Dow Jones Futures: Stock Market Rally, Tesla Have Healthy Pullbacks

Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures. The stock market rally fell last week as buzz from the Biden stimulus plan began to wane. But it was a constructive pullback.

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The major indexes fell modestly, holding short-term moving averages and letting longer-term averages catch up. Some euphoric market areas — such as new IPOs like Yatsen Holding (YSG) — suffered significant losses or sharp reversals. Tesla (TSLA) retreated, but after appearing to go on a climax run, the electric car maker is looking anti-climactic, which is a good thing.

U.S. tech giants aren’t participating. Apple stock, the only one that appeared to be trying to do well, reversed for solid losses. Most have been lagging the stock market rally for months and are stuck below their 50-day moving averages, including Microsoft (MSFT), Facebook (FB) and Netflix stock. Netflix (NFLX) reports earnings on Tuesday, with Walt Disney (DIS) and Disney+ rapidly becoming a serious rival. Disney stock has been doing much better than Netflix for several months.

Cyclical stocks are still looking strong. Eastman Chemical stock faded to just below a buy point. Eastman Chemical (EMN) has earnings in two weeks, as earnings season hits full force. JPMorgan stock rose last week and flirted with a buy point from a long deep base. JPMorgan Chase (JPM) earnings easily beat views Friday, but JPM stock retreated.

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The chip sector is still strong overall. Apple iPhone supplier and 5G wireless play Qualcomm (QCOM) flirted with a buy point last week. QCOM stock is still actionable now.

Cadence Design Systems (CDNS) and Synopsys (SNPS), which make software for designing semiconductors, are both just below range of recent breakouts. But CDNS and SNPS stock have set up three-weeks-tight patterns.

Match Group (MTCH) tried to clear a tight pattern last week, reversing lower. But Match stock rebounded from key support on Friday.

Biden Stimulus Buzz Fading?

President-elect Joe Biden unveiled a $1.9 trillion stimulus plan on Thursday night, but that didn’t buoy the stock market rally on Friday. Biden stimulus buzz had fueled cyclicals and the broader market in the new year. Democrats winning the Georgia Senate runoffs to have unified control of government makes it likely that much of the Biden stimulus plan will pass.

Still, with razor-thin majorities in the House and Senate, a Biden stimulus plan may face significant changes. Meanwhile, Biden also says he’ll propose another big spending bill later in the year, but that will come with significant tax hikes on corporations and capital gains.

Biden Stimulus: Checks Now, Tax Hikes Soon

Apple, Microsoft and Tesla stock are on IBD Leaderboard. Apple stock and Match are on SwingTrader. Microsoft stock is on the IBD Long-Term Leaders list. CDNS stock and SNPS are on the IBD 50.

Dow Jones Futures Today

U.S. stock exchanges are closed Monday for…