Dow Jones futures fell early Friday, while S&P 500 and Nasdaq futures fell slightly as Amazon shares became the latest slump in megacap earnings. Apple (AAPL) rose slightly.
The stock market rally had a mixed Thursday, with the Dow Jones rising on earnings reports and the Nasdaq sinking on Metaplatforms (META) results and tips. But the key indices all closed at or near session lows. It came despite Treasury yields falling below key levels after third-quarter GDP showed US economic growth was top of mind as inflation eased significantly.
Apple stock rose slightly in premarket trading. The iPhone giant slightly beat profit and sales forecasts, but said slower growth is ahead.
Amazon shares plunged on weak cloud revenue and dire fourth-quarter guidance. Vertex shares rose solidly overnight on strong third-quarter results. FSLR stock fell slightly on weak Q3 results. Texas Roadhouse stock was down late in the session despite mixed views. T-Mobile stock rose on mixed third-quarter results. DexCom stock jumped on strong earnings.
Chevron (CLC) and Exxon Mobil reported third-quarter earnings and revenue well above views. Chevron and XOM shares edged higher early Friday. CVX stock has signaled a possible move to a buy point. XOM stock could break out of a buy zone. Both have increased significantly over the past few weeks.
Dow Jones Futures Today
Dow Jones futures fell about 0.1% from fair value, with AAPL and Chevron shares providing some support for the blue chips. S&P 500 futures fell 0.5%. Nasdaq 100 futures lost 0.9%.
The 10-year Treasury yield rose 7 basis points to 4.01%, returning above the 4% level.
Crude oil futures fell slightly. Copper prices fell almost 2%.
Hong Kong’s Hang Seng Index fell 3.7%, the lowest since April 2009, with Chinese internet and electric vehicle stocks leading. Chinese cities are reimposing restrictions amid rising Covid cases.
Stock market rally
The stock market rally had a mixed session, closing near session lows as major indices diverged on earnings.
The Dow Jones Industrial Average rose 0.6% on Thursday stock market trading. The S&P 500 index fell 0.6%. The Nasdaq composite fell 1.6%. The small cap Russell 2000 edged up 0.1%.
The 10-year Treasury yield fell 7 basis points to 3.94%, falling below the key 4% level.
GDP grew at an annual rate of 2.6% in the third quarter, returning to growth after two quarters of small declines. It was slightly above the estimates. However, inflation measures showed a faster-than-expected deceleration. In addition, the European Central Bank raised rates by 75 basis points, as expected, but three members preferred a move of half a point. The post-meeting statement was also slightly less hawkish.
Markets still expect the Fed to hike rates by 75 basis points for a fourth consecutive meeting next week, although this is no longer a lock. They see a strong chance that the Fed will raise rates by just 50 basis points.
U.S. crude oil prices rose 1.3% to $89.05 a barrel.
From best ETFsthe Innovator IBD 50 ETF (FFTY) fell 0.4%, while the Innovator IBD Breakout Opportunities ETF (FIGHT) increased by 0.6%. The iShares Expanded Tech-Software Sector ETF (VIG) climbed 0.6%. The VanEck Vectors Semiconductor ETF (SMH) fell 1.25%.
SPDR S&P Metals & Mining ETF (XME) fell 0.3%. US Global Jets ETF (JETS) increased by 1.3%. The SPDR Energy Select ETF (XLE) gained 0.4%, with XOM and Chevron stocks both being massive constituents. SPDR Healthcare Sector Fund (XLV) fell 0.5%.
Apple revenue slightly topped fiscal fourth-quarter views while revenue beat slightly. iPhone and Services revenue slightly missed targets. On the earnings call, management said it expected growth to slow during the first-quarter vacation compared to the fourth quarter. Apple pointed to the strong dollar as a major headwind.
AAPL stock rose less than 1%, oscillating between small gains and losses. Apple stock fell just over 3% to 144.80 on Thursday, falling below its 21-day line after hitting resistance at its 50-day line earlier in the week.
Amazon wins slightly beat the sights as revenue fell short, in part due to weakness in high-margin Amazon web services. The e-commerce and cloud computing giant has warned about fourth-quarter sales. Cloud-software plays, already shaken by disappointing growth in cloud computing by Microsoft (MSFT), dropped again on Amazon.
AMZN stock tumbled 13% in premarket trading, signaling the worst levels in more than two years. Shares fell 4.1% to 110.96 on Thursday after falling below their 21-day line on Wednesday. Weakness in Microsoft’s cloud computing and online advertising issues for Meta and Google weighed on Amazon shares this week.
vertex gains and revenue beat the third quarter consensus. The biotech giant also raised its sales targets for the full year.
VRTX stock rose 5% overnight. This is after Vertex shares fell 7.5% in Thursday’s session to 287.89, falling below 306.05. flat base buy point and close below its 50-day line.
First Solar reported a bigger-than-expected third-quarter loss, while revenue was lower.
FSLR stock fell 3% early Friday, off overnight lows but signaling a move below the 50-day line. The shares edged down 0.2% to 131.18 on Thursday, holding above its 50-day line after recovering to that key level on Wednesday. Enphase Energy (ENPH) earnings. First Solar’s stock is consolidating, but needs more time to forge a proper base.
T-Mobile revenue exceeded while revenues were insufficient. The wireless giant added more mobile and broadband customers than expected. TMUS stock rose 3% in overnight trading. Shares fell 0.15% to 140.63 on Thursday. T-Mobile Stock Hits Resistance at 142.79 point of purchase in a double bottom base.
Revenues from Texas Roadhouse slightly exceeded views. TXRH stock fell 1% in extended trade. Shares rose 1.5% to 98.75, climbing into a buy zone above a flat base, according to MarketSmith Analysis.
DexCom’s earnings and sales also beat consensus. DXCM stock rose 9% early Friday, signaling a move into a buy zone. The shares fell 1.3% to close at 101.25. DexCom stock had formed a shelf with a buy point of 105.43, formed just above the 200-day line and a lower base.
Market rally analysis
The stock market rally diverged on Thursday, making it difficult to discern clear trends. Strong earnings rallied the Dow Jones, while the Nasdaq sank as Meta Platforms plunged and other megacap technologies retreated. The S&P 500 also lost ground.
The Dow Jones, although rising, closed near the lows for a second straight session. The S&P 500 hits resistance at its 50-day line, although it is still above its 10-week line. The Nasdaq pulled back around its 50-day/10-week lines and broke above its 21-day line.
The advances led the declines on the NYSE, but lagged on the Nasdaq.
The 10-year Treasury yield fell again on Thursday. Falling yields are positive for equities, although this relationship does not hold every day.
VRTX shares and some other medical picks fell sharply on Thursday with no clear news, adding to earnings-fueled volatility. Several other healthcare names, however, showed solid action.
Energy stocks are still doing well, reflecting rising prices. Discounters and defensive-minded auto parts retailers look strong, as do several restaurant stocks.
What to do now
The stock market rally shows volatile action around key levels, mostly but not entirely on earnings. It is a delicate environment for trading.
Investors may choose to slightly add exposure here, but may want to wait for indices to calm down and clear key levels.
The market is giving no reason to reduce overall exposure, but if stocks are erasing gains, don’t let small losses turn into large losses.
Lily The big picture every day to stay in tune with market direction and key stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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