Dow Jones futures rose solidly early Friday, along with S&P 500 futures and Nasdaq futures, ahead of the Fed's favorite inflation report. AppFolio and Dexcom headlined key earnings reports .
The stock market rally showed mixed action Thursday after Wednesday's ugly sell-off. The Dow Jones had a solid gain and the small-cap Russell 2000 jumped. The Nasdaq and S&P 500 staged upside reversals but faded to close lower.
ServiceNow staged a powerful breakout on earnings, a positive sign for software.
Nvidia slashed big losses, but the artificial intelligence leader is battling AI spending fatigue concerns, fueled by the CEOs of Meta Platforms and Google-parent Alphabet.
OpenAI, backed by Microsoft, launched a new AI-powered search engine, SearchGPT, hitting Google stock.
IBM, TechnipFMC, RTX, Nasdaq and Morningstar were stocks clearing buy points on earnings.
The video embedded in the article reviewed Thursday's stock market action and analyzed Nvidia, ServiceNow and TechnipFMC stock.
Dow Jones Futures Today
Dow Jones futures rose 0.7% vs. fair value. S&P 500 futures advanced 0.8% and Nasdaq 100 futures jumped 1.1%, with Nvidia and other big techs up slightly to modestly.
The 10-year Treasury yield dipped to 4.24%.
Crude oil futures edged lower.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Earnings
AppFolio earnings modestly beat views. APPF stock was little changed in overnight trade. The property management and legal software maker rose nearly 1% to 259.07 in Thursday's session, staging an upside reversal and moving back above a 256.73 buy point.
Dexcom beat Q2 EPS views although revenue fell short, while the diabetes products giant slashed full-year guidance. DXCM stock crashed 37% in premarket trade, which would be at least a two-year low.
Texas Roadhouse topped earnings views with strong same-restaurant sales. TXRH stock rose solidly after hours, moving back toward the 50-day line.
PCE Inflation Report
The PCE price index for June is due out at 8:30 a.m. ET. Economists expect a 0.1% rise for the overall index and the core PCE price index, the Fed's favorite inflation gauge. The PCE inflation rate and core PCE inflation rate vs. a year earlier should both dip to 2.5% from May's 2.6%.
However, Thursday's Q2 GDP report showed the core PCE price index rising at a 2.9% annualized pace, above views for 2.7%.
Join IBD experts as they analyze leading stocks and the market on IBD Live
Stock Market Rally
The stock market rally had a strong session, especially from morning lows.
The Dow Jones Industrial Average popped 0.2% in Thursday's stock market trading, back above the 21-day moving average and the 40,000 level. The S&P 500 index fell 0.5%, hitting resistance near it's 50-day line. The Nasdaq composite sank 0.9% amid big intraday swings.
The Russell 2000 jumped 1.3%, though it closed off its best levels. Small caps are near multiyear highs
Software had a big day, fueled by ServiceNow. But so did homebuilders, financials and many other non-tech areas that have been leading lately.
Gold, silver and crypto plays struggled.
U.S. crude oil prices rose 0.9% to $78.28 a barrel.
The 10-year Treasury yield fell three basis points to 4.255%, despite stronger-than-expected GDP growth and inflation data in that Q2 GDP report.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF sank 1.3%. The iShares Expanded Tech-Software Sector ETF rose 0.95%, with Microsoft and ServiceNow stock big holdings. The VanEck Vectors Semiconductor ETF sank 1.8%, with Nvidia stock the dominant holding.
Reflecting more-speculative story stocks, ARK Innovation ETF rebounded 1.1% and ARK Genomics ETF advanced 2.95%.
SPDR S&P Metals & Mining ETF gained 0.8% and the Global X U.S. Infrastructure Development ETF rallied 1.5%. U.S. Global Jets ETF ascended 2.6%. SPDR S&P Homebuilders ETF stepped up 1.7%. The Energy Select SPDR ETF also climbed 1.7% while the Health Care Select Sector SPDR Fund fell 0.5%.
The Industrial Select Sector SPDR Fund bounced 0.8% and the Financial Select SPDR ETF was up 0.4%. The SPDR S&P Regional Banking ETF popped 2.6%.
Time The Market With IBD's ETF Market Strategy
Nvidia Stock And AI Fatigue?
Nvidia stock dived 7% intraday Thursday, roared back to turn positive, but closed down 1.7%. Shares are off 4.8% for the week.
Nvidia has tumbled in part on concerns of AI spending fatigue. Meta CEO Mark Zuckerberg and Alphabet CEO Sundar Pichai this week conceded that tech firms may be investing too much in artificial intelligence. However, both said that AI underinvestment is a bigger risk than spending too much.
Google, in its Q2 report late Tuesday, signaled that its strong AI spending will continue.
Meta Platforms reports next week, along with Microsoft, Amazon.com and Apple. Their AI spending — and AI monetization —will be key.
Google stock fell 3.1% on Thursday, as OpenAI rolled out its SearchGPT rival to Google's dominant search product. That brings its weekly loss to 5.8%. Meta stock retreated 1.7%, down 4.9% for the week. Microsoft stock shed 2.45% on Thursday and 4.3% so far this week. Amazon stock dipped 0.5%.
Apple stock gave up 0.5%. It's below its 21-day line, but AAPL stock is the only of these tech titans that's above its 50-day line.
Early Friday, Nvidia was up 3%, while the other tech titans were generally up around 1%.
ServiceNow Stock
ServiceNow stock vaulted 13.4% to 828.79, clearing a five-month base in massive volume. The buy point was 806.52 from a messy handle, though investors also could have used the top of the consolidation, at 815.32. On Wednesday, shares had slumped 4.5%, closing below the 50-day line and testing the 40-week line.
The base looks messy on a daily chart, but better on a weekly chart.
ServiceNow earnings beat views with the software giant guiding higher for full-year subscription revenue. Along with SAP on Monday, ServiceNow results are bullish for business software makers generally
Market Rally Analysis
It was good to see stocks rebound Thursday after Wednesday's big losses. A number of stocks broke out or staged bullish upside reversals. But it could have been a one-day bounce after some heavy tech selling, and with market fear perking up.
The market rally is under pressure with key economic news and a wave of earnings reports due over the next week.
So investors should be cautious about new purchases. Nimble traders could have made some buys Thursday, perhaps as swing trades that could be converted into position trades if they work out. But if you rush into an uncertain market, you have to run away if those moves falter.
It's crucial to stay engaged and be prepared.
Nvidia stock and ServiceNow are on IBD Leaderboard. ServiceNow stock was added to SwingTrader. Microsoft stock is on IBD Long-Term Leaders. AppFolio stock is on the IBD 50.
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.
