% and the Health Care Select Sector SPDR Fund (XLV) gave up 0.9%, with VRTX stock part of XLV.
The Industrial Select Sector SPDR Fund (XLI) backed off 1.6%, with GE stock a major holding. The Financial Select SPDR ETF (XLF) also lost 1.6%.
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Stocks To Watch
Tesla stock fell 2.6% to 255.70, essentially 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. But shares essentially held the 50-day line. TSLA stock now has a proper handle, giving it a 278.98 buy point.
Meta stock fell 1.3% to 295.55, falling a little further below its 50-day line. But after wedging up in low volume for several weeks, the internet giant is having a bit of a shakeout. It now boasts a handle, giving it a lower buy point of 312.87.
Meanwhile, GE stock tested its 50-day line, closing just below it but within 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, according to MarketSmith. LPG stock rose toward a cup-with-handle buy point.
Remember, stocks can hold support until they don’t, as Adobe, DraftKings, Uber, Visa and Amazon showed Thursday. The market is in a correction. If the major indexes continue to slide, most remaining resilient stocks will buckle.
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What To Do Now
Investors should be largely or even entirely in cash, given the heavy selling in recent days and the past several weeks.
At some point, the stock market will get a bounce. But don’t get excited by a strong open or even a strong day or two. The best days in market history are in corrections or bear markets.
Instead, wait for evidence that a new market rally has real momentum, with a follow-through day to confirm the uptrend.
For now, work on your watchlists. A few stocks are holding up well, but a lot of leaders have been seriously damaged and need time to repair. So focus on stocks showing relative strength.
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 on Threads at @edcarson1971 for stock market updates and more.
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