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) increased slightly.
Exxon Mobil (XOM) and Chevron shares rose on strong earnings thrashing early on Friday.
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.
Besides Apple and Amazon.co.uk (AMZN), Vertex Pharmaceuticals (VRTX), First Solar (FSLR), Texas Truck Stop (TXRH), DexCom (DXCM) and T-Mobile (TMUS) also reported Thursday evening.
Apple stock has had overnight ups and downs. 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 (CVX) and Exxon Mobil reported third-quarter earnings and revenue well above expectations. CVX stock signaled a possible move to a buy point early on Friday. XOM stock also rose slightly, but could break out of a buy zone. Both have increased significantly over the past few weeks.
In other news, Tesla (TSLA) CEO Elon Musk has officially closed his $44 billion, $54.20 per share deal to Twitter (TWTR), already firing the CEO and several senior executives.
The TXRH stock is on the IBD ranking, with the DXCM stock on the earnings options for the ranking. Vertex and XOM stocks are on the IBD Big Cap 20.
Dow Jones Futures Today
Dow Jones futures fell 0.1% from fair value, with AAPL and Chevron shares providing some support for the blue chips. S&P 500 futures fell 0.55%. Nasdaq 100 futures lost 1%.
The 10-year Treasury yield rose 6 basis points to 4%.
Crude oil futures fell 1%. Copper prices fell more than 1%.
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.
Remember that overnight action on futures contracts on Dow Jones and elsewhere does not necessarily translate into actual trading in the next regular trading session.
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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% in trading Thursday. 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.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) fell 0.4%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 0.6%. The iShares Expanded Tech-Software Sector ETF (IGV) climbed 0.6%. ETF VanEck Vectors Semiconductor (SMH) fell 1.25%.
The SPDR S&P Metals & Mining (XME) ETF fell 0.3%. The US Global Jets ETF (JETS) climbed 1.3%. ETF Energy Select SPDR (XLE) gained 0.4%, with XOM and Chevron stocks the two massive components. The SPDR healthcare sector fund (XLV) fell 0.5%.
Reflecting more speculative history stocks, ARK Innovation ETF (ARKK) lost a fraction and ARK Genomics ETF (ARKG) slipped 1.7%.
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Apple’s earnings slightly beat 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 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’s revenue slightly topped views while revenue was lower, 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), fell 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’s earnings and revenue beat consensus in the third quarter. The biotech giant also raised its sales targets for the full year.
VRTX stock rose 5% overnight. This is after Vertex stock fell 7.5% in Thursday’s session to 287.89, breaking below the fixed base buy point of 306.05 and closing below its 50 line. days.
First Solar reported a bigger-than-expected third-quarter loss, while revenue was lower.
FSLR stock fell 3.5% early Friday, 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) income. First Solar’s stock is consolidating, but needs more time to forge a proper base.
T-Mobile’s earnings topped while revenue fell short. 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 is hitting resistance at a buy point of 142.79 in a double bottom basis.
Revenues from Texas Roadhouse slightly exceeded views. TXRH stock fell 1% in extended trade. The 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. Shares of DXCM rose 8% after hours, 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.
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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.
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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.
Read The Big Picture every day to stay in tune with market direction and top stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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