Dow Jones Futures: Market Rises, But Big Tests Loom; Tesla Rises on ‘Affordable’ EV, Elon Musk

Dow Jones futures were little changed after hours, while S&P 500 futures and Nasdaq futures rose slightly. Tesla (TSLA) jumped despite dismal earnings as it said an “affordable” electric car is coming soon. Elon Musk later praised Tesla’s robotaxi ambitions.

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The stock market rallied for a second straight session on Tuesday, with major indexes and many leaders showing strength. But the major indexes and many growth tech leaders are still below their 50-day moving averages Nvidia (NVDA).

This is just day two of an attempted stock market rally. Investors should look for a follow-up day later this week.

Next to Tesla gains is the Dow Jones giant Visa (V) reported late Tuesday. Early Wednesday, Boeing (BA) and AI play Vertiv (VRT) are on tap.

Nvidia stock is on IBD rankings.

Dow Jones futures today

Dow Jones futures traded just above fair value, even as Visa shares boosted. Futures on the S&P 500 rose 0.25%. Nasdaq 100 futures advanced 0.6%. Tesla stock is a major holding in the S&P 500 and Nasdaq.

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

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Attempted stock market rally

The stock market rally attempt had another strong session on Tuesday, with technology companies and small caps once again leading the way. Government bond yields fell due to weaker-than-expected economic data, sparking a rebound.

The Dow Jones Industrial Average rose 0.7% in stock trading on Tuesday. The S&P 500 index fell 1.2%. The Nasdaq composite rose 1.6%. The small-cap Russell 2000 rose 1.6%.

A solid day or two isn’t a huge surprise after a string of tough losses. The major indexes are all below their 50-day moving averages.

Many leaders have a lot of repair work to do. Nvidia shares rose 3.65% on Tuesday after Monday’s 4.35% gain, but are still trading within Friday’s 10% plunge and below the 50-day line.

Some stocks are widening their entry, although they often have weak long-term relative strength lines. But there are names from the energy, financial, aerospace, medical and restaurant sectors showing strength with solid RS lines.

Investors should look out for a follow-up day at the end of this week. An FTD involves one or more of the major indices showing strong gains on higher volume than the previous session. That would indicate that major institutions believe in the emerging rally attempt.

US crude oil prices rose 1.8% to $83.36 per barrel.

The yield on ten-year government bonds fell by 2.5 basis points to 4.6%, but not far from the highest level in five months.

ETFs

Of the growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) gained 1.7%. The VanEck Vectors Semiconductor ETF (SMH) rose 2.35%, with Nvidia shares the dominant SMH holding.

Reflecting more speculative stocks, ARK Innovation ETF (ARKK) bounced 3% and ARK Genomics ETF (ARKG) 1.6%. Tesla shares are a major stock in Ark Invest’s ETFs.

SPDR S&P Metals & Mining ETF (XME) fell 1.4% and the GlobalPAVE) advanced 0.9%. US Global Jets ETF (JETS) fell by 0.7%. The SPDR S&P Homebuilders ETF (XHB) rose by 2.7%. The Energy Select SPDR ETF (XLE) gained 0.55% and the Health Care Select Sector SPDR Fund (XLV) rose by 1.3%.

The Industrial Select Sector SPDR fund (XLI) recovered by 1.4%. The Financial Select SPDR ETF (XLF) added 0.6%, with Visa shares making up a significant stake.

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Tesla earnings

Tesla’s profits fell 47% from a year earlier, its third straight major year-over-year decline. Sales fell 9% to $21.3 billion, the biggest decline since 2012, due to declining vehicle deliveries and prices. Both fell short of estimates.

The EV giant also reported cash burn of $2.53 billion.

But investors didn’t care, because Tesla said new models “will begin production in the second half of 2025,” including “more affordable” electric vehicles.

However, the upcoming EVs will now be less ambitious. They will use “aspects of the next-generation platform, as well as aspects of our current platforms,” Tesla said.

Elon Musk said during the conference call that this means they can be made on the same production line as current models.

Tesla admits that the new plan “may lead to less cost savings than previously expected,” but will let the EV giant use its existing spare capacity.

Musk had previously stated that a next-generation model would use “revolutionary” manufacturing to achieve cost savings.

Musk declined to answer a question from analysts about whether the new models would be “tweaks” on existing EVs, given how long the Model 3’s modest refresh lasted.

Tesla said it is working on ride-hailing functionality that “will be available in the future.” Musk reiterated his long-standing argument that vision-only systems are the way forward for self-driving.

Musk said the Optimus robot will perform “useful” tasks at Tesla factories by the end of the year, with external sales late next year, although he said these were “guesses.”

Tesla shares

Tesla shares jumped nearly 13% in late trading.

Shares rose 1.8% to 144.61 on Tuesday, snapping a seven-session losing streak and recovering from their worst levels since January 2023. TSLA shares were down 14% last week on fears that Musk is a cheap EV was suspending.

Tesla is down 41.8% in 2024, which is the S&P 500’s worst performance as of the index’s close on Tuesday.

Visa revenue

Visa revenues were better than expected.

Visa shares rose modestly overnight. Payments giant Dow Jones rose 0.7% to 274.13 on Tuesday. Visa could soon have a base if it continues to build up the right side, with the 50-day limit at a key level.

Boeing’s earnings figures will be announced on Wednesday morning. BA shares fell 0.8% to 169.08 on Tuesday, hitting their worst level since late 2022.

Vertiv reports early Wednesday, calling the data center cooling system maker a de facto AI play. VRT shares fell 4.05% to 79.15 on Tuesday, extending Monday’s recovery above the 50-day mark.

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What to do now

The attempted market recovery has only just begun. It’s still a time to watch and wait, especially with so many earnings reports coming out in the coming days.

If you want to try some swing trades or pilot positions, you can, but you have to be just as aggressive when you get out.

In theory, an FTD could happen as early as Thursday.

However, Microsoft (MSFT) and Google parent Alphabet‘s (GOOGLThursday night’s gains and the key PCE price index, the Fed’s preferred gauge, could be key to the direction of the market.

In a montage-fast dream scenario, the Nasdaq or the S&P 500 confirm their rally efforts on Friday as they break above their 50-day line, along with leaders like Nvidia.

But a sustained rally could last weeks or even months. It is crucial for investors to be ready for the next market run.

Work on those watchlists. Look for stocks that are showing relative strength, holding or regaining key levels and recouping most of their recent losses. Remember, the leaders of the last market rally may be left behind in the next uptrend.

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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