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Dow Jones Futures Fall; U.S. Probes Auto Imports; Apple, Nvidia Near Buys

Dow Jones futures fell modestly Wednesday evening, along with S&P 500 futures and Nasdaq futures, as President Donald Trump ordered a probe into whether auto imports weakened national security. Meanwhile, North Korea threatened to cancel the June 12 summit with Trump unless the U.S. stops “unlawful and outrageous acts.”

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The Dow Jones, S&P 500 index and Nasdaq composite all rallied to close higher Wednesday, but held within a recent stock market trend of sideways action. Apple (AAPL), Nvidia (NVDA), Splunk (SPLK), Charles Schwab (SCHW) and Microsoft (MSFT) are all stocks that have been consolidating in or around buy zones during this span.

President Trump instructed the Commerce Department late Wednesday to begin a Section 232 investigation into imports of cars, light truck, SUVs and vans to determine if they undermined the domestic auto industry and weakened national security. Trump reportedly is mulling a 25% tariff on auto imports.

The Trump administration already used Section 232 to impose global tariffs on steel and aluminum imports.

North Korea’s top official for U.S. affairs, in a statement on state media, said if the Singapore summit doesn’t occur, that the two countries could face off in a “nuclear-to-nuclear showdown.” Trump recently has stated that the meeting may not happen.

Dow Jones Futures Today

Dow Jones futures fell 0.3% vs. fair value. S&P 500 index futures sank 0.25%. Nasdaq 100 futures were off 0.2%. Japan’s Nikkei fell 1.1% on the U.S. auto import threat.

General Motors (GM) rose slightly while U.S.-Italian automaker Fiat Chrysler (FCAU) and Japan’s Toyota (TM) fell 2.1% and 1.4%, respectively.

As for other late-night movers, Williams-Sonoma is the latest upscale retail brand to rally on strong earnings. NetApp fell on weak guidance, after fast-growing upstart Pure Storage failed to impress earlier in the week.

Dow Jones, Top Stocks Stay In Trading Range

The Dow Jones rose 0.2% on Wednesday’s stock market trading, erasing concerns about China trade as Fed minutes signaled a relatively dovish stance on inflation. The S&P 500 index climbed 0.3% and the Nasdaq composite 0.6%. The major indexes have been trading in a tight range over the past couple of weeks.

Even leading stocks tend to follow the general path of the major stock market averages. Even without looking at the S&P 500 index, looking at a chart of Apple, Nvidia, Splunk, Charles Schwab or Microsoft at investors.com or Marketsmith would give a general idea of the bench mark index’s recent performance. That’s because the charts include the relative strength line, which tracks a stock’s performance vs. the S&P 500 index.

Apple Stock

As the stock market drifted, Apple pulled back into buy range from its double-bottom breakout. But on Wednesday, the IBD Leaderboard stock rose 0.6% to 188.36, just above the 5% chase zone from its 179.04 entry. Investors shouldn’t buy an extended stock because of the higher risk of a pullback. It’s possible that Apple could dip back into the entry area.

Nvidia Stock

Hot chipmaker Nvidia also has retreated into the buy zone from a double-bottom breakout, and at one point appeared poised to test the 239.35 entry. But Nvidia, an IBD 50 stock, rose 247.54.

Charles Schwab Stock

Charles Schwab, which cleared a cup base on May 9 in low volume, has held in that range ever since. Schwab stock did fall 1.1% to 58.93 on Wednesday, modestly above its 58.21 entry.

Splunk Stock

Splunk broke out on May 7, and briefly undercut that entry, but the data analytics standout is back in the buy area. Shares climbed 2% Wednesday to 116.65, vs. its buy point of 112.76. Splunk reports earnings on Thursday.

Microsoft Stock

Microsoft finally closed above its 97.34 flat-base entry on May 10, but soon pulled back. This week Microsoft stock has been back in the buy zone. Shares rose 1.2% to 98.66 on Wednesday, after falling as low as 96.32 intraday. The stock got a price target hike for Microsoft’s cloud computing strength.

The Upside Of Sideways Stock Action

While investors want to see their stocks surge every day, sideways action isn’t bad. The volatile stock market has led to sloppy stock patterns. So tight action could be positive. Apple, for instance, could form a bullish three-weeks-tight pattern if it continues to consolidate tightly. Go a little longer and these stocks in buy range could provide base-on-base formations.

However, there is a risk with a stock hovering just in buy range. While you’re waiting for the stock to take off again, something bad could happen. It could be earnings or some other stock-specific news. Or it could be sector or market related. Oil stock breakouts are struggling as crude futures back off multiyear highs somewhat. Sometimes a stock will hold up for a while and then fade, such as Workday (WDAY) in recent sessions.

Stock Market Action Forms Handles

The Dow Jones and other major averages have formed handle-like formations in recent weeks. Not surprisingly, so have many stocks. As discussed earlier this week, Facebook (FB), Alphabet (GOOGL), Alibaba (BABA), Twitter (TWTR) and Akamai (AKAM) were all in newly formed handles. Twitter and Akamai did attempt breakouts this week.

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