Dow Jones futures rose slightly overnight, while S&P 500 futures and especially Nasdaq futures retreated. Facebook parent Meta Platforms (FB), Spotify (SPOT) and Qualcomm (QCOM) headlining after-hours earnings.
Google stock broke out after the open on strong earnings and a 20-for-1 split, but pulled back below the 3,019.43 buy point. Shares still jumped x% to xxx. The relative strength line for GOOGL stock hit a new high. Advanced Micro Devices (AMD) popped 5.1% on hot results and guidance, but is still below its 50-day line.
Meanwhile, PayPal (PYPL) and Dynatrace (DT) were among several earnings losers Wednesday. PYPL stock crashed nearly 25% to the lowest since May 2020. DT stock skidded 18%, hitting a 52-week low. They also triggering big losses in beaten-down growth stocks that have tried to rebound. Shopify (SHOP) and Snowflake (SNOW) fell sharply. Tesla stock retreated modestly, still comfortably above its 200-day line.
The video embedded in this article reviewed the market rally and analyzed Google, AMD stock and Equity Residential (EQR).
Meta Platforms earnings unexpectedly fell 5% while revenue narrowly beat. The Facebook parent also guided lower on Q1 revenue.
FB stock crashed 23% in extended trade, signaling at least an 11-month low. That’s after rising 1.25% Wednesday in reaction to Google earnings.
Other Key Earnings
Qualcomm earnings were better than expected while guidance also appeared solid. QCOM stock fell modestly overnight after an initial tumble. Shares had popped 6.25% to 188.20 on Wednesday, powering back above the 50-day line. The RS line hit a record high, but it’s not clear what a good Qualcomm stock buy point would be.
Another chipmaker, MaxLinear (MXL), had a beat-and-raise report as well. MXL stock was little changed in extended action. Shares climbed 1.4% on Wednesday to 61, rising for fourth straight session after finding support at its 200-day line.
Spotify results were roughly in line, but paid subscriber guidance was a little light. Spotify is dealing with some musicians pulling their content, claiming Covid misinformation by podcast host Joe Rogan. SPOT stock plunged 9% overnight.
Dow Jones Futures Today
Dow Jones futures climbed 0.15% vs. fair value. S&P 500 futures sank 0.7%. Nasdaq 100 futures slumped 1.7%. FB stock is weighing on Nasdaq futures, but many other techs are losing ground.
Stock Market Rally
The stock market rally was indecisive Wednesday morning, but the major indexes ultimately closed higher, though small caps struggled.
The Dow Jones Industrial Average rose 0.6% in Tuesday’s stock market trading. The S&P 500 index climbed 0.9%. The Nasdaq composite advanced 0.5%. The small-cap Russell 2000 retreated 1%.
But there were plenty of earnings losers. PYPL stock and Dynatrace hit related payment and software names. But those two names, along with FB stock and Spotify overnight, sent a broader warning to hard-hit growth stocks.
Tesla stock fell 2.75%, but it’s still up 7% this week as the EV giant rebounded from its 200-day line. SNOW stock sank 5.5% Wednesday, still up nearly 6% this week. Shopify (SHOP) tumbled 10% on Wednesday, still up 1.6% slightly for the week.
The 10-year Treasury yield fell 3 basis points to 1.77%, with the ADP Employment Report showing private payrolls down 301,000, unexpectedly.
Crude oil prices was up and down, ultimately closing 6 cents higher to $88.26 a barrel as OPEC+ continued to slowly unwind Covid crash output cuts. Natural gas prices jumped.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) edged up 0.4%. The iShares Expanded Tech-Software Sector ETF (IGV) sank 1%, even with big component Microsoft advancing. The VanEck Vectors Semiconductor ETF (SMH) popped 2.55%, with AMD and Qualcomm stock notable holdings.
SPDR S&P Metals & Mining ETF (XME) rose 1.3% and Global X U.S. Infrastructure Development ETF (PAVE) added 0.7%. U.S. Global Jets ETF (JETS) dipped 0.5%. SPDR S&P Homebuilders ETF (XHB) climbed 0.5%. The Energy Select SPDR ETF (XLE) picked up 0.3% and the Financial Select SPDR ETF (XLF) advanced 0.7%. The Health Care Select Sector SPDR Fund (XLV) rallied 1.35%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) slumped 5.1% and ARK Genomics ETF (ARKG) gave up 3%. Tesla stock is the No. 1 holding across ARK Invest’s ETFs. ARKK also owns a lot of SPOT stock.
Market Rally Analysis
The stock market rally ultimately extended a recent winning streak Wednesday, with the S&P 500 leading the way. The Nasdaq composite opened solidly higher, but reversed lower before settling for modest gains.
The Nasdaq still has some distance from its 200-day moving average, though it did close just above its 21-day moving average. The Nasdaq 100 cleared that long-term level Wednesday and the 21-day line. The S&P 500 index moved toward its 50-day line while the Dow reclaimed that.
The Russell 2000 retreated however. Unlike some recent up days for the major indexes, overall market breadth was weak, with decliners beating advancers by 2-to-1 on the Nasdaq.
Will the market rally continue to move higher, or reverse back toward recent lows? The major indexes moving sideways for a few days or weeks could be positive. It would let stocks form proper consolidations, with leading stocks showing relative strength. But the market could pause for a day or two or three and then suddenly break higher or lower.
Apple (AAPL), Microsoft and Google stock, megacap techs with modest price-to-earnings ratios, are healthy. But techs generally aren’t providing much leadership.
Fertilizer and several shipping stocks still look strong, along with the energy sector.
REITs such as Equity Residential fared well Wednesday as Treasury yields retreated. But those gains could reverse quickly if yields move back up.
Credit card companies are rallying even as digital upstarts such as PYPL stock flounder. A number of machinery and industrial stocks are not far from setting up. So are some travel names.
Various medical stocks look interesting.
What To Do Now
The stock market rally continues to gain momentum on the major indexes, but Wednesday’s weak breadth wasn’t a great sign. Overnight futures don’t bode well for Thursday’s open, especially on the Nasdaq.
Investors should be cautious about getting too heavily exposed. You could even take partial profits on recent buys — especially volatile rebound plays — to let the trade pay for itself in case of a reversal.
If the market rally continues to trend higher, there will plenty of chances to ramp up exposure as top stocks flash buy signals.
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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