Dow Jones futures fell slightly Friday morning, S&P 500 futures rose modestly while Nasdaq futures jumped, with Amazon.com and Snap earnings in focus and the January jobs report on tap.
The stock market rally sold off Thursday, as Facebook parent Meta Platforms crashed, dragging down techs, especially social media plays.
Two of those Facebook rivals, Snap and Pinterest, reported earnings Thursday night along with Amazon and Ford. So did cybersecurity leader Fortinet as well as Prudential Financial and The Hartford.
Amazon stock surged on earnings, while Snap stock and PINS stock spiked higher on their results after Thursday's Facebook-fueled sell-offs.
Ford Motor skidded on mixed results. Fortinet stock rose modestly. PRU stock edged lowerand Hartford stock advanced slightly, not far from buy points.
FTNT stock is on IBD Long-Term Leaders.
Jobs Report
The Labor Department will release its January jobs report at 8:30 a.m. ET on Friday. Economists expect to see payrolls up by 150,000 vs. December's 199,000. But markets are likely gearing up for a possible negative reading, after the ADP Employment Report estimated private payrolls tumbled 301,000 last month.
Labor's jobs report is based on a mid-month survey, when the omicron labor impact may have been at a peak.
Initial jobless claims suggest the labor market is already bouncing back. New filings for unemployment benefits fell to 238,000 in the week ended Jan. 29, vs. 261,000 in the Jan. 22 week, 290,000 in the Jan. 15 week, 231,000 in the Jan. 8 week and 207,000 as of Jan. 1.
Dow Jones Futures Today
Dow Jones futures fell 0.4% vs. fair value. S&P 500 futures climbed a fraction. Nasdaq 100 futures rose 0.7%, far off Thursday night highs of up nearly 2%. AMZN stock is a big S&P 500 and Nasdaq component.
The 10-year Treasury yield fell 2 basis points to 1.81%. Crude oil prices rallied 2% to $92 a barrel.
The January jobs report will surely have a big impact on Dow futures and Treasury yields.
Remember that 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 Rally
The stock market rally started off weak and kept getting worse, closing near session lows.
The Dow Jones Industrial Average fell 1.45% in Thursday's stock market trading. The S&P 500 index slumped 2.4%. The Nasdaq composite plunged 3.75%, with the big-cap Nasdaq 100 off just over 4%. The small-cap Russell 2000 retreated 1.9%.
Meta stock plunged 26% to an 18-month low.
The 10-year Treasury yield jumped 6 basis points to 1.83%, not far from recent two-year highs. The Bank of England raised rates for a second straight month. Meanwhile, the European Central Bank said it would end asset purchases in March, with ECB President Christine Lagarde striking a hawkish tone in post-meeting comments, offering the first hints of possible rate hikes.
U.S. crude oil prices rose 2.3% to $90.27 a barrel, moving above $90 for the first time since 2014. Natural gas futures tumbled Thursday after a sharp gain Wednesday.
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ETFs
Among the best ETFs, the Innovator IBD 50 ETF gave up 2.3%, while the Innovator IBD Breakout Opportunities ETF dipped 0.2%. The iShares Expanded Tech-Software Sector ETF retreated 3.8%. The VanEck Vectors Semiconductor ETF tumbled 4.4%.
SPDR S&P Metals & Mining ETF fell 0.8% and Global X U.S. Infrastructure Development ETF 1.7%. U.S. Global Jets ETF descended 2%. SPDR S&P Homebuilders ETF slumped 2.4%. The Energy Select SPDR ETF sank about 1% and the Financial Select SPDR ETF lost 1.1%. The Health Care Select Sector SPDR Fund dipped 0.4%.
Reflecting more-speculative story stocks, ARK Innovation ETF plunged 5.6% and ARK Genomics ETF 3.3%.
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Amazon Earnings
Amazon earnings easily beat, helped by a big gain in its Rivian stake. Revenue slightly missed.
The e-commerce and cloud-computing giant is hiking the price of its Amazon Prime membership by nearly 17% to $139 a year.
AMZN stock leapt 12% early Friday, but well off overnight peaks. Amazon stock gapped down 7.8% on Thursday, back near late January lows.
Ford Earnings
Ford earnings fell short, while the auto giant says chip shortages will continue to weigh on results.
In extended trade, Ford stock sank 6%. Shares fell 3.6% on Thursday after hitting resistance near its 50-day line. Ford stock tumbled from January's 20-year highs but its relative strength line has been relatively strong.
Snap Earnings
Snap earnings came in above estimates, calming fears of a Facebook-like report.
Shares spiked 41% before the open after surging more than 60% overnight. SNAP stock crashed 24% to a 52-week low Thursday, in sympathy with FB stock.
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Pinterest Earnings
Pinterest earnings and revenue easily cleared estimates.
PINS stock jumped 9% before Friday's open, but definitely off overnight highs. Shares skidded 10% on Thursday to an 18-month low, joining the Facebook and Snap social media meltdown. But Pinterest stock has been sliding for nearly a year.
Fortinet Earnings
Fortinet earnings beat forecasts. Q1 EPS guidance was light, but the cybersecurity leader gave a bullish outlook for full-year earnings and revenue.
FTNT stock rose 3% in overnight trade. Fortinet stock fell 4.2% on Thursday, trading around its 21-day line after bouncing from its 200-day earlier this week.
Prudential Earnings
Prudential earnings easily beat views. The insurer also raised its quarterly dividend 4% to $1.20 a share.
PRU stock lost less than 1% before the open. Prudential stock dipped 1.2% to 113.39 on Thursday. That's just below an old 115.62 buy point, which technically isn't valid after PRU stock briefly triggered the 7%-8% automatic sell rule. But investors could probably use 115.62, or 118.06, as entries.
Hartford Earnings
Hartford earnings ran past consensus forecasts.
HIG stock climbed 2.5% overnight. Shares fell 1.3% to 72.19 on Thursday. Hartford stock has a 78.27 buy point from a cup base. But investors could use 73.48 as an early entry.
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Market Rally Analysis
The stock market rally snapped a four-day winning streak in a big way Thursday. The catalysts were FB stock and a big jump in Treasury yields, but a pullback wasn't a particular surprise at this point.
The Nasdaq fell back below its 21-day line on Thursday, below the 14,000 level.
The Nasdaq 100, with Facebook and Amazon stocks as major components, tumbled back below its 200-day line as well as its 21-day. The S&P 500 fell back below its 21-day but is still above the 200-day average. The Dow Jones dipped below its 50-day.
So now the market rally has had a strong bounce, and a pullback. Was Thursday a temporary setback? Or will the major indexes tumble toward recent lows.
A confirmed market rally remains in force as long as it holds above its lows — Jan. 24 for the current uptrend. But it's a very bad sign when a rally closes below the low of its follow-through day.
So far, the S&P 500 and Nasdaq remain above the lows of their Jan. 31 follow-through days. The Nasdaq 100 is just above Tuesday's lows.
Market breadth was terrible on Thursday. Breadth also was poor Wednesday, especially on the Nasdaq. While the major indexes rose that day, small caps and highly valued growth stocks sank.
Energy stocks, transportation and various financials are looking good.
Apple, Google parent Alphabet and Qualcomm are big techs holding up well, with Microsoft not doing badly. All of those have relatively modest price-earnings ratios, a positive trait in a rising-interest-rate environment. But modest-ish P-E ratios didn't save FB stock or PayPal.
What To Do Now
Investors may have added some modest exposure earlier this week. Now may be a time to wait to see if Thursday was a blip or the start of a selling trend. Taking some partial profits on some recent buys also could be prudent.
If you're going to play in the current market environment, Dow Jones futures indicate you have to be just as nimble getting out as you are getting in. That's especially true if you're playing high-octane stocks or levered ETFs such as TQQQ.
Cash is still a strong position. Largely sitting out volatile market conditions will be positive for your portfolio and your mental health over time.
Eventually, a sustained market rally will clearly take hold. That could happen in a few days, weeks or months. When that happens, a large number of buying opportunities should present themselves.
So you want to be ready. Stay engaged and keep those watchlists up to date.
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.
