Dow Jones futures will reopen on Sunday night. Futures rose slightly on Friday as Treasury yields jumped after the March jobs report showed slowing hiring and wage growth but also a drop in unemployment. Meanwhile, Tesla (TSLA) cut US prices on all of its electric vehicles.
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US stock markets were closed on Friday. The major indexes held up well in a holiday-shortened trading week, with midweek pullbacks looking healthy and normal. But many sectors and top stocks sold off sharply, including Tesla stock.
parent of Google Alphabet (GOOGLE) broke out on Thursday. China’s e-commerce giant Alibaba (BOTTOM) flashed an aggressive entry.
The video embedded in this article discusses weekly market action and reviews Google, BABA stock and Intuitive Surgical (ISRG).
Job Report
The Labor Department reported that nonfarm payrolls rose by 236,000, just below estimates for 240,000. That was down from a revised 326,000 in February.
Private payrolls rose just 189,000, below the view for 223,000. Manufacturing jobs are not expected to fall by 1,000.
The jobless rate also surprised, falling to 3.5%, back to long-term lows. However, the labor force participation rate climbed to a post-Covid high of 62.6%.
Hourly earnings rose 0.3% compared to February, in line. The annual increase cooled to 4.2%, below views for 4.3% and the lowest in years. Three-month annualized wage gains slowed to 3.2%.
The average work week is not expected to shorten, to 34.4 hours.
Despite slower wage growth and private hiring, the likelihood of a Fed rate hike in May jumped to 67% Thursday from 49% on Wednesday.
Other News
ExxonMobil (XOM) held early acquisition talks with the shale play Pioneer Natural Resources (PXD), The Wall Street Journal reported on Friday, citing sources. PXD stock has a $49 billion market cap.
McDonald’s (MCD) is cutting hundreds of jobs and slashing pay packages in a major restructuring, The Wall Street Journal reported on Friday. The fast-food giant temporarily closed its corporate offices on Monday and began notifying affected employees of the layoffs.
Samsung Electronics will cut memory-chip sales to a “significant” level after Q1 operating profit fell more than 95%, more than expected. That may be good news for Micron Technology (MU).
Taiwan Semiconductor (TSM) will report March and first quarter sales early Monday.
Dow Jones Futures Today
Dow Jones futures were up 0.2% versus the fair value on Friday, reversing from narrow losses ahead of the jobs report. S&P 500 futures advanced 0.2%. Nasdaq 100 futures climbed 0.1%.
The 10-year Treasury yield jumped 12 basis points to 3.41%. The 10-year yield hit a seven-month low Thursday.
Hong Kong and European markets will be closed for Easter Monday.
Dow futures will reopen at 6 pm ET Sunday, along with S&P 500 futures and Nasdaq futures.
Note that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally
The stock market rally had a mixed week. The Dow Jones Industrial Average rose 0.6% in weekly stock market trading. The S&P 500 index fell 0.1%. The Nasdaq fell 1.1% and the Russell 2000 fell 2.5%.
US crude prices jumped 6.65% to $80.92 a barrel, mostly on Monday after a surprise OPEC+ output cut. Crude oil futures rose 20.9% in three weeks.
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Growth ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) sank 3.5% for the week. The iShares Expanded Tech-Software Sector ETF (IGV) down 1.6%. Microsoft stock is a major IGV holding. The VanEck Vectors Semiconductor ETF (SMH) gave up 4.1%.
Mirroring stocks with a more speculative story, ARK Innovation ETF (ARKK) slipped 4.4% and ARK Genomics ETF (ARKG) fell 1.2%, though both rose on Thursday. Tesla stock is the No. 1 held in ETFs by Ark Invest.
Tesla Price Cuts
Tesla slashed US prices on all of its EVs overnight. It slashed the prices of the Model S and X for the third time this year, both by $5,000 this time. The Model S starts at $84,990 while the Model X now starts at $94,990.
Meanwhile, Tesla cut US Model 3 prices by $1,000 to an entry price of $41,990. The Model Y is cut by $2,000, to $49,990.
Earlier in the week, Tesla once again cut Model 3 and Y prices in Australia.
Tesla cut global prices in January, with further cuts in the US on its S and X cars and further discounts in Europe in March. That, combined with new US EV credits, pushed Tesla’s first quarter deliveries to a record high. But they fall short of FactSet’s views. Production once again exceeded deliveries, with Model S and X output nearly twice as high as sales.
Many analysts predict more Tesla price cuts are on the way to support demand, further cutting into its valuable margins.
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Tesla Stock
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 following the Q1 delivery report. Shares fell below the 200.76 cup-with-handle buy point and the 50-day moving average.
A base has formed below the 200-day line, which is not good. The 200.76 buy point is no longer valid, but TSLA stock is working on a new handle, which is on a weekly chart, with a 207.89 entry. Of course, the 200-day line is still above it.
Tesla’s earnings for the first quarter are due on April 19, when investors will see how price cuts have hit profit margins so far.
Google Stock
Google jumped 3.8% on Thursday to 108.42 on above-normal volume. Shares broke above a cup-with-handle buy point of 106.69 according to MarketSmith analysis.
Google’s CEO says the company will add chat AI to its search engine soon, then Microsoft (MSFT) added ChatGPT to its Bing search engine and other products.
Alibaba Stock
Alibaba stock fell 4.25% on Thursday to 102.74, breaking the downtrend of a cup-with-handle base, offering early entry. The official handle buy point is 105.15.
BABA stock rose last week after Alibaba said it would split into six different units with their own CEOs and the option to file for IPOs.
Stock Market Rally Analysis
Investors must judge the health of a market rally by the major indexes and leading stocks. But those give some mixed signals. The main indexes look fine. The Dow rose, the S&P 500 almost fell and the Nasdaq showed a normal, constructive return, recovering to the 12,000 level on Thursday.
Google stock had a solid week and Meta Platforms (META) continues to increase. Apple (AAPL) and Microsoft stock was little changed, on the edge of buy zones. Meanwhile, ExxonMobil (XOM), Merck (MRK) and UnitedHealth (UNH) had large weekly gains.
But there are many big losers. Construction and industrials-related groups fell on Tuesday while growth stocks sold off on Wednesday. Many suffered significant damage, while others were able to return to position relatively close. Thursday’s rebounds, mostly from key levels, were really encouraging.
Defensive and defensive names, including medicals, consumer staples and utilities, had a strong growth week.
Will the cycle continue in defensive and defensive growth stocks or will Thursday be the start of a growth rebound?
Much of that may depend on how markets respond to the slowdown in economic data. Investors were buoyed by weaker economic reports, which could prompt an earlier Fed rate hike. But at least for the past week, markets have been more concerned about recession risks.
Dow and Treasury futures reacted positively on Friday to the March jobs report, which showed slower hiring and cooling wage growth. But let’s see how the stock market rally actually reacts on Monday.
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What should be done now?
Investors may want to reduce exposure last week. How much likely depends on which stocks they own.
If the top stocks show strength in the coming days, investors may make some new purchases. But don’t increase exposure too quickly and don’t concentrate too much on a particular stock or sector, especially on particularly volatile ones.
This is a good time to build your watchlists. With constant rotation, make sure you cast a wide net to spot medical and other stocks that are coming in strong.
Read The Big Picture daily to stay in sync 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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