Dow Jones futures tilted lower early Wednesday, along with S&P 500 futures and Nasdaq futures, with Treasury yields rising heading into the CPI inflation report. The European Union launched a probe into China EV subsidies, hitting Tesla (TSLA) rivals BYD (BYDDF), Li Auto (LI), Nio (NIO) and XPeng (XPEV).
X
The stock market rally suffered losses Tuesday, with the S&P 500 and Nasdaq dropping back below the 50-day moving average. Oracle (ORCL) plunged on mixed results and slowing AI growth, while Apple (AAPL) failed to impress with its iPhone 15 unveiling.
Tesla stock is on IBD Leaderboard. Tesla and LI stock are on the IBD 50.
Dow Jones Futures Today
Dow Jones futures fell 0.1% vs. fair value. S&P 500 futures declined about 0.1% and Nasdaq 100 futures edged lower.
The 10-year Treasury yield climbed a few basis points to 4.3%. That’s not far from the 15-year high of 4.36% set last month.
Crude oil edged higher, trading at its highest levels of 2023.
Remember that premarket action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the regular stock market session.
CPI Inflation Report
The Labor Department releases the August consumer price index at 8:30 a.m. ET. Economists expect a 0.6% increase vs. July, a pickup from July’s 0.2% gain, as gasoline prices rebound. The overall CPI inflation rate should climb to 3.6% from July’s 3.2% and June’s 3%.
But the Federal Reserve, which holds its next policy meeting on Sept. 19-20, is likely to pay more attention to core inflation.
Core CPI, which excludes food and energy, should rise 0.2% for a third straight month. The core inflation rate should cool to 4.4% from July’s 4.7%.
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Stock Market Rally Tuesday
The stock market rally retreated after solid Monday gains.
The Dow Jones Industrial Average dipped 0.1% in Tuesday’s stock market trading. The S&P 500 index sank 0.6%. The Nasdaq composite fell back 1%. The small-cap Russell 2000 closed just above break-even.
The Dow Jones hit resistance at the 50-day line while the S&P 500 and Nasdaq composite
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EU Probes China EVs
The EU’s European Commission launched an “anti-subsidy investigation into electric vehicles coming from China,” President Ursula von der Leyen said Wednesday.
The EU is worried about its auto industry’s ability to compete with Chinese EVs. The U.S. effectively bars Chinese EVs with huge China tariffs and the new IRA tax credits that are limited to vehicles produced in North America, along with other restrictions.
BYD, Nio and XPeng are among those exporting vehicles to China, with those numbers expected to increase dramatically in the coming year. Li Auto is not currently exporting to Europe.
BYD, which is the world’s largest EV maker including its plug-in hybrids, has previously signaled it’ll name a location for a European EV plant by year-end. That could sidestep any future restrictions on its Chinese-made vehicles.
Nio stock fell 2% in premarket trade. XPeng stock sank 3% and Li Auto retreated 2%. XPEV and LI stock have been working on new bases after huge moves earlier this year.
BYD stock was not yet trading in the U.S., but fell 2.75% in Hong Kong. On Tuesday, BYD stock rose 3.1% to 32.80, retaking the 50-day line and just topping a 32.79 entry within a cup base.
Tesla
The EU probe appears to focus on Chinese-made EVs, not just Chinese EV makers. So that could affect Tesla and other foreign automakers that export EVs from China to Europe.
Tesla’s Shanghai plant exports the Model 3 sedan and some Model Y crossovers to Europe. The Berlin plant covers most of Europe’s Model Y demand.
Tesla stock climbed 1% in premarket trade. On Tuesday, shares reversed lower to decline 2.2% to 267.48. But that’s after surging 10.1% on Monday as Morgan Stanley’s Adam Jonas hiked his TSLA stock price target by 60% to 400, citing supercomputing efforts.
The EV giant is working on a cup base with a 299.29 buy point, according to MarketSmith, but is actionable from an early entry of 261.18, just above the 50-day line.
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