Tesla Leads Nasdaq Rally As Bond Yields Ease; Dow Jones Futures Flat

The Nasdaq composite led a stock market rebound on Wednesday as the 10-year Treasury yield retreated from 16-year highs. Tesla stock cleared a buy point, while Meta Platforms and Google also showed strength. However, the market rally attempt still needs a follow-through day to confirm a new uptrend. Dow Jones futures were little changed overnight.

Nasdaq Outperforms As Yields Fall

The Nasdaq composite jumped 1.35% on Wednesday, outperforming the S&P 500 index, which rose 0.8%, and the Dow Jones Industrial Average, which gained 0.4%. The Nasdaq was helped by a decline in the 10-year Treasury yield, which fell nearly 7 basis points to 4.735%, after soaring 23 basis points over the prior two days. Lower bond yields tend to benefit growth stocks, especially in the tech sector.

The Nasdaq is now six days into its rally attempt, and could stage a follow-through day at any time. A follow-through day is a strong gain in higher volume than the previous session, indicating that institutional investors are buying stocks aggressively. The S&P 500 and the Dow Jones, however, are only one day into their rally attempts, after hitting six-month lows on Tuesday.

Market breadth was modestly positive on Wednesday, after being abysmal on Tuesday. The small-cap Russell 2000 index closed flat, erasing intraday losses. The Invesco S&P 500 Equal Weight ETF, which tracks the performance of the 500 largest U.S. companies without giving more weight to larger ones, rose 0.6%, after hitting a fresh six-month low intraday.

Tesla Leads Nasdaq Rally As Bond Yields Ease; Dow Jones Futures Flat

Tesla Breaks Out Amid EV News

Tesla stock soared 7.3% to 1,029.99 on Wednesday, clearing a buy point of 1,000.10 from a cup-with-handle base. The electric vehicle leader joined IBD Leaderboard and SwingTrader on Wednesday, as it continues to shrug off bad news and outperform its peers.

Tesla has been facing several challenges lately, including regulatory probes, production delays, supply chain issues, labor disputes, and competition from rivals such as Ford and GM. However, the company has also been delivering strong sales and earnings growth, expanding its global presence, launching new products and services, and innovating in areas such as battery technology and autonomous driving.

On Wednesday, Tesla announced that it will start selling its Model Y SUV in India next year, as part of its plan to enter one of the world’s largest and fastest-growing auto markets. The company also said that it will open its first showroom in New Delhi soon. Tesla has been lobbying the Indian government for tax breaks and other incentives to make its vehicles more affordable in the country.

Meanwhile, Tesla’s Chinese rival Nio reported a 125% surge in September deliveries, beating its own guidance and analysts’ expectations. Nio delivered 10,628 vehicles last month, bringing its total for the third quarter to 24,439 units, up 100% year over year. Nio also raised its fourth-quarter delivery forecast to 23,500-25,500 vehicles, implying a 46-59% annual growth rate.

Nio stock rose 3.9% on Wednesday, but remains well below its 52-week high of 66.99. Other Chinese EV makers such as Xpeng and Li Auto also reported strong September deliveries, but their stocks fell on Wednesday amid broader weakness in Chinese equities.

Meta Platforms And Google Near Buy Points

Among other Magnificent Seven stocks, Meta Platforms and Google parent Alphabet also showed resilience on Wednesday, trading near their buy points. Meta Platforms, formerly known as Facebook, rose 2.2% to 326.23, just below a buy point of 329.98 from a flat base. The social media giant has been facing scrutiny over its impact on society and democracy, as well as its handling of user data and content moderation.

However, Meta Platforms has also been growing its revenue and earnings at a robust pace, driven by its dominance in online advertising and social networking. The company has also been investing heavily in new areas such as e-commerce, virtual reality, augmented reality, and cryptocurrency.

Google stock gained 1% to 2,809.95 on Wednesday, close to a buy point of 2,843.86 from a flat base. The search engine leader has been benefiting from the recovery in online advertising spending amid the pandemic-induced digital shift. Google has also been expanding its presence in cloud computing, artificial intelligence, and hardware.

Arista Networks And Synopsys Near Key Levels

Two other stocks that are close to possible buy points are Arista Networks and Synopsys. Arista Networks is a provider of cloud networking solutions for large data centers and enterprise customers. The company has been growing its revenue and earnings at a double-digit rate, as it competes with Cisco Systems and other rivals in the fast-growing cloud market.

Arista Networks stock rose 2.4% to 463.69 on Wednesday, just below a buy point of 466.10 from a flat base. The stock was Wednesday’s IBD Stock Of The Day, as it showed relative strength amid the market turbulence. Arista Networks is already on the IBD Leaderboard, along with Meta Platforms and Tesla.

Synopsys is a leader in electronic design automation software, which helps engineers design and test chips and systems. The company has been benefiting from the strong demand for semiconductors across various industries, as well as its acquisitions and innovation in areas such as artificial intelligence and security.

Synopsys stock edged up 0.3% to 338.61 on Wednesday, near a buy point of 341.77 from a flat base. The stock is on the IBD Long-Term Leaders list, which features companies with stable earnings growth and price performance. Synopsys is also on the IBD 50, along with Tesla, Meta Platforms, and Arista Networks.

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