Dow Jones Futures Fall Slightly Overnight as Stock Market Rally Continues to Rebound
Investors urged to approach market cautiously as bullish sentiment reaches near-euphoric levels
Dow Jones futures, along with S&P 500 futures and Nasdaq futures, experienced a slight dip overnight. This comes after Wednesday’s stock market rally, which saw major indexes making a comeback after Tuesday’s tech-led sell-off. However, it is important to note that the overnight action in futures doesn’t necessarily indicate how the actual trading session will unfold.
During Wednesday’s stock market trading, the Dow Jones Industrial Average showed a 0.2% advance. Federal Reserve chief Jerome Powell reiterated that there is no hurry to cut interest rates and labor market data did not raise any concerns. Despite this, software sector leader CrowdStrike (CRWD) failed to gain traction from its positive earnings report, and tech giants Nvidia (NVDA), Advanced Micro Devices (AMD), and Super Micro Computer (SMCI) hit new highs.
In other news, AI software company Palantir Technologies (PLTR) and diabetics products giant Dexcom (DXCM) both cleared buy points on Wednesday. Chipmaker Qorvo (QRVO) also regained a buy point. On the flip side, electric car manufacturer Tesla (TSLA) briefly hit its lowest point since 2024, exhibiting significant underperformance compared to the S&P 500.
Dow Jones futures today saw a dip of 0.15% compared to fair value, while S&P 500 futures declined 0.25% and Nasdaq 100 futures fell 0.4%.
The stock market rally rebounded on Wednesday, although it only managed to recover a portion of Tuesday’s losses. U.S. crude oil prices rose 1.25%, reaching $79.13 a barrel. The 10-year Treasury yield fell by 3 basis points to 4.1%, while the two-year Treasury yield, which is closely tied to the Fed’s policies, increased by 1 basis point to 4.56%. Market indicators show a 70% chance of a rate cut in June, slightly down from Tuesday.
Some stocks to watch include Palantir, which saw a 9.9% surge to $26.26, clearing a buy point after winning a U.S Army contract for Project TITAN. Dexcom also experienced a 9.8% increase, reaching $133.72, after the FDA approved its latest glucose monitor for non-diabetics. Qorvo stock bounced back by 2.2% to $115.89, regaining a buy point from a cup-with-handle base. Square-parent Block’s stock (SQ) rose by 1.5% to $75.53, ending a three-day decline.
On the other hand, Tesla stock fell by 2.3% to $176.54, extending its weekly loss to 12.9%. This decline prompted Morgan Stanley analyst Adam Jonas to suggest that Tesla may potentially face financial losses this year due to weak sales, price cuts, and high spending.
The market rally has shown a strong resiliency, consistently bouncing back after short pullbacks and continuing to march higher. While those who invested early in the rally have had an easy time holding onto their positions, adding exposure in recent months has proven to be a challenge with limited windows of opportunity. It is advised that investors approach the market cautiously as bullish sentiment approaches near-euphoric levels.
Analyst comment
The news is neutral. The market may experience some volatility in the short-term as Dow Jones futures, along with S&P 500 futures and Nasdaq futures, have seen a slight dip. However, the stock market has shown resilience and has been rebounding after pullbacks. Investors are urged to approach the market cautiously as bullish sentiment reaches near-euphoric levels.
