Dow Jones Futures: Market rally pulls back in Taiwan, Fed hawkish: AMD leads 7 earnings drivers

Dow Jones futures were little changed overnight, as were S&P 500 and Nasdaq futures. Advanced micro-systems (AMD) headlined notable earnings after the close.




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The stock market rally retreated on Tuesday, with the Dow leading the declines amid House Speaker Nancy Pelosi’s trip to Taiwan and hawkish comments from the Fed.

amd shares, SolarEdge Technologies (SEDG), lithium game Livent (LTHM), western oil (OXY), Pioneer of natural resources (PXD), healthcare cost management firm Evolutionary Health (EVH) and PayPal (PYPL) reported Tuesday evening.

Early Wednesday, China e-commerce business Ali Baba (BABA) publishes quarterly results. The Chinese electric vehicle and battery giant BYD (BYDDF) will likely report July sales, following delivery data from Nio (NIO), Xpeng (XPEV) and Li-Auto (LI) Monday.

(The video embedded in the article discusses market action and analysis Onsemi (ON), KBR (KBR) and Harmony Biosciences (HRMY).)

Dow Jones Futures Today

Dow Jones futures have risen a fraction of fair value. S&P 500 futures fell 0.15%. Nasdaq 100 futures fell 0.3%.

Remember that overnight action on futures contracts on Dow Jones and elsewhere does not necessarily translate into actual trading in the next regular trading session.

Key wins

AMD stock fell sharply after AMD earnings topped views, but revenue forecasts fell short. Shares rose 2.6% to 99.29 in Tuesday’s regular session, continuing a strong run since a 52-week low on July 5. AMD stock is still below its 200-day line.

SEDG stock fell after earnings just beat the pace and revenue lagged slightly. SolarEdge stock rose 1.9% on Tuesday to 365.41, up sharply in recent days on more solar revenue and a tax-spending and climate bill that promotes energy green.

LTHM stock edged higher after Livent’s earnings beat views and revenue expectations were strong. Livent stock jumped 6.8% on Tuesday to 25.93, resuming its 50- and 200-day moving averages. Rival Albemarle (ALB) reports Wednesday evening. ALB stock rose later. Shares rose 1.6% on Tuesday, approaching a buy point.

OXY stock fell slightly despite Occidental’s earnings comfortably beating quarterly targets. Warren Buffett’s favorite energy stock fell 0.3% on Tuesday, just above its 50-day line in a cup basis.

PXD stock held steady after earnings topped and revenue missed, part of a big week for shale results. Pioneer Natural Resources also announced a dividend increase. PXD stock edged down 0.1% on Tuesday, below its 50-day mark.

EVH stock soared after Evolent earnings beat views and the healthcare management company raised its full-year guidance. Evolent stock rose 1.2% on Tuesday, just off the buy range.

PYPL stock jumped after PayPal’s earnings beat and forecasts were strong. The digital payments leader has also confirmed that activist investor Elliott Management has taken a $2 billion stake. Shares rose 1.2% on Tuesday to 89.63, continuing to rebound from late-June lows but well below the 200-day line.


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BABA stock rose 2.5% to 92.62 on Tuesday ahead of the results, but remains below its 50- and 200-day lines.

BYD stock fell 1.5% to 36.75 on Tuesday, slightly below its 50-day line as it works on further consolidation.

BYD is expected to record another month of record sales with several new growth engines set to kick off. This includes the BYD Seal, a You’re here (TSLA) Rival of the Model 3, which begins deliveries this month. The Chinese electric vehicle giant is also expanding into a host of new markets in the coming weeks and months.

Tesla stock, for its part, rose 1.1% to 901.76, extending a winning streak to five sessions. Stocks have once again reached resistance at the 200-day line.


Join the experts at IBD as they analyze actionable stocks in the stock market rally on IBD Live


Stock market rally

The stock market rally closed lower after trading higher and lower during the session.

Speaker Pelosi traveled to Taiwan on Tuesday, intending to meet with senior officials. Chinese authorities had threatened to take action if she continued her visit and had carried out or announced various military shows of force. After Pelosi’s plane landed, the major clues bounced back but then turned mixed.

The Dow Jones Industrial Average fell 1.2% in Tuesday’s trading, with blue chips not far from session lows. The S&P 500 index fell 0.7%. The Nasdaq composite, up for much of the day, closed around 0.2%. The small-cap Russell 2000 fell 0.1%

U.S. crude oil prices rose 0.6% to $94.42 a barrel. US natural gas prices fell 7%.

The 10-year Treasury yield jumped 13 basis points to 2.74%, rebounding from an intraday low of just under 2.58%. Yields rebounded as Pelosi-Taiwan fears eased. San Francisco Fed President Mary Daly and Chicago Fed President Charles Evans became the latest dovish policymakers to point out that the central bank is now far from done fighting inflation.

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Among the top ETFs, the Innovator IBD 50 ETF (FFTY) rose 1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) fell 1%. The iShares Expanded Tech-Software Sector ETF (IGV) edged up 0.2%. ETF VanEck Vectors Semiconductor (SMH) fell 0.2%.

The SPDR S&P Metals & Mining ETF (XME) fell 1.3% and the Global X US Infrastructure Development ETF (PAVE) lost 1.5%. US Global Jets (JETS) were down 1%. SPDR S&P Homebuilders (XHB) fell 3.1% as rising Treasury yields weighed on the sector. ETF Energy Select SPDR (XLE) fell 0.2% and ETF Financial Select SPDR (XLF) lost 1.1%. The SPDR healthcare sector fund (XLV) fell 0.4%.

Mirroring stocks with more speculative stories, ARK Innovation ETF (ARKK) rose 2.7% and ARK Genomics ETF (ARKG) veered 2.3%. TSLA stock remains one of Ark Invest’s leading ETF stocks. Ark also owns a small stake in shares of BYD.


Five best Chinese stocks to watch now


Market rally analysis

The stock market rally opened lower but then rebounded, only to fade again.

Given the geopolitical headwinds and hawkish comments from the Fed, a modest market pullback was not too much of a concern, especially given the market rally in recent weeks.

The Nasdaq held support near its early June highs.

The Dow Jones, S&P 500 and Russell 2000 are not quite up to their early June highs. Importantly, the major indices are facing several other resistance levels, most notably the 200-day line.

Market leadership is improving.

Solar, Oil & Gas, Power, Defense, Heavy Construction, and a variety of medical stocks are doing well, although some are just settling in while others are expanding. Even a few chip names are showing strength or building up, though AMD stocks and the whole group are still on a long road to recovery. Some steel and metals games and maybe even fertilizer stocks are starting to rebound.

But after rising significantly over the past few weeks, often in light volume, many of these stocks could use a break. So, a sideways market action over a few days or weeks could be constructive.


Time the Market with IBD’s ETF Market Strategy


What to do now

Investors should remain modestly invested. It is still unclear if this is a sustainable uptrend or another bearish rally. Remember: the more aggressive you are in entering the market, the faster you should exit if conditions deteriorate.

Whether you are 10% or 50% invested, look for early entries and try to start positions close to buy points. This can make it easier to get a cushion, as many stocks pull back after brief periods.

Now is definitely the time to be closely engaged with the market.

Read The Big Picture every day to stay in tune with market direction and top stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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