Dow Jones futures along with S&P 500 futures and Nasdaq futures edged higher overnight. meta platform (META)’s earnings tumbled, even as its spending splurge boosted several big tech suppliers.
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Apple stock and Amazon.com were on deck Thursday night.
Stocks rebounded on Wednesday with a volatile session, but the major indexes finally closed near their session lows.Nasdaq fell sharply Microsoft (MSFT) and Google earnings.
More stocks are showing buy signals, including In-phase energy (ENPH), Wing Station (wing) and Rollins (roll).
Respectively, Tesla Tesla (TSLA) is reportedly facing a criminal investigation over its self-driving claims.
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Facebook parent meta platform, wolf speed (Wolf), Ford (F), kid (PI), Molina Health (Ministry of Health), Aspen Technology (AZPN) and immediate service (now) reported after the close.
Meta stock fell on weak earnings and guidance.But Meta’s massive spending plans have boosted several chip and networking companies, including Nvidia (NVDA) and Arista Network (ANET).
WOLF stock plummeted on its guidance. Aspen Technology, ServiceNow, and PI stocks were big earnings winners, and Molina Health popped up. Ford is down slightly. AZPN stock is not yet active.
Merck (Human Rights Commission), Shopify (shop), MasterCard (Well), McDonald’s (MCD) and caterpillar (CAT) reported earlier Thursday.
But then all eyes will also turn to Thursday night apple (AAPL) On Call Amazon.com (AMZN) and biotech giants Apex Pharma (VRTX).
Apple stock and Amazon retreated from near the 50-day mark on Wednesday. VRTX stock is in buy territory.
Vertex stock and Wingstop are on the IBD leaderboard. WOLF stock is on the leaderboard watch list. MUSA stock falls under the IBD 50. Vertex, Molina Health and ENPH stocks are in the IBD Big Cap 20. Enphase Energy is Wednesday’s IBD stock today.
The video embedded in this article discusses the volatile behavior of the market and analyzes WING stock, Enphase and Clearance (CLFD).
Tesla Criminal Probe
Tesla faces a criminal investigation into its self-driving claims, Reuters reported on Wednesday. The Justice Department’s investigation, which began last year, has not come close to reaching any conclusions, the report said. The criminal investigation comes amid an ongoing and expanding Autopilot investigation by the National Highway Traffic Safety Administration.
The new criminal investigation doesn’t appear to have affected TSLA stock. Shares closed up 1 percent at 224.64, off session highs, as the market pulled back from the morning high.
Meanwhile, Tesla CEO Elon Musk Twitter (TWTR) headquarters and changed his Twitter bio to “Chief Twit,” and all signs point to a $44 billion acquisition Friday night. TWTR shares rose 1.2% to 53.42 on Wednesday and are up 7% so far this week, just below the $54.20 price tag.
Twitter shares rose 1% to 53.90 overnight as the New York Stock Exchange said TWTR would be delisted by Friday’s close.
It’s unclear whether Musk still needs to sell more Tesla stock to fund the Twitter acquisition.
Tesla vs. BYD: Which electric car giant is more worth buying?
Dow Jones Futures Today
Dow Jones futures rose 0.5% in fair value. S&P 500 futures rose 0.45%. Nasdaq 100 futures rose 0.5% as Meta tumbled while NOW surged.
Remember, overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
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stock market rebound
Stocks rebounded sharply on Wednesday and ended mixed.
The Dow Jones Industrial Average closed up 2 points in Wednesday’s stock market trading, even as MSFT shares fell 7% and Boeing (BA) 9% off. The S&P 500 fell 0.7%. The Nasdaq Composite fell 2%. The small-cap Russell 2000 gained 0.5 percent.
The 10-year U.S. Treasury yield fell 10 basis points to 4.01%, continuing to pull back sharply from Friday’s session high. The 10-year U.S. Treasury yield was lower than the 3-month yield, falling to 4.03% on Wednesday. A 3-month/10-year reversal is seen as a stronger recession signal than a 2-year/10-year reversal.
The Bank of Canada raised interest rates by 50 basis points. 75 bps is expected as more central banks start to become less aggressive. The Fed is actually raising interest rates by 75 basis points for the fourth time in a row next week. But the market is leaning towards a 50 basis point gain in December.
The dollar fell sharply for the second straight session.
U.S. crude rose 3 percent to $87.91 a barrel.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) edged up 0.2%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 1.75%, with Microsoft shares heavily weighted and ServiceNow a notable holding. The VanEck Vectors Semiconductor ETF (SMH) fell 1%.
The SPDR S&P Metals & Mining ETF (XME) rose 1.1%. The Energy Select SPDR ETF (XLE) rose 1.4%. The Healthcare Select Sector SPDR Fund (XLV) rose 1.1%.
Reflecting more speculative stocks, the ARK Innovation ETF (ARKK) edged up 0.2% and the ARK Genomics ETF (ARKG) rose 2.8%. Tesla stock remains a major holding in the Ark Invest ETF.
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main benefit
Meta Platforms’ earnings were significantly lower than third-quarter expectations, despite topping revenue. Facebook’s parents also gave weak guidance.
Meta shares tumbled nearly 20% in overnight action, signaling a drop to the lowest level since late 2016. The stock fell 5.6% to 129.82 on Wednesday after Google missed earnings estimates due to weak online advertising revenue.That’s followed by weaker revenue from Snapchat’s parent company break off (SNAP) earlier this month.
On the plus side, Nvidia Marvell Technology (MRVL) and ANET shares rose on Facebook’s massive payout.
Wolfspeed reported a quarterly loss and slightly higher sales than expected. The chipmaker, which is involved in electric vehicles, gave disappointing guidance.
WOLF stock plunged 26% in extended trading, signaling a break below the recent low and 200-day moving average. Shares rose 1.3 percent to 106.44 on Wednesday, hitting resistance at the 50-day line. WOLF stock is close to having a proper base.
Earnings from Impinj overwhelmed perceptions, and the tracking chip maker topped sales estimates.
PI stock surged 18% overnight, signaling a gap above the 99.10 consolidation buy point. Impinj shares rose 1.3 percent to 89.23 on Wednesday, above their 50-day line.
Ford’s earnings and revenue were largely in line with the downgrade after the automaker warned about supply chain issues and costs last month.
Ford shares fell 1% in the extended action. Shares fell 0.1 percent to 12.82 on Wednesday. According to an analysis by MarketSmith, a buy point for Ford stock is at the bottom at 16.78, but it remains below the 50-day and 200-day moving averages.
Molina Health’s earnings were slightly higher than expected. Shares in the Ministry of Health rose 5% in overnight trade. Shares edged up 0.8% to 369.23 on Wednesday, rising from flat bottom to buy territory. A flat base is part of the underlying structure with a 361.35 buy point. Molina stock will open above the 5% buy zone, which closed at 379.42.
Aspen Technology’s earnings overwhelmed perceptions and topped the list by revenue. AZPN stock is not yet in extended trading. Shares of the supply chain and engineering software maker fell 1.7% to 248.40 on Wednesday, but found support at a rising 21-day moving average. AZPN stock has been consolidating for a few weeks after a strong rally, but needs more time to build a proper base.
ServiceNow tops revenue but falls short, and the business software giant lowered its fourth-quarter subscription revenue target. However, NOW shares surged 13% hours later, indicating that at least a 50-day decline line was tested. ServiceNow shares fell 2.7% to 366.41 on Wednesday on Microsoft’s results and guidance.
Market rebound analysis
Wednesday was an odd day for a stock market rally. The Nasdaq tumbled at the opening of Microsoft and Google earnings. The tech-heavy index regained lost ground late in the morning, but stocks then retreated to session lows. The S&P 500 retreated after breaking above the 50-day line intraday.
The Nasdaq now needs support near the 21-day line after pulling back from around the 50-day line.
Although the Russell 2000 closed at a high, it did move its 50-day line, reflecting how the market weakness was heavily concentrated in large-cap stocks.Microsoft and Google parent company letter (GOOGL) was the main offender, but Meta, Amazon, and Apple were also big losers.
The Invesco S&P 500 Equal Weight ETF (RSP) rose 0.2% despite closing nearer the session low.
Advances on the NYSE and Nasdaq outpaced decliners. New highs exceed new lows.
Wednesday’s pullback from key technical areas on bad news was no surprise. What matters is how the market rebound reacts from here.
Huge gains, including Apple stock and Vertex, are still due this week, with a heavy load next week. Also next week: the Fed meeting and rate hike, as well as the October jobs report and other key economic data.
On the upside, leading stocks from various sectors are flashing buy signals and extending gains, including ENPH stock.
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what to do now
Wednesday’s roller coaster session closed near the lows, underscoring the need for caution.
Investors should gradually increase their exposure in recent days as the market rally strengthens and more stocks flash buy signals. But rushing into new positions could add to the session’s highs or a larger pullback.
While there is reason to be hopeful, many technical hurdles and macroeconomic challenges remain.
Find new opportunities by working on your watchlist. However, if an uptrend or your stock is in trouble, be prepared to scale back.
Read the big picture every day to stay abreast of market direction and leading stocks and sectors.
Follow Ed Carson on Twitter @IBD_ECarson Stock market updates, etc.
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