Dow Jones Futures: Bank of Japan Surprise; Tesla jumps

Dow Jones futures edged higher overnight, along with S&P 500 futures and Nasdaq futures after the Bank of Japan unexpectedly kept rate on hold. Shares of United Airlines and Moderna jumped on the news. Big job cuts at Microsoft could come on Wednesday.


The stock market rally had a relatively quiet session despite a solid decline for the Dow Jones.

Tesla (TSLA) continued its recovery from bear market lows, jumping 7.4% to 131.49. Shares have moved slightly above the 21-day line, but remain well below the 50-day and especially the 200-day line. Tesla China EV registrations rebound in the last week after the last big price cuts there. But it may be some time before investors get a clear picture of the impact of Tesla’s global price cuts and demand. Tesla’s Q4 earnings are expected on January 25th.

A pause of a few days would allow more stocks to be built up. This includes stocks that have rallied from early entries and could use handles.

Chevron (CVX), Vertex Pharmaceuticals (VRTX) and TJX Cos. (TJX) are three stocks that are currently active.

But in general, investors should be patient.

The Bank of Japan remains stable

The Bank of Japan left its monetary policy unchanged. The BoJ maintains its policy of keeping interest rates and Japanese government debt close to 0%. In December, the BoJ effectively hiked, leaving the 10-year Japanese bond yield to rise to 0.5%. This has fueled speculation that Japan’s central bank will end the zero rate policy altogether.

The BoJ’s decision to hold rates moved Dow futures, government bond yields and the dollar.

Key wins

United Airlines (UAL) and Interactive brokers (IBKR), reported Tuesday evening.

United Airlines’ earnings comfortably beat estimates for Q4, while the carrier also gave bullish guidance. UAL shares rose modestly after hours. Shares fell 0.9% to 51.20 on Tuesday, but after a sharp rise in eight sessions.

Interactive Brokers earnings also beat views. Shares of IBKR rose slightly in overnight action. Shares fell 2 cents to 77.19 on Tuesday, trading at an 80.95 buy point from double bottom base. Friday’s move above the 50-day line offered an early entry, but just ahead of earnings.

Charles Schwab (BLACK) and a transport company JB Hunt Transport Services (JBHT) are expected early Wednesday. Shares of SCHW rose 0.6% to 83.49 on Tuesday, staying in a buy zone. Shares of JBHT were down 0.3% at 176.29, between the 50-day and 200-day lines.

UAL shares are at IBD 50. VRTX shares are at IBD Big Cap 20.

Modern RSV vaccine

Moderna late Tuesday reported strong results for a vaccine against respiratory syncytial virus, or RSV. The biotech’s RSV vaccine uses its mRNA technology. Shares of MRNA rose steadily in extended trading, signaling a strong bounce from around the 10-week line. The Moderna RSV vaccine follows positive RSV results Pfizer (PFE) and GlaxoSmithKline (GSK).

Microsoft Job Cuts Loom

Meanwhile, Microsoft (MSFT) could announce further job cuts as early as Wednesday, Bloomberg reported, citing sources. The cuts may be “significantly larger” than previous cuts. Sky News reported that software giant Dow Jones could cut up to 5% of staff, which would be 11,000 jobs. In October, Microsoft cut about 1,000 positions.

Shares of MSFT rose 0.5% to 240.35 on Tuesday, their seventh straight gain and just below the 50-day line. Microsoft earnings are expected on January 24.

The video embedded in the article reviewed CVX stock, Eli Lilly (LLY) and Free market (MELLY).

Dow Jones futures today

Dow Jones futures were a fraction above fair value. S&P 500 futures rose 0.15 percent and Nasdaq 100 futures rose 0.2 percent. Futures were slightly lower ahead of the BoJ announcement.

The 10-year Treasury yield fell 5 basis points to 3.48%, turning lower after the Bank of Japan decision.

The dollar jumped against the Japanese yen.

Crude oil prices rose slightly.

Remember this night action in Dow futures and elsewhere does not necessarily become an actual trade in the next regular Stock Exchange session.

Join IBD’s experts as they analyze active stocks on IBD Live’s stock market rally

Stock market rallies

The stock market rally had a mixed session on Tuesday, showing modest intraday swings overall.

The Dow Jones Industrial Average fell 1.1% on Tuesday Exchange Tradingbut this was largely due to Goldman Sachs (GS) and Travelers (TRV) with the weight of the blue chips. The S&P 500 was down 0.2%, as Tesla shares and Morgan Stanley (Mrs. CA) top performers. The Nasdaq Composite advanced 0.1%. The small-cap Russell 2000 was down 0.1%.

U.S. crude oil prices rose 0.4 percent to $80.18 a barrel, closing above $80 for the first time in two weeks. Crude oil futures hit $81.23 intraday.

The yield on the 10-year Treasury note rose 2 basis points to 3.53%.


Among growth ETFs, the Innovator IBD 50 ETF (FFTY) submerged 0.2%. iShares Expanded Tech-Software Sector ETF (IGV) rose 0.3%, with Microsoft shares the main drag. VanEck Vectors Semiconductor ETF (SMH) rose 0.6%.

Reflecting the more speculative stocks of history, the ARK Innovation ETF (ARKK) jumped 2.9%, and the ARK Genomics ETF (ARKG) 1.8%, both extending gains from the 50-day line and moving toward their 200-day moving averages. TSLA shares remain the top performer in Ark Invest’s ETF, with Cathie Wood adding many more shares in recent weeks.

SPDR S&P Metals & Mining ETF (XME) fell by 1%. US Global Jets ETF (STREAMS) rose 0.4%, with UAL shares a large share. SPDR S&P Homebuilders ETF (XHB) decreased by 0.8%. Energy Select SPDR ETF (XLE) edged up 0.2%, with shares of CVX the main drag. The Financial Select SPDR ETF (45) declined by 0.7%. Select Healthcare Sector SPDR Fund (XLV) fell by 0.5%.

The five best Chinese stocks to watch now

Stocks in Buy Zones

Chevron advanced 1.65% to 180.49, moving above the 50-day line and a short-term high of 180.23. CVX shares have a 189.78 flat buy base, according to MarketSmith analysis.

Shares of VRTX jumped 3.7% to 311.58, bouncing above the 50-day line in an above-average trade. This offers an early entry for the Vertex, which has a 324.85 flat base point of purchase. VRTX shares also retook a previous buy point of 306.05. The biotech hit a record high of 324.75 on Dec. 8, but then fell to the 200-day line by the end of the year. Vertex shares recovered from there last week. Investors can wait to see if the stock pauses around the 50-day line.

TJX shares closed down 2 cents at 81.55, bouncing back intraday from a test of 81.29 flat base the point of purchase cleared on January 6th. Since then, the stock has been consolidating into a buy zone. The 5% deep flat base is just above the long 31% deep. cup consolidation.

Market Rally Analysis

The stock market rally had a relatively quiet session after last week’s big gains.

The S&P 500 briefly took the 4,000 level and pulled back, but only held above the 200-day.

The Russell 2000, which broke past its 50-day and 200-day lines last week, retreated after coming within 1% of its November highs.

The Nasdaq Composite is holding above its 50-day line, with the December highs and 200-day line the big areas of resistance on the horizon. Much of Tuesday’s strength came from Tesla, chip and cloud software names.

The Dow Jones fell solidly, largely on GS and Travelers shares. The blue chip index is comfortably above its moving averages, with only the December highs left to watch.

The market rally still looks healthy. A number of trends, including the Nasdaq advance-decline line and new highs versus lows, have improved over the past few sessions.

A pause or moderate retreat here would be normal or even healthy. The S&P 500 decisively breaking below the 200-day line, perhaps undercutting the 50-day, would be more concerning. On the upside, the late 2022 highs are the next key level.

While Chevron, TJX and Vertex and a few other names can be condemned, there is nothing to buy right now. A few stocks that looked promising on Tuesday morning, such as A monster drink (MNST), withered since the closure.

Many stocks have already risen over the past few sessions, such as Medpace (MERP) and MercadoLibre. A pause would allow many of these names to form handles or shelves. Meanwhile, other stocks are emerging.

Time the Market with IBD’s ETF Market Strategy

What should we do now

Patience is important. With the market poised for a possible pause and not many stocks flashing buy signals, resist the temptation to buy extended stocks. If this uptrend works, you will have safer options ahead. This includes recently hot stocks if the form is processing or touching support levels.

Definitely review your top stock screens to find ones that are showing promising action.

If the market offers more stocks flashing buy signals, you can gain exposure gradually over time. In addition to the various economic and Fed cross-currents, earnings season is underway, with the next two weeks likely to be the heaviest releases.

Read it The big picture every day to stay in sync with market direction and leading stocks and sectors.

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


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