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Stock Indexes, Tesla Face 3 Key Challenges

Index futures hung back late Wednesday as the stock market and Tesla (TSLA) faced several key tests Thursday. Early cues for Thursday’s market action pointed to a flat open, shot through with some dramatic moves — both up and down.

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Late earnings news on Wednesday led new-issue Zscaler (ZS) and dollar-store Five Below (FIVE), both trading near buy points, to spike in after-hours trade. Recreational and specialty vehicle plays Thor Industries (THO) and Rev Group (REVG) suffered harsh losses.

Futures for the Dow Jones industrial average dipped in and out of narrow declines late Wednesday. S&P 500 and Nasdaq 100 futures defended very slender gains.

Tesla, Stock Market Face These 3 Challenges

The market faces a few key challenges for Thursday’s session.

1. Will Tesla hold on to its massive 9.7% gain from Wednesday, the stock’s largest move since November 2015? Chief Executive Elon Musk spurred the move at the company shareholder meeting on Wednesday, saying Model 3 production would “quite likely” hit 3,000 vehicles a week by the end of June. The maker of luxury battery-powered vehicles has a history of missing its self-imposed targets, a trait reflected in the stock’s tentative action over the past year.

2. Will the Dow hold the 25,000 level? The index first cleared the 25,000 mark in January, then slipped back below it in its huge Feb. 5 dive. The mark holds little technical significance, but could bolster the market’s mood and reset sights on retaking the Dow’s January record high.

3. Will the Nasdaq and S&P 500 extend their rally to five days? The S&P 500 ended Wednesday 1% below its 2801 high of March 13. That marker is still well below the index’s late-January peak, but retaking the psychologically important level would bode well for the market’s status. The hurdle is within striking distance on Thursday.

Zscaler, Five Below Poised To Exit Buy Ranges

Zscaler surged 10.8% following its fiscal third-quarter report. The security software play narrowed its loss to 2 cents, vs. expectations for an 8-cent loss. Revenue powered up a much-better-than-forecast 50%. Zscaler has soared nearly 17% since the start of June, to 92% above its March IPO price. The stock closed Wednesday in a buy range above a 30.20 buy point in a double-bottom base. The stock’s after-hours move implied it would open beyond buy range on Thursday. Moves made in extended trade do not always carry over into the regular session.

IBD Leaderboard stock Five Below rocketed 10.8% as first-quarter revenue and earnings topped consensus views. Same-store sales came in a bit lighter than expected, but management boosted its Q2 revenue and earnings guidance well above consensus targets. The dollar store’s shares were up 13.9% for the week on Wednesday, and nearing the top of a buy range from a flat-base buy point at 78.38.

Downside: Thor, Rev Group Break Camp

Rev Group, the already beaten-down maker of ambulances and school buses, bombed more than 14% after its fiscal Q2 revenue and earnings missed expectations. The stock ended Wednesday 46% below its January high.

Leading trailer and motor-home brand Thor Industries reeled more than 6% lower. Fiscal third-quarter revenue just met analyst targets, but earnings growth stopped short. The company said industry outlook is strong and labor costs had moderated, but it cited raw-material price increases “due in large part to the headwinds created by the announcement and implementation of the steel and aluminum tariffs and other regulatory actions, as well as higher warranty costs.” Thor shares closed 38% below their January peak.

Oil Prices, Jobless Claims

Oil prices continued to oscillate Wednesday, with West Texas intermediate down 1.2% to settle back below $65 per barrel. Energy Information Administration data showed a surprise 2.1 million barrel increase in weekly oil supplies.

Prices are likely to remain in flux ahead of the June 22 meeting at which the Organization of Petroleum Exporting Countries and partners including Russia will discuss whether and how much to ease current production caps. Oil prices are tacking toward a third straight weekly decline — the first three-week downtrend since September last year.

Weekly jobless claims are the only notable economic data due out Thursday. The release is scheduled for 8:30 a.m. ET.

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