Dow Jones futures rose slightly early Wednesday, while S&P 500 futures and especially Nasdaq futures fell. Microsoft, Google parent Alphabet, Advanced Micro Devices headlined overnight earnings. Meanwhile, Tesla slumped as a judge voided CEO Elon Musk's $56 billion stock compensation plan.
Investors will now turn to the Federal Reserve meeting announcement Wednesday afternoon. They'll be looking for hints from the Fed meeting announcement and Fed chief Jerome Powell about when rate cuts may begin.
The stock market rally had a mixed Tuesday, with the Dow rising. Apple made a bearish move ahead of earnings later this week. Tech stocks broadly saw profit taking ahead of big earnings. Job openings came in hotter than expected, something Fed policymakers didn't want to see.
Microsoft nudged lower in premarket trade following earnings while AMD and Google stock declined solidly. Their reports and guidance are a huge test for artificial intelligence, cloud computing and many other tech sectors, as well as the overall market rally.
Fellow giants Meta Platforms, Nvidia, Amazon.com and Arista Networks also retreated slightly early Wednesday.
Meta and AMZN stock report on Thursday with Arista next week.
Weight-loss drug giant Novo Nordisk and Dow giant Boeing reported before the open, with NVO and the Dow giant edging higher.
Meta, Nvidia and NVO stock are on IBD Leaderboard. Nvidia stock is on SwingTrader. MSFT stock is on IBD Long-Term Leaders. Meta stock, Nvidia, Google, Microsoft and Novo Nordisk are all on the IBD 50. Google stock and Nvidia are on the IBD Big Cap 20.
Dow Jones Futures Today
Dow Jones futures rose 0.1% vs. fair value, with Microsoft and Boeing both weighing on the Dow fractionally. S&P 500 futures fell 0.4%. Nasdaq 100 futures slumped 0.8%. Microsoft. Google, AMD and Tesla stock are all major weights in the S&P 500 and Nasdaq, along with Nvidia, Amazon and Meta.
The 10-year Treasury yield dipped to 4.02%.
Crude oil futures fell more than 1%.
China's official manufacturing index edged up 0.2 point in January to 49.2, in line with forecasts. Readings below 50 signal contraction. The non-manufacturing index rose 0.3 point to 50.7.
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 had a mixed session, with techs and small caps taking a breather.
The Dow Jones Industrial Average rose 0.35% in Tuesday's stock market trading. The S&P 500 index edged lower. The Nasdaq composite sank 0.75%.
The small-cap Russell 2000 fell 0.9%, but it was an inside day after Monday's 1.75% jump.
U.S. crude oil prices rose 1.35% to $77.82 a barrel.
Saudi Arabia ordered state-owned titan Aramco to halt production capacity expansion, limiting longer-term supply.
Oil and gasoline producers such as Exxon Mobil and Marathon Petroleum surged, while oil drilling, machinery and services firms like Weatherford International and Tidewater sold off.
The 10-year Treasury yield fell 3 basis points to 4.06%. But the two-year Treasury yield, more closely tied to Fed policy, rose four basis points to 4.36%. Stronger-than-expected December job openings and January consumer confidence lowered rate cut odds slightly.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF declined 0.45%. Microsoft stock is a major IGV component. The VanEck Vectors Semiconductor ETF sank 1%. Nvidia is the No. 1 SMH holding with a AMD stock also a big weight.
Reflecting more-speculative story stocks, ARK Innovation ETF retreated 2.6% and ARK Genomics ETF slumped 3.85%. Tesla stock is still a major holding across Ark Invest's ETFs.
SPDR S&P Metals & Mining ETF rose 0.5%. U.S. Global Jets ETF descended 1.5%. SPDR S&P Homebuilders ETF edged up 0.1%. The Energy Select SPDR ETF rose 1% and the Health Care Select Sector SPDR Fund edged up 0.2%.
The Industrial Select Sector SPDR Fund was just above break-even. The Financial Select SPDR ETF gained 1.3%.
Time The Market With IBD's ETF Market Strategy
Big Tech Earnings
MSFT stock edged lower before the open, but off lows, after Microsoft earnings topped fiscal Q2 views and gave upbeat guidance. Azure revenue grew 30%, above forecasts and picking up from Q1's 29%.
Microsoft stock edged down 0.3% to 408.59 on Tuesday. Shares are extended from a buy zone, according to MarketSmith analysis. Microsoft boasts a $3.04 trillion market cap, while Apple stock has faded to $2.92 trillion.
GOOGL stock declined solidly in extended action as Google earnings beat but online advertising growth disappointed. Google Cloud topped views. Google stock fell 1.3% on Tuesday to 151.46, extended from a buy point.
AMD stock retreated solidly as well. Q4 earnings were in line with views while revenue slightly beat. AMD guided low on revenue for the current quarter.
AMD stock fell 3.2% to 172 on Tuesday, with an analyst downgrading the chipmaker just ahead of earnings. Shares are greatly extended from a buy zone.
Microsoft, Google and AMD are all major AI players, with Microsoft and Google also big cloud-computing players. Combined, this trio also covers online advertising, business software, data centers, cybersecurity and more. So the earnings and guidance have a huge impact across the tech sector.
In after-hours action, NVDA stock fell modestly. Meta stock and Amazon also retreated, along with Arista Networks, which boasts Microsoft and Meta as its two biggest customers.
On the plus side, Manhattan Associates jumped overnight on earnings, signaling a breakout for the supply-chain management software maker. Medical products maker Stryker moved out of a buy zone on its results. Powell Industries skyrocketed out of a base on blowout earnings.
Key Earnings Wednesday
Novo Nordisk earnings came in slightly above forecasts, with the Danish weight-loss drug giant forecasting strong growth in 2024. NVO stock rose slightly before the open after closing flat Tuesday at 109.02, within range of a flat-base buy point.
Boeing reported a smaller-than-expected Q4 loss with revenue and cash flow above views. However, the Dow giant suspended 2024 guidance in the wake of 737 Max 9 woes. BA stock edged up before the open. Shares fell 2.3% to 200.44 on Tuesday, down 23% so far this year.
Elon Musk's $56 Billion Plan Voided
A Delaware judge voided Elon Musk's $56 billion compensation plan, siding with plaintiffs who argue that Tesla's board acted improperly in setting the pay deal.
In recent weeks, Musk had been demanding a big jump in voting power, above and beyond the now-voided compensation plan. He threatened to move AI and robotics tech from Tesla to another company.
The board could approve a new pay plan for Musk.
Tesla's unprecedented 2018 pay package made Elon Musk the world's richest man.
Tesla stock fell modestly early Wednesday.
In Tuesday's trade, shares edged up 0.35% to 191.59. TSLA stock hit an eight-month low of 182.63 on Jan. 25 following disappointing Tesla earnings and guidance.
Cathie Wood's Ark Invest bought Tesla stock for a fourth straight session. Ark Innovation ETF added 26,824 shares on Tuesday, after buying 14,598 shares on Monday. That's after snapping up 360,411 shares in Thursday-Friday.
Apple Stock
Apple stock fell 1.9% to 187.54, its fifth straight loss and breaking below the 50-day moving average. Further, the relative strength line undercut recent lows to hit its worst level since early March, reflecting AAPL stock's underperformance vs. the S&P 500 index.
Apple fell as an analyst forecast a significant decline in iPhone sales, following several other analysts worried about that possibility.
The Dow Jones tech titan reports Thursday evening.
AAPL stock was little changed early Wednesday.
Fed Rate Cuts: Is The S&P 500 About To Party Like It's 1999 Again?
What To Do Now
The market rally is acting well, but is in the midst of the busiest week for news in months. So investors may want to be cautious about new buys to see how the dust settles.
Consider taking some profits as earnings loom, or just to rein in exposure.
But this week could generate some new setups and buying opportunities. So have your watchlists up to date. Stay engaged and remain flexible.
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