Dow Jones Futures Decline Amid Boeing and Apple Focus; Elon Musk Raises Concerns for Tesla

Dow Jones futures experienced a modest decline on Monday night, accompanied by a similar trend in S&P 500 futures and Nasdaq futures. Key players like Elon Musk and Tesla are under scrutiny, alongside major Dow Jones entities Boeing and Apple.

After a somewhat shaky start to 2024, the stock market saw a robust recovery last week, rebounding from recent declines. Several stocks, including Nvidia (NVDA), displayed buy signals, marking a notable resurgence in the overall market.

Investors are finding favorable conditions to increase their exposure. While Nvidia stock has reached an extended position, other AI leader Microsoft (MSFT) is hovering just above a buy point following a strong weekly performance. This comes as it approaches surpassing the market cap of Dow giant Apple (AAPL).

Novo Nordisk (NVO) remains within a buy zone, and both MercadoLibre (MELI) and Tradeweb Markets (TW) showed entry signals intraday.

However, Tesla (TSLA) faced challenges with a significant sell-off, breaking key support levels. Elon Musk added to the concerns by indicating that he might not pursue “AI & robotics” development at Tesla unless he acquires a more substantial stake in TSLA shares.

Apple, responding to worries about slowing demand in China, is offering discounts of up to 5% on iPhones in the region.

Boeing (BA) announced new quality changes in the aftermath of the midair Alaska Airlines (ALK) incident on Jan. 5. Additionally, the company is experiencing delays in delivering 737 Max jets to China, according to The Wall Street Journal.

Notable stocks like Nvidia and NVO are part of IBD Leaderboard, while MELI, Nvidia, and Microsoft feature on SwingTrader. MSFT stock is listed on IBD Long-Term Leaders, and Nvidia, MercadoLibre, Novo Nordisk, and Microsoft are part of the IBD 50. Microsoft, Nvidia, and MercadoLibre stock also find a place in the IBD Big Cap 20.

The embedded video in the article provides insights into the weekly market rally and analyzes Microsoft, MercadoLibre, and NVO stock.

Dow Jones Futures Today
Dow Jones futures experienced a 0.3% decline compared to fair value. S&P 500 futures and Nasdaq 100 futures also recorded decreases of 0.4% and 0.5%, respectively.

The 10-year Treasury yield increased by several basis points, reaching 4%. Crude oil futures saw a slight decrease.

A U.S.-owned cargo ship was targeted by a missile off the coast of Yemen on Monday, following strikes by the U.S. and U.K. on Houthi rebels in Yemen. This has disrupted global shipping in the Red Sea.

Although U.S. stock markets were closed on Monday for the MLK holiday, other global exchanges remained open.

It’s crucial to note that overnight movements in Dow futures and elsewhere may not necessarily reflect actual trading during the next regular stock market session.

Stock Market Rally
The stock market rally commenced strongly on Monday and sustained its gains.

The Dow Jones Industrial Average saw a 0.3% increase in last week’s trading after briefly reaching a record high on Friday. Boeing (BA), facing challenges with 737 Max issues, limited the Dow’s upward movement.

The S&P 500 index surged by 1.8%, touching 52-week highs and approaching its all-time peak. The Nasdaq witnessed a 3.1% jump, rebounding from the 10-week line but encountering resistance at the 15,000 level. Neither index has reached extended levels from the 50-day, indicating potential for further gains.

While the small-cap Russell 2000 rose on Monday, it ended the week flat, facing resistance at the 21-day line. The Invesco S&P 500 Equal Weight ETF (RSP) remained above the 21-day line and near 52-week highs but only saw a 0.2% increase for the week.

The weak breadth observed in 2024 thus far stands out as a notable flaw in the market rally.

However, market leadership remains broad. The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW), representing growth, gained 2.1%. Despite trailing the Nasdaq 100, which benefited from the performance of Nvidia, Microsoft, and other megacaps, QQEW exhibited a solid performance.

The 10-year Treasury yield decreased by 9 basis points to 3.95%, falling below the 4% level. The two-year Treasury yield, more closely linked to Fed policy, plunged 25 basis points to 4.14%. Odds of a Fed rate cut increased following significant inflation reports during the week.

U.S. crude oil futures saw a 1.5% decrease, settling at $72.68 per barrel last week.

ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) rebounded by 5.7%, with MSFT stock as a major holding. The VanEck Vectors Semiconductor ETF (SMH) rose by 4.1%, with NVDA stock being the largest holding. Both ETFs bounced back from their 10-week lines.

The SPDR S&P Metals & Mining ETF (XME) experienced a 1.1% decline last week, while the U.S. Global Jets ETF (JETS) slumped by 3.25%, primarily due to Delta Air Lines (DAL) guidance. On the positive side, the SPDR S&P Homebuilders ETF (XHB) rose by 2.2%, while the Energy Select SPDR ETF (XLE) fell by 2.4%, and the Health Care Select Sector SPDR Fund (XLV) recorded a 1% increase, marking its ninth consecutive weekly gain.

The Industrial Select Sector SPDR Fund (XLI) saw a 0.6% increase, while the Financial Select SPDR ETF (XLF) dipped by 0.4%, maintaining a tight trading range.

Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) experienced a 3.1% decline last week, and ARK Genomics ETF (ARKG) slumped by 2.9%. Notably, Cathie Wood increased her TSLA holdings on Thursday, emphasizing the impact of Tesla stock on Ark Invest’s ETFs.

Stocks In Buy Zones
MSFT stock saw a 5.6% rally, reaching 388.47 for the week and surpassing a 384.30 buy point from a flat base, base-on-base pattern. Microsoft rebounded from the 10-week line during the week, clearing some resistance and offering early entry opportunities.

While Microsoft briefly surpassed Apple’s valuation on Thursday, it didn’t close ahead. Microsoft’s market cap is currently $2.887 trillion compared to Apple’s $2.892 trillion. AAPL stock recorded a 2.6% increase last week, bouncing back from the 200-day but remaining below its 50-day.

NVO stock climbed by 1.1% to 107.16, moving within a buy zone. Unlike many others in the market, Novo Nordisk stock had a strong start to 2024, clearing the 105.69 flat-base buy point on Jan. 4. Another weight-loss drug giant

, Eli Lilly (LLY), is also within a buy zone.

MELI stock saw a 4.2% increase, reaching 1,658.58 and briefly clearing a 1,660 flat base, base-on-base buy point according to MarketSmith analysis. MercadoLibre stock surged by 7.8% for the week, rebounding from the 10-week line and providing early entry opportunities.

TW stock rose by 3.1% last week to 95.91, rebounding from the 10-week line. On Friday, shares approached 97 intraday, just below the 97.18 flat-base buy point. It becomes actionable above 96.10.

Tesla Stock
Tesla stock, despite its historical strong performance, is currently facing challenges. Shares declined by 7.8% to 218.89 for the week, breaking through the 50-day and 200-day lines. The relative strength line, comparing the stock’s performance to the S&P 500, is at its lowest levels since May.

In the past week, Tesla reduced prices in its primary market and announced a temporary suspension of production at its Berlin plant for two weeks. Hertz (HTZ) is selling many of its electric vehicles, mostly Tesla vehicles, at discounted prices, citing weak demand and high repair costs.

On Monday, Elon Musk expressed discomfort with making Tesla a leader in “AI & robotics” unless he obtains 25% voting control of TSLA stock. Musk had previously stated that “Tesla is an AI/robotics company.” Currently, Musk owns 13% of Tesla.

What To Do Now
The market rally has been performing well, recovering from the initial setbacks in 2024. While stocks experienced a dip, the S&P 500, Nasdaq, and leading stocks found support at expected levels. This pullback was sufficient to create bullish pullbacks and handles, without causing significant harm.

Investors had opportunities to either hold through the initial selling or take profits. Regardless, there were numerous chances to increase exposure last week.

Many stocks are forming new consolidations, often just above or at the top of deep bases. Investors are advised to focus on their watchlists.

Reading The Big Picture daily is essential to staying aligned with market direction and keeping track of leading stocks and sectors.