Dow Jones futures will reopen Sunday evening. Futures rose slightly Friday while Treasury yields jumped after the March jobs report showed slowing hiring and wage growth but also declining unemployment. Meanwhile, Tesla (TSLA) cut U.S. prices on all its electric vehicles.
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U.S. stock markets were closed Friday. The major indexes held up well in a holiday-shortened trading week, with midweek pullbacks looking healthy and normal. But many sectors and leading stocks sold off hard, including Tesla stock.
Google parent Alphabet (GOOGL) broke out Thursday. China e-commerce giant Alibaba (BABA) flashed an aggressive entry.
The video embedded in this article discusses the weekly market action and analyzed Google, BABA stock and Intuitive Surgical (ISRG).
Jobs Report
The Labor Department reported that nonfarm payrolls rose by 236,000, just below estimates for 240,000. That’s down from February’s revised 326,000.
Private payrolls rose just 189,000, well below views for 223,000. Manufacturing jobs unexpectedly dipped 1,000.
The jobless rate also surprised, dipping to 3.5%, back to long-term lows. However, the labor force participation rate climbed to a post-Covid high 62.6%.
Hourly earnings rose 0.3% vs. February, in line. The annual gain cooled to 4.2%, below views for 4.3% and the lowest in years. The three-month annualized wage gain slowed to 3.2%.
The average workweek unexpectedly shortened, to 34.4 hours.
Despite the slower wage gains and private hiring, the odds of a Fed rate hike in May jumped to 67% Thursday from 49% on Wednesday.
Other News
Exxon Mobil (XOM) has held early takeover talks with shale play Pioneer Natural Resources (PXD), The Wall Street Journal reported Friday, citing sources. PXD stock has a $49 billion market cap.
McDonald’s (MCD) is cutting hundreds of jobs and reducing pay packages in a big restructuring, The Wall Street Journal reported Friday. The fast-food giant had temporarily closed its corporate offices on Monday and began informing affected employees of layoffs.
Samsung Electronics will cut memory-chip out to a “meaningful” level after Q1 operating profit plunged more than 95%, far more than expected. That could 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 rose 0.2% vs. fair value on Friday, reversing from slim losses before 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 p.m. ET Sunday, along with S&P 500 futures and Nasdaq futures.
Remember that overnight action in Dow futures and elsewhere doesn’t 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 dipped 0.1%. The Nasdaq fell 1.1% and the Russell 2000 slumped 2.5%.
U.S. crude oil prices leapt 6.65% to $80.92 a barrel, mostly on Monday after the surprise OPEC+ output cut. Crude futures have surged 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) fell 1.6%. Microsoft stock is a major IGV holding. The VanEck Vectors Semiconductor ETF (SMH) gave up 4.1%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) skidded 4.4% and ARK Genomics ETF (ARKG) dropped 1.2%, though both rose Thursday. Tesla stock is the No. 1 holding across Ark Invest’s ETFs.
Tesla Price Cuts
Tesla cut U.S. prices on all its EVs overnight. It reduced Model S and X prices for the third time this year, both by $5,000 in this instance. The Model S starts at $84,990 while the Model X now begins at $94,990.
Meanwhile, Tesla trimmed U.S. Model 3 prices by $1,000 to an entry price of $41,990. The Model Y was cut $2,000, to $49,990.
Earlier in the week, Tesla cut Model 3 and Y prices in Australia once again.
Tesla slashed global prices in January, with further U.S. cuts on its S and X vehicles and additional European discounts in March. That, along with new U.S. EV credits, pushed first-quarter Tesla deliveries to a record high. But they fell short of FactSet views. Production exceeded deliveries once again, with Model S and X output nearly twice as high as sales.
Many analysts predicted more Tesla price cuts were on the way to support demand, further cutting its prized margins.
Tesla will build a new Shanghai facility to make its Megapack batteries, state media reported Sunday. Tesla’s energy storage business uses batteries from China’s CATL.
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Tesla Stock
Investors won’t get a chance to react to the latest Tesla price cut until Monday. But Tesla stock tumbled 10.8% to 185.06 this week following the Q1 delivery report. Shares plunged below a 200.76 cup-with-handle buy point and the 50-day moving average.
The base had formed below the 200-day line, which is not great. The 200.76 buy point is no longer valid, but TSLA stock is working on a new handle, already present on a weekly chart, with a 207.89 entry. Of course, the 200-day line still looms just above that.
Tesla earnings for the first quarter are due 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 in above-normal volume. Shares rallied past a cup-with-handle buy point of 106.69 according to MarketSmith analysis.
Google’s CEO said the company will add a chat AI to its search engine soon, after Microsoft (MSFT) added ChatGPT to its Bing search engine and other products.
Alibaba Stock
Alibaba stock popped 4.25% on Thursday to 102.74, breaking the downtrend of a cup-with-handle base, offering an early entry. The official handle buy point is 105.15.
BABA stock surged in the prior week after Alibaba said it would split into six different units with their own CEOs and the option of filing for IPOs.
Stock Market Rally Analysis
Investors should judge the health of a market rally by the major indexes and leading stocks. But those are giving some mixed signals. The major indexes look fine. The Dow rose, the S&P 500 barely fell and the Nasdaq showed a normal, constructive pullback, recovering the 12,000 level on Thursday.
Google stock had a solid week and Meta Platforms (META) kept rising. Apple (AAPL) and Microsoft stock were little changed, at the edge of buy zones. Meanwhile, Exxon Mobil (XOM), Merck (MRK) and UnitedHealth (UNH) had big weekly gains.
But there were a lot of big losers. Construction and industrial-related groups tumbled Tuesday while growth stocks sold off Wednesday. Many suffered significant damage, while others could move back into position relatively soon. Thursday’s rebounds, often from key levels, were definitely encouraging.
Defensive growth and defensive names had a strong week, including medicals, consumer staples and utilities.
Will the rotation into defensive and defensive growth stocks continue or was Thursday the start of a growth rebound?
A lot of that may depend on how markets respond to slowing economic data. Investors had cheered weaker economic reports, which could bring Fed rate hikes to an earlier close. But at least last week, markets were more worried about recession risks.
Dow futures and Treasury yields reacted positively Friday to the March jobs report, which showed slower hiring and cooling wage growth. But let’s see how the stock market rally reacts for real on Monday.
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What To Do Now
Investors may have wanted to reduce exposure last week. How much likely depended on which stocks they owned.
If leading stocks show strength in the coming days, investors can make some new buys. But don’t ramp up exposure quickly and don’t get too concentrated in a particular stock or sector, especially those that are especially volatile.
This is a good time to be building up your watchlists. With a rotation going on, make sure you’re casting a wide net to spot medicals and other stocks that are coming on strong.
Read The Big Picture every day to stay in sync with the 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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