Dow Jones Futures: GOP Set To Win House In Midterm Elections; Elon Musk Sells More Tesla Stock

Dow Jones futures were little changed overnight, along with S&P 500 futures and Nasdaq futures. The midterm election results come as Tesla CEO Elon Musk is selling more shares of TSLA.




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The stock market rally ran on Tuesday morning, fueled by lower Treasury yields and a weaker dollar. Major indexes pared strong gains as Bitcoin and other cryptocurrencies fell on a surprise Binance-FTX takeover deal. But stocks rebounded somewhat at the close.

Bitcoin related stocks like cryptocurrency exchanges Coinbase (COIN), trading app Robinhood Markets (HOOD), custodian of cryptocurrency Silvergate Capital (SI) and Bitcoin miners Marathon Digital (MARA) sold.

Looking ahead, the consumer price index looks great.

Primary Income

Walt Disney (DIS), Occidental Petroleum (OXY), Tesla (TSLA) rival Lucid Motors (LCID) and Array Technologies (ARRY) was reported on Tuesday.

Disney stock fell sharply overnight as earnings declined, even as Disney+ subscriber growth was strong. OXY stock, more than 20% owned by Warren Buffett’s Berkshire Hathaway (BRKB), less mixed income. LCID stock fell amid weak Q3 results and declining Lucid Air reservations. ARRY stock has a higher gap on strong earnings and guidance.

In other news, Meta Platform (META) will begin sweeping layoffs Wednesday morning, according to multiple reports.

Tesla Stock

Tesla CEO Elon Musk disclosed that he sold 19.5 million shares for $3.95 billion on November 4, 7 and 8. That may be to help pay for his recent deal with Twitter, although Musk said in early August that part of the sale was the last one he needed. .

Musk’s latest share sale likely helped fuel the recent decline in Tesla stock. More Chinese subsidies and concerns about Elon Musk’s dominance of Twitter could also hurt TSLA stock.

Tesla stock fell 2.9% to 191.30 in Tuesday’s session after falling to 186.75 intraday, above a May 2021 low.

Midterm Elections

Midterm election results poured in Tuesday night. Republicans are a virtual lock to retake the House of Representatives, but it hasn’t turned into a big GOP wave. The Senate is up for grabs, but final results in key races could be days away.

Either way, President Joe Biden and the Democrats no longer have full control of the White House and Congress. Financial markets tend to do better in gridlock in Washington. Stocks also traditionally do well in the third year of a presidential term.

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So a split Congress could be a positive for Wall Street, and could be good news for defense companies, private prisons and drug manufacturers. Again, the markets may have already priced some of that in.

Dow Jones Futures Today

Dow Jones futures were little changed compared to fair value, with DIS stock weighing in on the blue chips. S&P 500 futures rose 0.1% and Nasdaq 100 futures rose 0.3%.

China’s consumer inflation rose lower than expected. Wholesale prices fell.

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


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


Stock Market Rally

The stock market rally moved higher Tuesday morning but reversed that in the afternoon as the Bitcoin meltdown weighed on stocks. The S&P 500 and Nasdaq briefly turned negative before recovering.

The Dow Jones Industrial Average rose 1% in stock market trading on Tuesday. The S&P 500 index rose 0.6%. The Nasdaq composite advanced 0.5%. The small-cap Russell 2000 turned in a gain.

Tesla stock fell to near May 2021 intraday lows.

Apple and Microsoft stock rose 0.4%, Google stock rose 0.5% and Amazon fell 0.5%. Everyone is on this week but after last week’s fall.

The 10-year Treasury yield returned 9 basis points to 4.13%.

The US dollar fell sharply for the third day in a row, hitting its lowest level since late September.

US crude oil prices fell 3.1% to $88.91 per barrel. Natural gas futures fell 11.6%, continuing large daily swings.

Bitcoin Dives

Despite a weaker dollar, Bitcoin fell as the world No. 1 cryptocurrency exchange Binance agreed to buy rival FTX, which is facing a liquidity crisis. That’s a doubt that the Binance-FTX deal will actually happen, with FTX facing several setbacks in the past few days. Just a few months ago, FTX and founder Sam Bankman-Fried looked like potential saviors for other ailing crypto firms.

Bitcoin crashed to $17,484.20, the lowest since November 2020 and is now trading at $18,500. The pioneering digital currency broke below $20,000 on Monday night. Ethereum, Dogecoin and other cryptocurrencies showed similar or greater losses as well.

The FTX token collapsed by 80% on Tuesday after massive losses in the current days and weeks.

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COIN stock fell 10.8% to a four-month low. Binance’s purchase of FTX could create a new rival for Coinbase, which is also concerned about Bitcoin’s woes and worries about crypto-related businesses.

HOOD stock, which includes Bankman-Fried as an investor, dived 19%. MARA stock fell 5.3% to its lowest since July. After the shutdown, Marathon Digital reported a bigger-than-expected loss while revenue fell 75%.

SI stock fell 23% to its lowest since December 2020.

Tesla still owns some Bitcoin, while Elon Musk has held Dogecoin for some time.


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ETFs

Among the best-performing ETFs, the Innovator IBD 50 ETF ( FFTY ) fell 0.3%, while the Innovator IBD Breakout Opportunities ETF ( BOUT ) rose 0.1%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 1.3%, with MSFT stock a key component. The VanEck Vectors Semiconductor ETF (SMH) popped 2.2%.

The SPDR S&P Metals & Mining ETF (XME) rallied 1.9%. The Energy Select SPDR ETF (XLE) rose 0.1%. The Health Care Select Sector SPDR Fund (XLV) rose 0.5%.

Reflecting more speculative stocks in the story, the ARK Innovation ETF (ARKK) fell 0.4% and the ARK Genomics ETF (ARKG) rose 1.4%. Tesla stock remains the top holding in Ark Invest’s ETFs.


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Market Rally Analysis

The stock market rally looked badly damaged on Thursday after Fed chief Jerome Powell’s hawkish comments. But it’s been back and forth over the past three sessions, even with Bitcoin’s woes.

The Dow Jones took off last week’s highs after retaking the 200-day line on Monday.

The S&P 500 rose slightly above its 50-day line, although it was still below the short-term low of November 1.

The Nasdaq, weighed down by Tesla and technology problems, hit resistance at its 21-day moving average. It is below its 50-day and far from its 200-day lines.

But the Direxion Nasdaq-100 Equal Weighted ETF (QQQE) rose just 1% above its 50-day line.

Falling Treasury yields helped lift stocks on Tuesday, while a falling dollar was a key driver in the last three sessions.

Midterm election results may trigger market moves, but Thursday’s CPI inflation report will be key. A good CPI reading could fuel hopes for a slow rate hike by the Fed and low peak rate. But another hot inflation number could trigger a sharp selloff in stocks and bonds.

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Top Stocks

There were not many new buying opportunities on Tuesday.

GlobalFoundries (GFS) broke above a trendline and was a little underwhelming after earnings.

Albemarle (ALB) cleared an early entry, but quickly ran into its official buy point, closing below key levels. However, ALB stock is well above its 50-day line after a big move from Nov. 3 intraday lows.

Crocs (CROX) briefly regained a buy point while UnitedHealth (UNH) closed in buy range.

Many LNG stocks are close to purchase points.

Technological weakness is still a concern. Chip stocks are reversing, with the SMH ETF convincingly above its 50-day line. Megacap techs like Apple (AAPL) is trying to bounce back, but after massive sell-offs. The same goes for cloud software.


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What To Do Now

The stock market rally showed strength after sharp losses last week, with the Dow Jones and S&P 500 recovering key levels. Investors may still want to be cautious, with the CPI inflation report looming. Also, there aren’t many stocks that can be actioned right now, although many are setting up.

Investors must be ready to take action, by continuing to participate and build your watchlists. Growth stocks are generally out of favor, so make sure you cast a wide net to find stocks and sectors that are emerging leaders.

Definitely know the earnings, which remains active. Some stocks turned out to be big winners, while others rebounded strongly after initial falls. But there were some high-profile sales as well, as shown in Disney and Lucid stock overnight.

Read the Big Picture every day to stay in tune 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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