Dow Jones futures fell sharply Friday morning, along with S&P 500 futures and Nasdaq futures. Apple was little changed on earnings while Amazon.com tumbled. The July jobs report is due before the open.
The stock market rally suffered an expectations breaker on Thursday following Wednesday's bullish moves. Weak economic data raised recession fears, sending the 10-year Treasury yield tumbling below 4%. The Russell 2000 suffered the biggest loss, while the S&P 500 and Nasdaq reversed lower, undercutting key levels.
Meta Platforms, which leapt 11% intraday Thursday, settled for a 4.3% gain as many earnings gap-ups wilted.
Nvidia reversed from the 50-day line on a day full of ugly reversals and terrible market breadth. NVDA stock fell solidly early Friday as well.
Other Earnings
Coinbase, Vertex Pharmaceuticals, MercadoLibre, Monolithic Power, DoorDash, Snapchat parent Snap and Intel also reported Thursday night, with Intel slashing jobs and planning to suspend its dividend. Oil giants Exxon Mobil and Chevron reported early Friday.
MELI stock, DoorDash and Monolithic Power were big winners overnight, with Coinbase up modestly. Intel stock and especially Snap were big losers. Exxon, Chevron and Vertex were little changed before the open.
Nvidia stock is on IBD Leaderboard.
Dow Jones Futures Today
Dow Jones futures fell 0.9% vs. fair value, with Apple, Chevron and Intel stock all Dow components. S&P 500 futures lost 1.1% and Nasdaq 100 futures plunged 1.7%, both signaling moves below last week's lows. Apple stock, Amazon and Nvidia are major S&P 500 and Nasdaq 100 members.
The 10-year Treasury yield slipped to 3.94%. Crude oil fell slightly
The jobs report will be sure to swing 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.
Jobs Report
The Labor Department will release the July jobs report at 8:30 a.m. ET. Nonfarm payrolls are expected to rise by 180,000, down from June's 206,000, though private hiring is seen picking up. The jobless rate is set to hold steady at 4.1%, with average hourly earnings up 0.3% vs. June.
After months of looking for easing labor markets, investors may want to see some stabilization.
Join IBD experts as they analyze leading stocks and the market on IBD Live
Stock Market Expectations Breaker
After Wednesday's bullish moves, with the S&P 500 staging a de facto follow-through day, the expectation is that the stock market will continue higher. But the major indexes saw sharp downside reversals Thursday, wiping out most or all of Wednesday's AI-and-Fed gains. Selling ramped up after July ISM manufacturing data and June construction spending came in well below views, raising recession fears. The indexes did close off their worst levels.
The Dow Jones Industrial Average slid 1.3% in Thursday's stock market trading, but closed above its 21-day line. The S&P 500 index fell 1.4%, back below the 21-day line and just under its 50-day line. The Nasdaq composite lost 2.3%, back below the 50-day line after topping the 21-day line shortly after the open. The small-cap Russell 2000 skidded 3%, but held the 21-day line.
U.S. crude oil prices sank 2.05% to $76.31 a barrel. Bitcoin slumped 2.85% to $63379.19, extending weekly losses amid a general risk-off market.
The 10-year Treasury yield dived 13 basis points to 3.98%, undercutting the 4% level for the first time since early February. The two-year yield dived 17 basis points to 4.16%, the lowest since January.
A day after Fed chief Jerome Powell gave strong signals that rate cuts are coming, investors are fearing that policymakers may be acting too late.
Stepping back, the Russell 2000 and many non-tech sectors just gave back a portion of July's sharp gains, albeit a big chunk in one day. Meanwhile, the S&P 500 and Nasdaq are close to recent lows, with The First Trust Nasdaq 100 Equal Weighted Index ETF undercutting on Thursday. That suggests that concerns about AI spending fatigue and AI valuations remain, despite the bullish AI-fueled capital spending plans from Google, Microsoft and Meta Platforms.
One bright spot: The CBOE Volatility Index, or VIX, shot up to three-month high, though the market fear gauge was well off the April 19 intraday high. Excessive fear can signal at least a temporary market bottom.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF slumped 2.7%. The iShares Expanded Tech-Software Sector ETF gave up 1.6%%. The VanEck Vectors Semiconductor ETF plunged 6.5%, with Nvidia stock the No. 1 member.
Reflecting more-speculative story stocks, ARK Innovation ETF tumbled 5.1% and ARK Genomics ETF retreated 3.5%.
SPDR S&P Metals & Mining ETF skidded 4.1%. SPDR S&P Homebuilders ETF lost 3.2%. The Energy Select SPDR ETF gave up 2.65% and the Health Care Select Sector SPDR Fund rose 1%.
The Industrial Select Sector SPDR Fund declined 1.85%. The Financial Select SPDR ETF fell 1.4%. The SPDR S&P Regional Banking ETF slumped 4.5%.
Time The Market With IBD's ETF Market Strategy
Apple Earnings
Apple earnings modestly beat views. AAPL stock was flat heading into Friday's open. Shares fell 1.7% to 218.36 on Thursday, back below the 21-day line and approaching the 21-day line.
Amazon Earnings
Amazon earnings beat views, but sales fell short, though Amazon Web Services revenue slightly topped. The cloud-computing and e-commerce giant also generally guided lower on Q3 revenue.
AMZN stock fell 8% early Friday. Shares slid 1.6% to 184.07 on Thursday after moving above the 50-day line at the open.
Nvidia Stock Reverses Hard
Nvidia opened with decent gains, quickly touching the 50-day moving average after spiking 12.8% on Wednesday. But as the market reversed, NVDA stock helped lead the slide, falling 6.7% to 109.21.
Capital spending guidance has been strong from tech giants so far. But chip stocks sold off hard on earnings Thursday, with Arm Holdings diving nearly 16%. Lam Research and Qualcomm plunged as well.
NVDA stock fell more than 3% in premarket trade. The Justice Department is reviewing Nvidia over its AI chip dominance, including a planned takeover of startup Run:ai, Politico reported Thursday night. The Information reported the DOJ is reviewing whether Nvidia abused its AI dominance in selling chips, following complaints from rivals.
Copper A Can't Miss? The Hottest industries Crave The Red Metal
What To Do Now?
Following Wednesday's bullish gains, Thursday was an expectations breaker, especially after the open with the Nasdaq moving above its 21-day line and Nvidia stock brushing against its 50-day line. Small caps, which are always prone to big moves, have quickly given up a big chunk of their gains since Wednesday afternoon.
Most important, recent breakouts failed or faltered.
Investors have to react to these market signals, especially those who were quick to act on bullish signals.
It's not a time to be making new buys, while investors may need to exit recent positions.
Friday's jobs report could steady nerves or inflame recession fears, offering a de facto day three reaction to the Fed meeting. The latest batch of big earnings from Apple and others will move markets as well.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
