Dow Jones futures rose modestly overnight, while S&P 500 futures and Nasdaq futures rose solidly as Facebook’s parent company meta platforms (FB) surged on strong gains.
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The stock market tried to bounce up with the Dow Jones giants on Wednesday Microsoft (MSFT) and Visas (V) while blue-chip jump on profits Boeing (BA) fell. But the Nasdaq erased a large intraday gain and closed flat while the Dow and S&P 500 made slight gains.
Tesla stock rose, but only recovered a fraction of Tuesday’s plunge. Meanwhile, TWTR stock fell for the second straight day amid fears Tesla CEO Elon Musk might step down from the Twitter deal.
Facebook, along with other tech companies, reported gains after the close PayPal (PYPL), service now (Now and Qualcomm (QCOM), as well Ford engine (F). But all of these former leaders are in major downturns.
Meanwhile winner of Pandemic stock Teladoc health (TDOC) also reported. TDOC stock had already recouped its huge 2020 gains.
early thursday, Eli Lilli (LLY) and the Dow Jones giant note (MRK) are available, both near purchase points. Dow stocks Caterpillar (CAT) and MC Donalds (MCD) along with Twitter are also about to open.
In the meantime, Apple (AAPL) emerges Thursday evening. Apple stock edged higher on Wednesday but faced resistance at its 200-day moving average.
Tesla (TSLA) and Microsoft shares are on the IBD leaderboard. Microsoft and NOW shares are IBD Long-Term Leaders.
Dow Jones futures today
Dow Jones futures rose 0.2% versus fair value. S&P 500 futures were up 0.75%. Nasdaq 100 futures rose 1.3%, led by FB shares and other tech gainers.
Keep in mind that overnight action in Dow futures and elsewhere doesn’t necessarily translate to actual trading in the next regular trading session.
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Facebook earnings and daily active views beat forecasts as earnings came to light. FB stock is up 18% in overnight trading. Shares fell 3.3% on Wednesday to 174.95, a two-year low, according to Google’s parent company alphabet (GOOGL) Missed revenue, a bad sign for online advertising.
PayPal earnings were on track while earnings slightly exceeded targets. PYPL stock rose 5% in extended action. Shares fell 1.3% on Wednesday to 82.61, just above the March 2020 coronavirus low.
ServiceNow’s earnings far outpace views, while revenue outperforms as well. NOW stock rose 8% overnight. ServiceNow shares rose 2.3% to 466.29 on Wednesday after hitting a 23-month low on Tuesday.
Qualcomm’s earnings beat forecasts and the company edged higher for the current quarter, allaying fears of slowing smartphone demand. QCOM stock tumbled 5% in extended trading. Qualcomm shares rose 1.2% to 135.10 on Wednesday after falling to their lowest level since October on the day. Qualcomm’s earnings and guidance also bode well for Thursday night’s earnings for Apple.
Ford’s earnings narrowly beat expectations as the automaker confirmed its full-year guidance. Ford shares rose 1% overnight. Shares rose 0.5% to 14.78 on Wednesday after that General Motors (GM) said it sees solid production growth in 2022.
Teladoc reported a bigger-than-expected loss and a surprise $6.6 billion impairment. The telemedicine specialist also lowered its 2022 guidance. TDOC stock plunged 37% overnight, to a four-year low. Teladoc stock fell 3.1% on Wednesday to 55.99 from its February 2021 peak of 308.
An attempt at a stock market rally begins
The stock market went up and down on Wednesday and finally closed little changed. The Dow Jones Industrial Average rose 0.2% in trading on Wednesday. The S&P 500 Index was also up 0.2%. The Nasdaq Composite closed down less than 2 points. Small-cap Russell 2000 fell 0.4% to its lowest level since December 2020.
US crude prices edged up 0.3% to $102.02 a barrel. The 10-year government bond yield rose 4 basis points to 2.82%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) gained 0.3%, while the Innovator IBD Breakout Opportunities ETF (BOUT) gained 0.1%. The iShares Expanded Tech-Software Sector ETF (IGV) closed just above breakeven, with MSFT stock and ServiceNow both being big holdings. The VanEck Vectors Semiconductor ETF (SMH) fell 0.5% with QCOM stock included in SMH.
ARK Innovation ETF (ARKK) is down 2.2% and ARK Genomics ETF (ARKG) is down 0.65%, reflecting more speculative story stocks. Both hit 23-month lows on the day. Tesla stock remains Ark Invest’s #1 ETF. TDOC shares are also a key holding for Ark Invest, as fund manager Cathie Wood recently added to the position. ARKK and ARKG fell solidly overnight.
The SPDR S&P Metals & Mining ETF (XME) was up 1.8% and the Global X US Infrastructure Development ETF (PAVE) was up 0.8%. The US Global Jets ETF (JETS) rose 0.9%. The SPDR S&P Homebuilders ETF (XHB) was down 0.2%. The Energy Select SPDR ETF (XLE) was up 1.5% and the Financial Select SPDR ETF (XLF) was down 0.1%. The Health Care Select Sector SPDR Fund (XLV) lost 0.2%.
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Tesla stock
TSLA shares rose 0.6% to 881.51 after falling 12.1% on Tuesday, undercutting the 50-day and 200-day moving averages. Shares rose to 918 for the day but fell sharply and failed to close above its 200-day moving average on Wednesday.
Tuesday’s sell-off may have been sparked by concerns that CEO Elon Musk will sell TSLA stock to fund his Twitter buyout. But in the context of growth stocks, Tesla stock hasn’t fallen that much in recent weeks.
Meanwhile, Twitter stock fell 2.1% to 48.64, further down from the takeover price of $54.20. The market sees a small, but not tiny, risk that Musk will walk away from the deal and trigger a massive sell-off in TWTR shares. Musk has continued to make disparaging comments about Twitter and its employees and policies since announcing the deal on Monday.
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market analysis
The stock market tried to recover from gains in Microsoft and Visa on Wednesday, but gains dried up. The Dow Jones and S&P 500 have technically started stock market rally attempts, but not the Nasdaq, which closed marginally lower.
Even at daily highs, the major indices were still well below their 10-day moving averages, let alone their 21-day or 50-day moving averages. If the Dow and S&P 500 sustain Wednesday’s lows, a follow-up day could come as early as next week to confirm a fresh market rally.
But until then it’s a market correction, with the Nasdaq in a full blown bear market.
Earnings season is set to remain furious over the next few weeks, with Apple stock poised to make headlines on Thursday. Next week the Federal Reserve is likely to hike rates by 50 basis points and agree to start trimming its balance sheet.
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What now
Wednesday’s action was certainly not inspiring. Even if the market had closed to session highs, that in itself would not have been meaningful.
For now, investors should stay on the sidelines with little or no exposure. But stay engaged and build those watch lists.
Defense companies still look strong, while energy stocks are generally staying in bases. Steel and Fertilizer games hold key levels. Travel stocks and REITs are trying to hold or create new buying points.
But as mining stocks have recently shown, even leading sectors can collapse quickly in a weak market.
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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