Dow Jones futures fell slightly overnight while S&P 500 futures and Nasdaq futures tumbled Apple (AAPL) and Amazon stock led with key gains late Thursday Exxon Mobile (XOM) and rafters (CVX) due early Friday.
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The stock market rally attempt gained momentum as a Facebook parent meta platforms (FB) rose and a number of other dejected former tech leaders rallied. Dow giant note (MRK) and Eli Lilli (LLY) rallied on gains, both blinking buy signals.
Tesla stock fell after sharply paring losses during the day.
Apple stock and Amazon.com (AMZN) reported earnings after the close, along with intel (INTC) and Atlasian (TEAM). But aside from Apple, all of these stocks are far from their highs.
Along with the oil companies Exxon and Chevron, medical giants AbbVie (ABV) and Bristol Myers Squibb (BMY) Report ahead of Friday’s opening. XOM stock and Dow giant Chevron are near buy points. ABBV stock finds support at its 50-day moving average while Bristol Myers stands at its 21-day moving average, both after strong gains.
Tesla (TSLA) and LLY stocks are on the IBD leaderboard. MRK stocks are on SwingTrader. TEAM shares are on IBD Long-Term Leaders. Exxon Mobil, Chevron and BMY stocks are represented in the IBD Big Cap 20. Merck was the IBD stock of the day.
The video embedded in this article discusses the strong market rally and analyzes FB stock, Merck and Eli Lilly.
Dow Jones futures today
Dow Jones futures fell 0.45% from fair value, while shares of Apple and Intel hit the blue chips. S&P 500 futures were down 0.9%. Nasdaq 100 futures fell 1.6% as Apple and AMZN shares and other tech earnings losers fell.
Keep in mind that overnight action in Dow futures and elsewhere doesn’t necessarily translate to actual trading in the next regular trading session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Apple stock
Apple’s profit and revenue beat forecasts amid strong iPhone sales. Tech giant Dow Jones released another $90 billion for AAPL share buybacks and increased its dividend 5% to 23 cents a share. Apple stock rose modestly after hours, but then turned back lower after warning of a $4 billion to $8 billion headwind this quarter from ongoing shutdowns in China. AAPL stock is down 2% overnight.
Shares rose 4.5% to 163.64 in Thursday’s regular session, retaking the 200-day moving average. AAPL stock has a buy point of 179.71 from a handle that is very large for a consolidation that is only 18% deep. There is arguably an early entry from a short trendline slightly above the 50-day moving average. The line of relative strength for Apple stock is not far from highs, reflecting broad market weakness.
Amazon stock
Amazon reported a large Q1 loss, reflecting the declining value of its stock Rivian (RIVN) share. Earnings slightly missed. Amazon Web Services slightly exceeded revenue targets. But Amazon led low in the second quarter.
AMZN shares fell nearly 9% in extended trading. Shares rose 4.65% on Thursday to 2,891.93 but are trading near their lowest levels since mid-2020.
Intel stock
Intel earnings just outpaced views. But the struggling chip giant led to weak results in second-quarter EPS and revenue. INTC shares are down 4% in extended action. Shares rose 3.6% to 46.84 on Thursday.
TEAM share
Atlassian earnings beat consensus. But the collaboration software maker has downplayed earnings per share for the current quarter. TEAM stock fell 6.5% overnight. Atlassian shares rose 6.7% to 259.98 on Thursday.
Merck share
Merck shares rose 4.9% to 88.58 after better-than-expected gains. Technically, MRK stock is still below a buy point of 89.58 cups w/ handle, according to MarketSmith analysis. But shares broke the handle’s downtrend and posted their best close since early November. The RS line for MRK stock is the highest since January 2021.
Eli Lilly Stick
Eli Lilly stock rose 4.3% to 297.27 after its Q1 gains. After recovering from a cup basis breakout earlier this month, LLY stock headed for gains just above the 284 buy point. The shares are still in the buy zone but have also broken a short-term downtrend and moved above their 21-day moving average.
Stock market Thursday
The rally attempt on the stock exchanges wobbled at first, but then picked up speed.
The Dow Jones Industrial Average rose 1.85% in trading on Thursday. The S&P 500 index rose 2.5%. The Nasdaq Composite gained 3.1%. Small-cap Russell 2000 is up 1.8% after hitting a fresh 52-week low on the day.
US crude prices rose 3.3% to $105.36 a barrel. The 10-year government bond yield rose 4 basis points to 2.86%.
ETFs
Among the best ETFs, Innovator IBD 50 ETF (FFTY) is up 1.1%, while Innovator IBD Breakout Opportunities ETF (BOUT) is up 1.4%. The iShares Expanded Tech-Software Sector ETF (IGV) is up 4%. The VanEck Vectors Semiconductor ETF (SMH) is up 5.7%.
The SPDR S&P Metals & Mining ETF (XME) rallied 1.85% and the Global X US Infrastructure Development ETF (PAVE) rallied 1.9%. The US Global Jets ETF (JETS) is up 2%. The SPDR S&P Homebuilders ETF (XHB) is up 2.8%. The Energy Select SPDR ETF (XLE) is up 3%, with XOM stock and CVX stock being the top constituents. The Financial Select SPDR ETF (XLF) is up 1.3%. Health Care Select Sector SPDR Fund (XLV) rose 1.4%, with ABBV shares and Bristol Myers having big holdings.
ARK Innovation ETF (ARKK) and ARK Genomics ETF (ARKG) are down 1.4% and ARK Genomics ETF (ARKG) down 3.5%, reflecting more speculative story stocks, both over the course of a 24-month period -Reached low. That Teladoc health (TDOC) crash weighed on both funds.
Tesla stock remains #1 among Ark Invest’s holdings. Shares fell 0.45% to 877.51 on Thursday but had to be dragged down to this point by a major market rally. During the day, TSLA shares fell as low as 821.70. Technically, Tesla still has a buy point of 1,152.97 cups with handle, but the chart looks damaged as shares are below the key moving averages.
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Analysis of the market rally
The stock market finally had a strong session with strong gains across the board. But it’s only one day. The best daily percentage gains in stock market history have come in bad markets.
The Nasdaq has now made another attempt at a stock market rally while Thursday was the second day for the Dow Jones and S&P 500. If major indices hold their recent lows, investors could be looking for a follow-up day to confirm the new rally as soon as possible like next week. From a practical standpoint, it seems unlikely that a follow-through day will occur before the end of next Wednesday’s two-day Federal Reserve meeting.
For now, the market remains in a correction.
Many of Thursday’s big winners were disheartened techs leaning on not-as-bad-as-feared earnings — like Facebook, PayPal (PYPL) and service now (NOW) – but far from a buying opportunity. Merck and LLY shares were welcome exceptions.
But recovery rallies can fade quickly as Apple and Amazon lead futures lower overnight.
Energy, steel and fertilizer companies remain resilient along with defense stocks. Drug makers and health insurers are looking strong. Travel names are still interesting.
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What now
Thursday’s market action doesn’t matter. What matters is what comes next. If major indices are about to make new lows then Thursday is just a blip in an ongoing correction or bear market. If the major indices continue to climb and confirm a new market rally, it makes sense.
Investors with little or no exposure could have bought MRK stock or Lilly on Thursday. Another option would be to buy a broad-market ETF, hoping for at least a short-term recovery. But if you’re making new purchases ahead of a follow-through day, keep exposure minimal and be extremely nimble. Quickly take partial profits and be ready to exit.
Being 100% cash is still a good strategy.
Your primary goal now is to be ready when the market turns. Create these watch lists. They need to be revised in the wake of the earnings season and recent market declines to lift some names and drag others down.
And stay engaged. You don’t need to be staring at your screens to watch the market, but stay focused so you don’t get caught off guard.
Read The Big Picture every day to keep up to date with 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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