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Dow Jones futures rose slightly early Thursday morning, while S&P 500 futures climbed solidly and Nasdaq futures jumped as Facebook parent Meta Platforms (FB) soared on strong earnings.
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The stock market tried to bounce Wednesday with Dow Jones giants Microsoft (MSFT) and Visa (V) jumping on earnings while blue-chip Boeing (BA) tumbled. But the Nasdaq wiped out a big intraday gain to close flat while the Dow and S&P 500 eked out slim advances.
Tesla stock edged higher, but only recouping a sliver of Tuesday’s tumble. Meanwhile, TWTR stock fell for a second straight day amid fears that Tesla CEO Elon Musk could walk away from the Twitter deal.
Facebook reported earnings after the close, along with fellow tech firms PayPal (PYPL), ServiceNow (NOW) and Qualcomm (QCOM), as well as Ford Motor (F). But all of these former leaders are in significant downturns.
Meanwhile, pandemic stock winner Teladoc Health (TDOC) also reported. TDOC stock had already round-tripped its huge 2020 gains.
Early Thursday, Eli Lilly (LLY) and Dow Jones giant Merck (MRK) are on tap, both near buy points as well. Dow stocks Caterpillar (CAT) and McDonald’s (MCD) also are before the open, along with Twitter.
Meanwhile, Apple (AAPL) looms Thursday night. Apple stock edged higher Wednesday but hit resistance at its 200-day moving average.
Tesla (TSLA) and Microsoft stock are on IBD Leaderboard. Microsoft and NOW stock are on IBD Long-Term Leaders.
Dow Jones futures rose 0.3% vs. fair value. S&P 500 futures climbed 0.85%. Nasdaq 100 futures jumped 1.5%, led by FB stock and other tech earnings winners.
Crude oil prices fell more than 1% to below $101 a barrel. The 10-year Treasury yield rose 1 basis point to 2.83%.
The Commerce Department will give its first estimate of first-quarter economic growth. Economists see economic growth slowing to a 1.1% annual rate vs. Q4’s 6.9% pace. That’s partly due to weaker inventories, with consumer spending seen rising 3.4%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
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Facebook earnings and daily active views beat forecasts while revenue came in light. FB stock surged 18% in overnight trade. Shares fell 3.3% to 174.95 on Wednesday, a two-year low, after Google parent Alphabet (GOOGL) missed on earnings, in a bad sign for online advertising.
PayPal earnings were in line while revenue slightly exceeded targets. PYPL stock rose 3% in extended action. Shares fell 1.3% to 82.61 on Wednesday, just above the March 2020 coronavirus low.
ServiceNow earnings easily beat views while revenue also topped. NOW stock jumped 7% overnight. ServiceNow stock rose 2.3% on Wednesday to 466.29, after hitting a 23-month low on Tuesday.
Qualcomm earnings topped forecasts and the company guided higher for the current quarter, easing fears of waning smartphone demand. QCOM stock popped 6% in extended trade. Qualcomm stock climbed 1.2% to 135.10 on Wednesday, after falling intraday to its worst level since October. Qualcomm earnings and guidance also are hopeful signs for Apple earnings Thursday night.
Ford earnings narrowly topped views while the automaker reaffirmed full-year targets. Ford stock rose 2% in overnight action. Shares edged up 0.5% to 14.78 on Wednesday after General Motors (GM) said it sees solid production growth in 2022.
Teladoc reported a wider-than-expected loss and a surprise $6.6 billion impairment charge. The telehealth specialist also cut 2022 guidance. TDOC stock crashed 38% overnight, on target for a four-year low. Teladoc stock fell 3.1% on Wednesday to 55.99, vs. its February 2021 peak of 308.
The stock market was up and down Wednesday, ultimately closing little changed. The Dow Jones Industrial Average rose 0.2% in Wednesday’s stock market trading. The S&P 500 index climbed 0.2% as well. The Nasdaq composite closed down less than 2 points. The small-cap Russell 2000 sank 0.4% to the lowest point since December 2020.
U.S. crude oil prices edged up 0.3% to $102.02 a barrel. The 10-year Treasury yield rose 4 basis points to 2.82%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) edged up 0.3%, while the Innovator IBD Breakout Opportunities ETF (BOUT) eked out a 0.1% gain. The iShares Expanded Tech-Software Sector ETF (IGV) closed just above break-even, with MSFT stock and ServiceNow both big holdings. The VanEck Vectors Semiconductor ETF (SMH) fell 0.5%, with QCOM stock in SMH.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) fell 2.2% and ARK Genomics ETF (ARKG) 0.65%. Both hit 23-month lows intraday. Tesla stock remains the No. 1 holding across Ark Invest’s ETFs. TDOC stock also is a major Ark Invest holding, as fund manager Cathie Wood added to the position recently. ARKK and ARKG fell down solidly overnight.
SPDR S&P Metals & Mining ETF (XME) climbed 1.8% and the Global X U.S. Infrastructure Development ETF (PAVE) rose 0.8%. U.S. Global Jets ETF (JETS) ascended 0.9%. SPDR S&P Homebuilders ETF (XHB) dipped 0.2%. The Energy Select SPDR ETF (XLE) rallied 1.5% and the Financial Select SPDR ETF (XLF) edged down 0.1%. The Health Care Select Sector SPDR Fund (XLV) lost 0.2%.
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TSLA stock rose 0.6% to 881.51 after plunging 12.1% on Tuesday, undercutting the 50-day and 200-day lines. Shares rose to 918 intraday but faded badly, unable to close above their 200-day line Wednesday.
Tuesday’s sell-off may have been triggered by concerns that CEO Elon Musk will sell TSLA stock to finance his Twitter buyout. But in the context of growth stocks, Tesla stock hasn’t fallen especially hard over the past few weeks.
Meanwhile, Twitter stock fell 2.1% to 48.64, retreating further from the $54.20 takeover price. The market sees a small-but-not-tiny risk that Musk walks away from the deal, triggering a massive TWTR stock sell-off. Musk has continued to make disparaging comments about Twitter, and its staff and policies, since the deal announcement Monday.
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The stock market tried to bounce Wednesday on Microsoft and Visa earnings, but gains withered. The Dow Jones and S&P 500 technically have started stock market rally attempts, but not the Nasdaq, which closed fractionally lower.
Even at session highs, the major indexes were still well below their 10-day moving averages, let alone their 21-day or 50-day lines. If the Dow and S&P 500 can hold Wednesday’s lows, a follow-through day could occur as soon as next week to confirm a new market rally.
But until then, it’s a market correction, with the Nasdaq in a full-blown bear market.
Earnings season will remain furious for the next couple of weeks, with Apple stock headlining a massive Thursday. Next week, the Federal Reserve is likely to hike interest rates by 50 basis points and agree to start cutting its balance sheet.
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Wednesday’s action certainly wasn’t inspiring. Even if the market had closed at session highs, it wouldn’t have been meaningful by itself.
For now, investors should stay on the sidelines, with little or no exposure. But stay engaged and build up those watchlists.
Defense firms are still looking strong, while energy stocks are generally holding in bases. Steel and fertilizer plays are holding key levels. Travel stocks and REITs are trying to hang on or form new buy points.
But as mining stocks recently showed, even leading sectors can quickly crumble in a weak market.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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