Dow Jones futures rose solidly early Friday, along with S&P 500 futures and Nasdaq futures. Apple rallied on earnings while PacWest led a rebound in regional bank stocks. The April jobs report looms.
The stock market rally faced further selling Thursday amid bank contagion fears. PacWest Bancorp and Western Alliance Bancorp were among the biggest losers yet again, despite issuing deposit updates overnight. Other regional banks skidded yet again with even giants such as Bank of America, Wells Fargo and JPMorgan Chase.
The Dow Jones turned slightly negative for 2023 as it tested its 50-day line.
Amid bank woes and recession fears, gold stocks shined. So did Bitcoin and several Bitcoin-related stocks.
AMD stock popped on a report that Microsoft is helping Advanced Micro Devices move into artificial intelligence chips, creating competition for Nvidia.
Shopify and Lantheus were big earnings winners Thursday, but there were plenty of losers too.
Apple Earnings
Apple earnings modestly topped views, helped by iPhone and services revenue. The tech titan announced a $90 billion AAPL stock buyback and a slight dividend hike.
Apple rose 2.5% in premarket trade. Shares fell 1% on Thursday to 165.79, finding support near a rising 21-day line after hitting an eight-month high intraday Wednesday.
Fortinet, Floor & Decor, Booking Holdings, DoorDash, Insulet also reported Thursday night, along with Cathie Wood stalwarts DraftKings and Coinbase.
DoorDash rose solidly while DKNG stock and Coinbase were big winners. DASH stock is set to break out from a cup-with-handle base while DraftKings looks to retake a cup-base buy point. PODD stock rose slightly, with Insulet eyeing a move into a buy zone. Fortinet topped views with FTNT little changed Friday morning. BKNG stock fell modestly overnight signaling a test of its 50-day. FND stock, which had flirted with a buy point for weeks, may gap below the 21-day and 50-day lines.
Dow Jones Futures Today
Dow Jones futures were up 0.5% vs. fair value. S&P 500 futures climbed 0.7%. Nasdaq 100 futures rose 0.65%. AAPL stock is a Dow Jones, S&P 500 and Nasdaq component.
The 10-year Treasury yield rose 6 basis points to 3.41%.
Crude oil futures bounced 3% to above $70 a barrel.
The Labor Department will release the April jobs report at 8:30 a.m. ET. Economists expect nonfarm payrolls to rise by 178,000, down from April's 236,000. Unemployment should tick up to 3.6%. Hourly wages should climb 0.3% vs. March and 4.2% vs. a year earlier, both steady vs. March.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Bank Stocks
PacWest and Western Alliance were up more than 15% Friday morning, but recouping just a sliver of recent losses.
PACW plummeted 51% on Thursday to 3.17, hitting a new record low. That followed a Bloomberg report Wednesday night that PacWest might put itself up for sale. The California-based lender confirmed "ongoing" talks with "several potential partners and investors."
Western Alliance said Wednesday night that deposits have edged higher recently and on Thursday flatly denied a report that it's exploring a possible sale. WAL stock came off intraday lows, but still dived 38% to 18.20, a nine-year closing low.
Toronto-Dominion Bank called off its planned $13.4 billion merger deal with Tennessee-based First Horizon, citing regulatory concerns. FHN stock cratered 33% Thursday.
Zions Bancorp hit a long-term low. So did superregionals Comerica, KeyCorp, PNC Financial and Truist.
BAC stock sank 3.1% and WFC stock slid 4.3%, relatively tame vs. regional banks, but are near recent long-term lows. JPM stock 1.4%, undercutting its 50-day line after reversing hard from a brief breakout attempt Monday.
Microsoft-AMD AI Alliance
Microsoft is helping AMD move into AI chips, Bloomberg reported Thursday. The Dow Jones tech titan is providing some financial support, and working with AMD on an in-house Microsoft processor, code-named Athena, for AI tasks.
AMD stock jumped 6.1% Thursday after plunging 9.2% Wednesday on weak guidance. Shares briefly reclaimed the 50-day line. A decisive retaking of the 50-day could offer an aggressive entry. AI chip leader Nvidia edged down 0.9%. It's holding the 21-day line, but NVDA stock is down slightly for the week after jumping 4.2% on Monday to a 16-month high.
MSFT stock inched up 0.3%, holding near a 52-week high.
Nvidia stock is on IBD Leaderboard. Microsoft and FTNT stock are on IBD Long-Term Leaders. Fortinet and BKNG stock are on the IBD Big Cap 20.
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Stock Market Rally
The stock market rally saw losses for a fourth straight day, though the major indexes did close off lows.
The Dow Jones Industrial Average fell 0.9% in Thursday's stock market trading. The S&P 500 index declined 0.7%. The Nasdaq composite retreated 0.5%. The small-cap Russell 2000 shed 1.2%
U.S. crude oil prices fell 4 cents to $68.56 a barrel, down 10.7% so far this week.
Gold futures rose 1% to $2,048 per troy ounce, a 52-week high and the second-best close ever. Gold has climbed 3.3% in three days. Silver rallied 2.2%, also to a 52-week high.
The 10-year Treasury yield slid 5 basis points to 3.35%. The 2-year yield tumbled 21 basis points to 3.73%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF retreated 1.2%%. The iShares Expanded Tech-Software Sector ETF dipped 0.4%, with Microsoft stock a major holding. The VanEck Vectors Semiconductor ETF edged down 0.3%%. AMD stock and Nvidia are key components.
Reflecting more-speculative story stocks, ARK Innovation ETF gained 2.8% and ARK Genomics ETF 1.8%. Shopify, DraftKings and COIN stock are top 10 holdings at Ark Invest.
SPDR S&P Metals & Mining ETF slumped 2% and the Global X U.S. Infrastructure Development ETF 1.2%. U.S. Global Jets ETF descended 2.9%. SPDR S&P Homebuilders ETF stepped down 1.6%. The Energy Select SPDR ETF fell 1.1% and the Health Care Select Sector SPDR Fund gave up 0.8%
The Financial Select SPDR ETF sank 1.3%, dominated by financial giants such as JPM stock, Bank of America and Wells Fargo. The SPDR S&P Regional Banking ETF, with includes PACW stock, Western Alliance and First Horizon, tumbled 5.45%. ZION stock is in both ETFs.
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Market Rally Analysis
Intraday Monday, the stock market rally appeared ready to move above 2023 highs. But the major indexes reversed lower and have now fallen for four straight sessions.
The Nasdaq composite, with little bank exposure, didn't lose much ground but is moving toward the 50-day moving average. The S&P 500 nearly tested its 50-day. The Dow Jones undercut its 50-day intraday, briefly turning negative for the year, before closing above that key level.
The major indexes still aren't far from 2023 highs. But they don't look great, and they look better than other market metrics.
Apple stock could give the major indexes a lift Friday, but tech titans have masked weak market breadth for weeks.
The Invesco S&P 500 Equal Weight ETF, which already tumbled below all its moving averages earlier in the week, hit its worst level since late March, losing 0.95%.
The First Trust Nasdaq 100 Equal Weighted Index ETF, without bank exposure, edged down 0.15%, But it's below its 50-day line and near recent lows.
Market leadership remains narrow, with few stocks in buy areas.
Earnings season has been treacherous. While Shopify, Lantheus, Shake Shack and Green Brick Partners rocketed Thursday, many leaders near buy points fell, tumbled or reversed lower.
Homebuilders are still strong. Building materials and installers have looked robust, though a few fell hard on earnings Thursday.
Several restaurant and footwear stocks are doing well, but not all. Several of these groups' winners have retreated recently.
Some travel stocks, including Booking Holdings, have shown promise. But it's definitely hit or miss.
Gold stocks are shining amid the uncertainty, but that's not a great sign for the market rally. Agnico-Eagle Mines broke out, while several gold or silver plays or ETFs are flashing buy signals.
On Wednesday, Fed chief Jerome Powell said the banking system is fine and pushed back on market expectations for rate cuts later this year. But with bank stocks plunging Thursday, markets are now leaning toward Fed rate cuts starting in July, up from September, with a total of 100 basis points in cuts by year-end. Either the Fed or markets — or both — will need to change course.
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What To Do Now
Earnings season has peaked and there's a sense that the Federal Reserve is done with rate hikes. But banking fears and recession risks are big headwinds.
Some stocks are working, but many of those will go on runs and then falter. So investors should still consider taking at least partial profits along the way.
Overall exposure should be light. The market rally is "under pressure."
When the major indexes and leading stocks show real momentum, investors could start adding to their positions. But do so gradually. Have your watchlists prepared so you can act quickly. On the flip side, have your exit plans ready based on individual stock and overall market action.
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