Dow Jones Futures: Nasdaq crosses 12,000 mark as inflation report comes due; Big News For Tesla

Dow Jones futures edged higher after hours, along with S&P 500 and Nasdaq futures, with attention turning to the Federal Reserve’s favorite inflation report, the PCE price index.

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Aehr test system (AEHR) title earnings after closing. IRS on Friday may limit US tax credits to entry level Tesla (TSLA) Form 3 .

The stock market rally extended Wednesday’s strong rally with modest gains. Nasdaq closed above 12,000 while the large-cap Nasdaq 100 hit a seven-month high.

The top stocks were up, although many were down significantly on the day. MercadoLibre (MELI), Analog Devices (ADI), ASML (ASML) And Great beauty (ULTA) made bullish moves.

The market rally is now a confirmed uptrend, so investors should take advantage of this, gradually adding exposure.

Bank shares fell modestly on Thursday, with Charles Schwab (SCHW) down reliably. While banking concerns have eased, that remains a high risk for investors at least in the short term.

MELI in stock IBD Rankings. ADI stock is on SwingTrader. MercadoLibre and Analog Devices available on IBD 50 list. ASML and ADI stocks are above IBD Large Hat 20.

The video embedded in this article discussed Thursday’s market action and reviewed DoubleVerify (DV), Analog Devices and ASML stock.

Inflation Report PCE

The February PCE Price Index will be released at 8:30 a.m. ET. Analysts expect the PCE and core PCE index to gain 0.4% after gaining 0.6% in January.

Wall Street expects PCE inflation to ease slightly to 5.1% from January’s 5.4%. But core PCE inflation is likely to hold at 4.7%.

The Fed has long favored PCE inflation data over the consumer price index. Recently, Fed chief Jerome Powell highlighted services prices excluding energy and housing as the main measure of inflation today.

Inflation numbers will affect market expectations for a Fed rate hike. Investors are divided on whether there will be another quarterly rally on May 3.

PCE inflation data is part of monthly income and expenditure statements. Personal income will increase 0.3% after increasing 0.6% in January. Spending will increase 0.2% after increasing 1.8% in January.

income aehr

AEHR stock fell modestly in late trading up and down after Earnings of the Aehr . Test System and sales beat views modestly. The chip testing company, which is heavily exposed to the EV market, has reported exploding pre-orders and backlogs. Shares fell 1.7% to 37.22 in Thursday trading. AEHR stock closes just below 37.67 buy pointsbut 10% higher than its 50-day line.

on semiconductors (ABOVE), Aehr Test Systems’ biggest customer, discounts in extended deals. In Thursday’s trading, ON stock rallied 2.45% to 81.83, hitting the trendline after retrieving the 50-day line on Wednesday. Also known as Onsemi, On Semiconductor has an official consolidated buy point of 87.65. ON stock is also available on IBD 50 and Big Cap 20.

Dow Jones Futures Today

Dow Jones futures are little changed from fair value. S&P 500 and Nasdaq 100 futures edged higher.

The PCE inflation report is sure to hit Dow futures and Treasury yields just before opening.

A New York grand jury indicted former President Donald Trump in connection with hush payments to a porn star.

Remember that action overnight in future index and other places that don’t necessarily translate into actual transactions the next time stock market meeting.

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Tesla Model 3 tax credit

The Internal Revenue Service is expected to release guidelines on battery manufacturing and material sourcing rules on Friday.

The IRS tax credit language requires battery manufacturing in North America and battery materials from countries with a free trade agreement with the United States. However, the IRS initially waived those provisions until detailed instructions became available.

The upshot is that the cheapest Model 3 will probably no longer qualify for the full $7,500 tax credit after a grace period. The base model 3 uses an LFP battery from China’s CATL. Other Tesla vehicles in the United States use batteries from the Nevada gigafactory, with some Model Ys receiving 4680 batteries from Tesla’s Keto Road facility.

Eventually, Tesla will probably switch to the more expensive 2170 battery pack. But in the short term, news about the IRS could spur a wave of buying the cheapest Model 3. Tesla has noted that the IRS is expected to move to boost Model 3 sales.

Tesla is looking to build a US battery factory with China’s CATL, Bloomberg reported on Thursday. That could provide a long-term answer to tax credit eligibility. In February, Ford Motor (F) announced plans to build a battery factory with CATL in Michigan.

Tesla delivery and production numbers for the first quarter will be released later this week, possibly on Sunday, April 2. Analysts expect Tesla to report record deliveries of around 430,000, which is expected fueled by massive discounts and US tax credits. This would be up 39% from a year earlier and up slightly from 405,278 in Q4.

Production will likely exceed delivery quantities again.

Tesla shares rose 0.7% to 195.28 on Thursday, holding above the 21- and 50-day moving averages. After Friday, Tesla will bottom with a buy point of 217.75. The daily chart suggests a handle with an entry of 200.76. However, the handle is not on track to appear on the weekly chart. More importantly, the 200-day line, currently slightly below entry 217.75, presents as a potential resistance level.

Join IBD experts as they analyze stocks that could act in the stock market rally on IBD Live

Stock market recovers

The stock market rally opened higher on Thursday, descending to mixed intraday, before recovering again in the afternoon.

The Dow Jones Industrial Average rose 0.4% on Thursday stock market trading. The S&P 500 Index rose 0.6 percent, with SCHW stock dropping the most. The Nasdaq Composite Index rose 0.7 percent. The Russell 2000 small-cap index fell 0.2%.

U.S. crude oil prices rose 1.9% to $74.37 a barrel, up 11.4% from a 52-week low set on March 17.

The yield on the 10-year Treasury note fell 1.5 basis points to 3.55%. Yields on the 2-year Treasury note rose 2 basis points to 4.1%.

The dollar fell, but fell to an early low.

ETFs

Among the growth ETFs, the Innovator IBD 50 ETF (FFTY) increased by 0.3%. iShares Expanded Tech-Soft Sector Sector ETF (IGV) increased by 0.6%. VanEck Vectors Semiconductor ETF (SMH) rose 1.4%, with Analog Devices and ASML shares notable.

Reflecting more speculative stocks, the ARK Innovation ETF (ARKK) fell 0.3% and the ARK Genomics ETF (ARKG) decreased by 0.8%. TSLA stock is the primary holding in Ark Invest ETFs.

SPDR S&P Metals & Mining ETF (XME) increased by 0.3%. US Global Jets ETF (jet plane) increased by 1.3%. SPDR S&P Homebuilders ETF (XHB) decreased by 0.1%. Energy Select SPDR ETF (XLE) increased by 0.4% and the Healthcare Sector SPDR Fund (XLV) increased by 0.5%.

Financial Options SPDR ETF (XLF) decreased by 0.2%. Shares of SCHW, a component of XLF, fell 5% to 52.47 as the analyst downgraded for the second time in two days. SPDR S&P Regional Bank ETF (KRE) decreased by 2%.

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Analysis of market recovery

The stock market rally hit early highs but remained modestly up, following Wednesday’s big gains.

Nasdaq crossed the 12,000 mark, peaking on March 22. Nasdaq 100 hit its highest level since late August.

The S&P 500 gained a little more distance from the 50-day line and the 4,000 level, after crossing both levels on Wednesday.

The Dow Jones is approaching its 50-day line.

The Russell 2000 index rose to the 21-day line and reversed slightly lower. Main reason: Bank stocks fell slightly on Thursday.

Banks did not plunge. But banks, especially regional banks, have a long way to go. The banking crisis may have subsided, but risks remain.

Of course, bank stocks could continue to struggle even as banks stabilize. Banks are likely to pay more on deposits because account holders realize they can get much higher returns elsewhere, reducing profitability. Mid-tier banks, those with assets between $100 billion and $250 billion, could face tighter regulatory scrutiny. Meanwhile, if there is a resurgent crisis, bank deposits will likely be protected, but not bank stocks or creditors.

Many top stocks closed with highs on Thursday morning, but most held on to Wednesday’s gains. Rambus (yuan), payment processor Ca4 (FOUR) And skyline champion (SKY) was added to the yield recently, but now expanded.

MELI and ASML shares rose on Thursday, extending strong weekly gains and providing positive entries. But the volume is low. Ulta Beauty and ADI stocks topped early entries in above-average trading.

Just because the stock market rally held a the next day Wednesday doesn’t mean a big progress is underway. Leading indices and stocks can quickly reverse lower. Or, this could be a tradeable rally to early resistance.

Market Timing with IBD’s ETF Market Strategy

What to do now

Wednesday’s FTD is a signal to add a little more exposure. But there is no need to dive headfirst into the market. The major indicators have important resistance levels. Banks and Fed policy are still huge risks.

If the market recovers and your positions perform well, you can continue to make new purchases. But be ready to lock in at least part of your profits relatively early and cut your losses quickly. Make sure you don’t overexpose a particular area, such as a chip.

Work on your watchlist, create a wide net.

Read Big picture every day to stay in sync 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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