Dow Jones futures fell slightly early Thursday, along with S&P 500 futures and Nasdaq futures. Salesforce.com, Snowflake and bitcoin miner Marathon Digital headlined earnings with the Fed's favorite inflation gauge, the core PCE price index, on tap.
The stock market rally saw slim-to-modest losses Wednesday, with the key indexes consolidating near highs ahead of inflation data before Thursday's open. Bitcoin continued to skyrocket, surging above $64,000, before slashing gains to $60,312.44, up 5.8%.
Salesforce and Snowflake reported after the close, along with fellow software plays Nutanix, Okta, Duolingo and C3.ai. Marathon Digital also released results, along with storage giant Pure Storage.
Duolingo, Okta and C3.ai were big winners overnight, with Nutanix and Pure Storage solid gainers. Salesforce was roughly flat after initially skidding. Snowflake stock plunged, with Marathon retreating.
Salesforce stock is on the IBD 50.
PCE Inflation
The Commerce Department will release the January PCE price index at 8:30 a.m. ET Thursday.
The overall PCE price index is expected to rise 0.3%, picking up from December's 0.2%. But PCE inflation is seen slowing to 2.4% from December's 2.6% year-over-year increase.
The core PCE price index should climb 0.4%. Core PCE inflation should still dip to 2.8% from December's 2.9% annual increase.
The data will come as part of the monthly income and spending report. Economists forecast personal incomes to rise 0.4% with consumer spending just 0.2%.
Fed officials have signaled rate cuts will come later this year amid relatively strong economic data and sticky inflation. Markets are betting Fed rate cuts will start in June, but that's no slam dunk. The Street sees 75 basis points of easing for the full year, with a chance of 100 basis points. At the start of 2024, investors were pricing in a March rate cut and 150 basis points of easing for the year.
Dow Jones Futures Today
Dow Jones futures fell 0.3% vs. fair value. CRM stock is a Dow Jones component. S&P 500 futures retreated 0.2% and Nasdaq 100 futures declined 0.2%. Salesforce and Snowflake are NYSE-listed, limiting the Nasdaq damage, but a number of software names retreated in sympathy overnight.
The 10-year Treasury yield rose to 4.32%. Crude oil edged higher.
Bitcoin rebounded back above $62,000.
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 pulled back slightly Wednesday. The Dow Jones Industrial Average lost less than 0.1% in Wednesday's stock market trading. The S&P 500 index fell 0.2%. The Nasdaq composite declined 0.55%. The small-cap Russell 2000 gave up 0.8%
The Nasdaq is no longer extended from the 50-day line after pausing for the past few days around the 16,000 level, but it would be extended with any decent gain. That's been the story for the past few months.
U.S. crude oil prices dipped 0.4% to $78.54 a barrel.
The 10-year Treasury yield fell 4 basis points to 4.27%, still holding near 2024 highs.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF dipped 0.2%. CRM stock is a major holding, with Nutanix also in IGV. The VanEck Vectors Semiconductor ETF slumped 1.1%.
Reflecting more-speculative story stocks, ARK Innovation ETF slid 0.7% and ARK Genomics ETF sank 2.1%.
SPDR S&P Metals & Mining ETF slumped 2.6% and the Global X U.S. Infrastructure Development ETF advanced 0.35%. U.S. Global Jets ETF descended 0.5%. The SPDR S&P Homebuilders ETF edged down 0.1%. The Energy Select SPDR ETF was off 0.2% and the Health Care Select Sector SPDR Fund declined 0.5%.
The Industrial Select Sector SPDR Fund climbed 0.3% and The Financial Select SPDR ETF rose 0.4%.
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Earnings
Salesforce earnings slightly topped Q4 views but revenue guidance was light. The Dow Jones software giant added $10 billion to a stock buyback and initiated a quarterly dividend. CRM stock was little changed early Thursday, coming back from sharp declines initially Wednesday night. Shares edged up 0.1% to 299.77 on Wednesday, nearing the November 2021 all-time high.
Snowflake earnings beat views, but the data analytics software firm gave weak guidance for the current fiscal year and said its CEO is retiring. SNOW stock crashed in extended action. Shares fell 1.7% to 230 on Wednesday. Snowflake stock has had a 237.72 buy point from a three-weeks-tight entry.
Okta earnings and guidance were strong. Okta stock vaulted higher overnight. Shares advanced 0.45% to 87.30 on Wednesday. The cybersecurity play is working on a 92.38 buy point from a flat base that's next to consolidations going back a year.
Nutanix earnings fell short though revenue topped. NTNX stock still rose solidly above 61 in extended trade. Shares of the server and storage cloud software firm rose 1.4% to 59.04 on Wednesday. Nutanix stock, which rebounded from the 10-week line last week, has a 59.87 buy point from a four-weeks-tight, according to MarketSmith analysis.
Marathon Digital earnings beat views, signaling a move back below a buy point. MARA stock fell solidly in overnight trade. The bitcoin miner gained 2.4% to 31.03 on Wednesday, well off intraday highs of 34.09 but closing above a 30.45 buy point from a wild cup-with-handle base. Marathon Digital stock surged 29% just this week as bitcoin prices have raced higher.
Pure Storage beat views and guided up on Q1 revenue. PSTG stock rose sharply early Thursday in volatile trade. Shares of the storage firm climbed 1.5% to 42.12 on Wednesday, extended from a 38.28 buy point cleared in January.
Duolingo earnings beat views with a slew of other strong metrics. DUOL stock soared overnight, signaling a gap above the 50-day line and working up the right side of a consolidation. Shares edged up 0.5% on Wednesday to 195.51. Duolingo stock has a 245.87 buy point.
C3.ai had a smaller-than-expected loss while revenue growth topped. AI stock spiked in premarket trade. Shares fell 1.4% to 29.69 on Wednesday, just below the 200-day line. C3.ai stock has a 33.91 buy point from a consolidation within a larger, eight-month base. A decisive move above the 200-day line would break a downward-sloping trendline, offering an early entry. But AI stock has lagged other artificial intelligence stocks for several months.
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What To Do Now
The market rally has been pausing for a few days, which is probably constructive. There haven't been many buying opportunities recently aside from earnings gap-ups.
Some stocks have been setting up. Thursday's PCE inflation data, along with overnight earnings, could provide a positive market catalyst that offers a few buying chances. However, that would likely push the Nasdaq back into extended territory again, making it hard to build a cushion in new buys.
On the flip side, a hot inflation report could trigger significant selling.
So investors need to be prepared either way. Have your watchlists and your exit strategies ready, stay engaged and remain flexible.
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