Dow Jones futures tilted higher early Wednesday, while S&P 500 futures and Nasdaq futures fell modestly. Microsoft and Google parent Alphabet headlined big earnings overnight.
The stock market rally attempt gained ground on Tuesday amid steady Treasury yields, and earnings reactions were generally positive. This time the major indexes closed with decent gains as the S&P 500 got back above the 200-day line.
Investors should still be cautious. The rally attempt is barely underway and hasn't proved anything.
Microsoft stock jumped on earnings, but pared gains on guidance. Google stock tumbled.
Microsoft earnings and guidance, along with Google's, are hugely important for the tech sector, especially artificial intelligence and cloud computing. Meta Platforms and Amazon.com follow later this week. Meta stock and Amazon fell overnight.
Visa fell on its earnings released Tuesday night.
Vertiv surged early Wednesday despite missing views. CME Group fell slightly on its results. Dow Jones giant Boeing rose despite mixed results Wednesday morning.
Meta stock is on IBD Leaderboard. Microsoft stock is on IBD Long-Term Leaders. META is on the IBD 50 list.
Dow Jones Futures Today
Dow Jones futures rose 0.3% vs. fair value, thanks to a boost from MSFT and Boeing. S&P 500 futures fell 0.2%. Nasdaq 100 futures declined 0.4%, with Microsoft helping but Google stock and several other techs were drags, including Meta and Amazon.
The 10-year Treasury yield rose slightly to 4.86%, after falling Tuesday evening.
China's government OK's a RMB 1 trillion ($136.7 billion) bond issue to fund stimulus, a not unexpected move. Hong Kong's Hang Seng rose solidly, paring gains to 0.55%.
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 Attempt
The stock market rally attempt saw some decent gains Tuesday. For a second straight session, the major indexes rebounded and then fell back. But unlike Monday, they rebounded to close in the upper third of their daily ranges.
Earnings reactions Tuesday were generally positive, after mostly negative reactions last week. Many of those earnings gains were in beaten-down stocks, such as Dow components Verizon, 3M and Coca-Cola.
The Dow Jones Industrial Average rose 0.6% in Tuesday's stock market trading. The S&P 500 index climbed 0.7%, just moving above its 200-day line. The Nasdaq composite advanced 0.9%.
Tuesday marked day two of the Nasdaq's stock market rally attempt and just day one for the Dow Jones and S&P 500. One or two modest up days doesn't mean much in a market correction. But if the rally attempt builds momentum — amid massive earnings — investors could look for a follow-through day later this week to confirm the new uptrend.
The S&P 500 index is hitting resistance at the 200-day line.
Market breadth was positive, but has been terrible for weeks or months. New lows continue to crush new highs.
The small-cap Russell 2000 gained 0.8%, but after hitting a 52-week low on Monday.
The First Trust Nasdaq 100 Equal Weighted Index ETF rose 0.96% vs. 0.97% for the Nasdaq 100. But QQEW is just below its 200-day. The Nasdaq 100, with Meta, Microsoft and Google above their 50-day lines, never got close to its 200-day.
The 10-year Treasury yield was essentially flat at 4.84%. The 10-year bond yield got as high as 4.89%, but that's after tumbling from 5% on Monday.
U.S. crude oil prices fell 2.1% to $83.74 a barrel.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF jumped 1.9% in Tuesday stock market trading. The iShares Expanded Tech-Software Sector ETF was up 0.91%, with MSFT stock a major IGV holding. The VanEck Vectors Semiconductor ETF climbed 1.2%.
Reflecting more-speculative story stocks, ARK Innovation ETF was up nearly 3% and ARK Genomics ETF advanced 2.9%.
SPDR S&P Metals & Mining ETF rose 1.5% and the Global X U.S. Infrastructure Development ETF was up 0.5%. U.S. Global Jets ETF fell 0.33%. SPDR S&P Homebuilders ETF slid 0.2%. The Energy Select SPDR ETF plunged dipped 1.4% and the Health Care Select Sector SPDR Fund eked out a 0.3% gain.
Meanwhile, the Industrial Select Sector SPDR Fund rose 0.75%.
The Financial Select SPDR ETF climbed 0.7%. Visa stock is a major component, with CME also in the ETF.
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Microsoft Earnings
Microsoft earnings easily beat fiscal Q1 2024 estimates, while revenue also topped. Azure cloud computing revenue grew 28%, slightly above views.
On the conference call, management repeatedly referred to AI while also citing cybersecurity gains. Overall, Microsoft guided modestly higher on Q2 revenue, though that includes newly acquired Activision. It sees Azure growth of 26.5%, with roughly stable growth in the second half.
MSFT stock popped more than 4% early Wednesday, signaling possible buying opportunities Wednesday. Shares have a 366.78 official buy point, but investors could use the Oct. 19 high of 336.88 or the Sept. 14 high of 340.86 as early entries.
Microsoft stock edged up 0.4% to 330.53 on Tuesday, after nudging off the 50-day line Monday.
Google Earnings
Google earnings and revenue modestly beat views. Ad revenue was strong but Google Cloud revenue slightly missed forecasts.
Google also is making a big AI push, so its comments are important too.
Google stock tumbled more than 6% in premarket trade. Shares climbed 1.7% to 138.81 on Tuesday, extending Monday's bounce from the 50-day line. The relative strength line is at highs.
In the wake of Google and Microsoft earnings, Meta stock lost a fraction early Wednesday. Shares edged lower Tuesday as 42 states sued the social media giant, alleging that Facebook and Instagram features are addictive and target children. Meta has slowly pulled back from a buy point it set nearly two weeks ago.
AMZN stock fell slightly overnight, consolidating but below its 50-day. Amazon stock rose 1.6% on Tuesday.
Visa Earnings
Visa earnings and revenue modestly beat Q4 views with the Dow card giant also gave upbeat guidance for fiscal 2024. But Visa also announced a $25 billion stock buyback and a 16% dividend hike. Visa stock fell slightly in premarket trade. Shares climbed 1.35% to 234.65 on Tuesday, between the 50-day and 200-day lines. Visa stock has a flat base with a 250.06 buy point, according to MarketSmith analysis.
Other Key Earnings
Vertiv earnings missed views with revenue just below estimates, but the AI-adjacent play raised guidance. Shares soared 10% early Wednesday, signaling a fresh high. VRT stock reclaimed its 50-day line on Tuesday in strong volume.
CME stock fell modestly early Wednesday, but still in a buy zone, after the futures exchange narrowly topped EPS views with revenue in line.
BA stock climbed modestly even though Boeing reported a wider-than-expected loss, a bigger cash burn and a trimmed 737 Max delivery target. Boeing did beat on revenue and affirm cash-flow targets. The Dow aerospace giant rose slightly Tuesday, but near 2023 lows.
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What To Do Now
A few stocks flashed buy signals Tuesday, but the market rally attempt is tepid at best so far.
Perhaps earnings from Microsoft, Google, Meta, Vertiv, Amazon and many more will be positive catalysts. But they could send the market sharply lower. Or stocks and sectors could whipsaw on mixed results.
It's not a time to be bold on the long or short side. But pay close attention and keep updating your watchlists. If the market does gain momentum, you want to be ready.
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