Dow Jones futures fell early Wednesday, along with S&P 500 futures and Nasdaq futures. Palo Alto Networks retreated after reporting earnings after the close.
The stock market rally fell modestly Tuesday, still trading in a recent range. Megacaps Broadcom and Amazon.com have forged handles, offering lower buy points.
Tesla rose Tuesday as CEO Elon Musk pledged to stick with the EV play for five more years and reiterated robotaxi plans. Meanwhile, China rival Xiaomi broke out ahead of unveiling its so-called Model Y killer while EV giant BYD hit a new high.
The video embedded in this article reviews Tuesday's market action and analyzes Xiaomi, Quanta Services and Amazon stock.
Broadcom stock is on the IBD Leaderboard watchlist and is on SwingTrader. PWR stock is on the IBD 50. Quanta Services was Tuesday's IBD Stock Of The Day. Broadcom was Monday's Stock Of The Day.
Dow Jones Futures Today
Dow Jones futures lost 0.7% vs. fair value. S&P 500 futures and Nasdaq 100 futures fell 0.5%. Futures have pared overnight losses. Palo Alto stock is an S&P 500 and Nasdaq 100 component.
The 10-year Treasury yield rose several basis points to 4.53%, approaching recent highs.
Crude oil futures rose 1%.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
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Earnings
PANW stock fell solidly before the open after Palo Alto earnings beat and revenue just eked past views. But gross margins missed some forecasts while the cybersecurity giant guided in line. Palo Alto stock edged up 0.1% to 194.48 on Tuesday, just below a 195.42 cup-with-handle buy point.
China EV maker XPeng reported a much-smaller-than-expected Q1 loss early Wednesday while the Tesla rival's sales more than doubled. XPeng stock rose solidly, signaling a move above the 50-day line and near an early entry within a deep base.
TJX Cos. narrowly topped Q1 views, but shares fell modestly.. TJX stock is in range of a short consolidation next to and above the top of a prior base..
Medtronic beat quarterly views with the Wall Street Journal reporting that the medical products giant will spin off its diabetes unit its own stand-alone company. Shares edged lower.
Lowe's rose on mixed earnings, but shares are set to remain below the 200-day.
Target earnings and sales missed. Shares fell solidly, in a long downturn.
Stock Market Rally
The stock market rally saw modest losses Tuesday. But it was an inside day for the major indexes, which closed off afternoon lows.
The Dow Jones Industrial Average fell 0.3% in Tuesday's stock market trading. The S&P 500 index and The Nasdaq composite sank 0.4%. The small-cap Russell 2000 rose a fraction.
After the major indexes surged above their 200-day moving averages last week, the recent market pause has been constructive. A modest pullback would be fine, as long as the S&P 500 and Nasdaq hold above their 200-day lines.
The pause has let many stocks work on handles. In addition to Broadcom stock and Amazon, Quanta Services and Futu Holdings finished new handles Tuesday. Meta Platforms is on track to do so on Wednesday.
U.S. crude oil prices dipped 0.2% to $62.56 a barrel.
The 10-year Treasury yield edged higher to 4.48%, backing off a morning move above 4.5% for a second straight session.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF climbed 0.6%. The iShares Expanded Tech-Software Sector ETF dipped 0.2%, with Palo Alto stock a top-10 holding. The VanEck Vectors Semiconductor ETF edged down 0.2%. Broadcom stock is a major SMH position.
Reflecting more-speculative story stocks, ARK Innovation ETF inched up 0.1% and ARK Genomics ETF rose 0.55%. Tesla stock is still the No. 1 holding across Ark Invest's ETFs. Cathie Wood's ARK also owns a small stake in Amazon stock and a tiny holding of BYD.
SPDR S&P Metals & Mining ETF advanced 0.2%. The Energy Select SPDR ETF sank 0.9% and the Health Care Select Sector SPDR Fund climbed 0.25%.
The Industrial Select Sector SPDR Fund fell 0.5%.
The Financial Select SPDR ETF declined 0.4%.
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Tech Titans In Buy Areas
Broadcom and Amazon, both with trillion-dollar valuations, forged proper handles as of Tuesday's close.
Broadcom stock now has a 235.28 buy point on a daily chart, though the handle doesn't offer much of a shakeout after a big run-up. AVGO may be best-positioned technically of all the AI chip plays right now.
Amazon stock has a 214.84 cup-with-handle buy point, according to MarketSurge. But the cloud-computing and e-commerce giant is not that far above its 200-day line. And its relative strength line hasn't recovered much in recent weeks. Can AMZN stock be a market leader once again?
Elon Musk Comments Lift Tesla Stock
CEO Elon Musk said early Wednesday that he will commit to Tesla for the next five years. He also plans to slash campaign donations after spending massively to help elect Donald Trump in 2024.
Later on CNBC, Musk reiterated that a Tesla robotaxi launch will take place in Austin by the end of June. It'll start with "maybe 10" robotaxis in the first week, geofenced to part of the city. They won't have human safety drivers but will have teleoperators supervising, he said. Musk reiterated his forecast for mass self-driving by the end of 2026.
Tesla stock edged up 0.5% to 343.82, well off an intraday three-month high of 354.99. Shares are extended from an aggressive entry above the 200-day line as they work their way up the right side of a very deep base. Investors are excited at the prospect of a refocused Musk and robotaxis.
Musk also said that Tesla EV demand is strong outside Europe, but most indications point to broad global weakness continuing even with generous incentives.
Notably, handset-turned-EV maker Xiaomi will unveil the YU7 crossover, a Model Y rival, on Thursday. The SU7, Xiaomi's only EV so far, has been consistently outselling the Model 3 in China, even with production constraints.
Xiaomi's U.S. shares rose 4.2% to 35.12, clearing a 34.26 cup-with-handle buy point.
Meanwhile, BYD stock climbed 2.7% to 57.25, hitting a new high. The world's largest EV maker is now extended from a cup-with-handle base.
What To Do Now
The stock market rally has staging a bullish pause, letting the indexes and leaders catch their breath. A modest pullback that undercuts the past few days of action could be constructive as well, though investors may not feel that way in the moment.
Already, new buying opportunities are being formed.
With the market in a power trend, investors can be more aggressive and take positions in more-volatile names with high average true ranges. But don't be reckless.
Keep working on watchlists.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
