Dow Jones Futures: Another Ugly Market Reversal; Nvidia Slips, Tesla Tumbles on ‘Dark Day’

Dow Jones futures were little changed after hours, as were S&P 500 futures and Nasdaq futures. Dow Giants UnitedHealth Group (UNH) And Johnson & Johnson (J.N.J) report early Tuesday.

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The stock market rally tried to recover Monday morning but quickly fell in yet another ugly reversal. The S&P 500 and Nasdaq broke major levels. Treasury yields rose to new highs in 2024 even amid uncertainty over how Israel will respond to Iran’s drone-and-missile attack on Saturday.

Tesla (TSLA) plunged into major layoffs and a slew of other headlines Salesforce.com (CRM) surfaced reports that it is in advanced stages of talks to buy a data management software maker Computer science (INFA).

In the meantime, Nvidia (NVDA) And Microsoft (MSFT), two mega-cap AI leaders, fell below several key levels on Monday, though they’re not broken yet.

Nvidia stock is on IBD rankings and the IBD50. Microsoft stock is on the IBD Long-Term Leaders list.

Dow Jones futures today

Dow Jones futures were flat versus fair value. Futures on the S&P 500 headed lower and futures on the Nasdaq 100 were flat.

The yield on ten-year government bonds fell to 4.61%.

Crude oil futures rose slightly.

China will release March data on retail sales, industrial production and more at 10 PM ET.

As for the U.S. economy, investors will get data on housing starts and industrial production before the March open.

Remember, overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading during the next regular stock market session.

Main income

UnitedHealth, Johnson & Johnson and Morgan Stanley (MRS) report early Tuesday.

Shares of UnitedHealth and J&J are near 2024 lows. Morgan Stanley is between the 50- and 200-day limit after plunging last week on reports that regulators are investigating its asset management activities.

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Stock market rally

Friday’s sell-off was an expectation-breaker for the stock market’s rally. Monday was a continuation of that, especially given the downward reversal after a strong open.

The Nasdaq and the S&P 500 closed below the 50-day mark for the first time since early November, while the stock market rally was just getting underway. The Nasdaq fell 1.8%, ultimately moving out of range on the April 4 reversal day. The S&P 500 encountered resistance at the 21-day mark before falling 1.2% in Monday’s stock market trading.

The Dow Jones Industrial Average fell 0.7% to its lowest level since late January. Shares of Salesforce plunged 7.3% as investors were unhappy with rumors of the Informatica acquisition. Compensate for that Goldman Sachs (GS), which rose 2.9% on an earnings basis.

The small-cap Russell 2000 fell 1.4% to a two-month low.

The broader market has been struggling for some time, with Nvidia, Microsoft and other leading AI and megacap players supporting the Nasdaq. But with the losses in the previous two sessions, those leaders are being dragged down.

The Nasdaq has now undergone three major downward reversals in recent weeks, starting with the Nvidia-led fall of March 8. Overall, the market has recovered thanks to lighter volumes, while distribution days have increased.

US crude oil prices fell 0.3% to $85.41 per barrel.

Ten-year Treasury yields rose 13 basis points to 4.63%, hitting a new high in 2024. Friday’s safe haven into government bonds reversed on Monday as Middle East fears subsided, while robust retail sales pushed yields higher drifted.

The market fear meter is rising again

In particular, the CBOE Volatility Index, or VIX, rose 11% on Monday to a closing high of 2024. On Friday, the market fear gauge spiked to its highest level since late October on concerns about Iran. Concerns in the Middle East continue to grow, while rising interest rates are adding to investor fears.

But the VIX does not appear to be at an extreme level that would indicate a market bottom.

ETFs

Of the growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) plummeted 2.75%, with Microsoft and Salesforce being two IGV giants. The VanEck Vectors Semiconductor ETF (SMH) lost 1.5%. Nvidia stock is the dominant SMH holding.

Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) sold 4.6% and ARK Genomics ETF (ARKG) 3.8%. Tesla shares are a major stock in Ark Invest’s ETFs.

SPDR S&P Metals & Mining ETF (XME) fell by 0.2%. The SPDR S&P Homebuilders ETF (XHB) has stepped down by 1.3%. The Energy Select SPDR ETF (XLE) retreated 0.9% and the Health Care Select Sector SPDR Fund (XLV) fell by 0.2%.

The Industrial Select Sector SPDR fund (XLI) retreated 0.7%. The Financial Select SPDR ETF (XLF) lost 0.5%, with Goldman as a key member.

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Nvidia stock

Nvidia shares fell 2.5% to 860.01 after hitting 906.13 on Monday morning. The AI ​​chip leader fell below the 21-day limit and is again testing its 10-week limit. NVDA stock has a flat-base buy point of 974.

Nvidia chipmaker Taiwanese semiconductor (TSM) reports early Thursday.

Microsoft stock

Shares of Microsoft fell 2% to 413.65, undercutting an earlier buy point of 420.82 and closing below the 50-day line for the first time since Oct. 6.

MSFT stock is in a tight three-week pattern with an entry at 429.37, which would still be relatively close to the 50-day mark. The Dow tech titan could be working on a new flat base.

Microsoft’s Q3 2024 earnings will be released on April 25.

Tesla is having ‘another bad day’

Tesla announced it would cut more than 10% of its global workforce, amounting to more than 14,000 jobs. That follows staggeringly weak deliveries in the first quarter, with first quarter results due on April 23.

Tesla has also reduced discounts on Model Y inventory in the US, despite rising inventories.

These moves could support profits and margins, but also suggest further production cuts are likely.

Several top Tesla executives from key projects resigned or were fired, a bad sign for these efforts.

The next-generation EV has been put on the back burner, Electrek reported on Monday. That largely confirms a Reuters report from two weeks ago, despite Musk’s vague denials.

Cybertruck deliveries have also reportedly stopped in recent days.

Monday was “another dark day” for Tesla, according to Wedbush analyst Dan Ives, a longtime TSLA bull.

This deluge of bad news and uncertainty raises the stakes for the first-quarter earnings report on April 23 and the conference call that will follow.

Ives emphasized in Monday’s note that “The Street wants and NEEDS answers on Tesla’s 1Q conference call next week.”

Tesla shares fell 5.6% to 161.48 on Monday, close to the recent 11-month low of 160.51.

What to do now

The stock market started the week with the ‘uptrend under pressure’. Monday’s action certainly did not help.

Investors should reduce their exposure.

Furthermore, earnings season will continue to develop and reach full strength next week, which will create a huge amount of uncertainty.

But stay engaged and keep your watchlists up to date.

Many stocks are newly established or in the process of establishing themselves, although most have suffered recent setbacks. Focus on those who hold important levels and demonstrate relative strength. If the market regains momentum soon, these could be the stocks that lead the way.

Read The Big Picture every day to stay informed about market direction and the most important stocks and sectors.

Follow Ed Carson on Threads at @edcarson1971 and X/Twitter on @IBD_ECarson for stock market updates and more.

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