Dow Jones futures fell modestly Friday morning, as UnitedHealth plunged on a reported DOJ probe of Medicare billing. But S&P 500 futures and Nasdaq futures rose slightly. Booking Holdings, MercadoLibre and Tesla rival Rivian headlined earnings overnight.
The stock market rally saw modest declines Thursday but the major indexes finished off lows. Walmart tumbled on weak earnings guidance. Growth stocks were hit hard. Palantir Technologies and Axon Enterprise struggled again, joined by Carvana and a slew of software names such as AppLovin and Samsara. Royal Caribbean and other cruise lines sold off.
China stocks kept rising, fueled by Alibaba. Nvidia, notably, is starting to tighten up near a buy point.
Still, investors should be turning more defensive, especially if their holdings are taking hits.
The Justice Department is probing UnitedHealth's billing practices that trigger extra payments to its Medicare Advantage plans, The Wall Street Journal reported early Friday. UnitedHealth stock dived 10%, with other insurers also down.
AppLovin stock is on IBD Leaderboard. Palantir and Samsara are on the IBD 50. Palantir, Axon and AppLovin stock are on the IBD Big Cap 20.
The video embedded in the article reviews Thursday's market action and analyzes Palantir stock, Royal Caribbean and Mastercard.
Dow Jones Futures Today
Dow Jones futures fell 0.5% vs. fair value, reflecting the UNH stock sell-off. S&P 500 futures climbed 0.1%. Nasdaq 100 futures rose 0.4% as growth plays try to steady.
The 10-year Treasury yield dipped to 4.49%.
Crude oil futures fell slightly.
Hong Kong's Hang Seng surged 4% Friday, as Alibaba spurred a tech surge there.
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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Key Earnings Movers
MercadoLibre stock, Booking Holdings, Sprouts Farmers Market, Rivian and Square-parent Block reported earnings after the close.
MELI stock surged more than 10% on blowout MercadoLibre earnings, signaling a gap out of a messy base. Booking stock climbed solidly, signaling a move above an early entry within a base.
On the downside, Block stock tumbled, undercutting the low of its base. Sprouts stock fell solidly, signaling a 21-day test at the top of a buy zone. Rivian stock declined strongly early Friday after up-and-down action overnight. The Tesla rival had been eyeing an early entry in a bottoming base.
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Stock Market Rally
The stock market rally saw declines on the major indexes, though the S&P 500 is still right at record highs. Growth showed continued and expanding losses, though some of those stocks found support.
The Dow Jones Industrial Average gave up 1% in Thursday's stock market trading, below the 21-day line and moving down toward the 50-day line. WMT stock was a big drag, down 6.5%, technically back in a buy zone.
The S&P 500 index fell 0.4% and the Nasdaq composite declined 0.5%, both paring losses after touching their 10-day lines. The small-cap Russell 2000 slumped 0.9%, falling further from a sliding 50-day line.
The Invesco S&P 500 Equal Weight ETF gave up 0.3%, off intraday lows and holding above all its moving averages.
The First Trust Nasdaq 100 Equal Weighted Index ETF declined 6%, but is still above the top of its old December peak.
Growth stocks, especially those with very high valuations such as Palantir, AppLovin, Carvana and Axon, were big losers, as seen by the FFTY and ARKK ETFs.
Beyond tech plays, cruise lines were hard hit. Banks suffered solid losses, though their charts generally look OK.
U.S. crude oil prices rose 0.4% to $72.57 a barrel.
The 10-year Treasury yield fell four basis points to 4.5%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF sank 3.4%. The iShares Expanded Tech-Software Sector ETF retreated 1.8%, with Palantir and AppLovin notable holdings. The VanEck Vectors Semiconductor ETF edged up 0.2% with Nvidia stock the top holding. ARK Innovation ETF gave up 2.6% and ARK Genomics ETF tumbled 4.2%.
SPDR S&P Metals & Mining ETF rose 0.3%. The Energy Select SPDR ETF climbed 0.9% and the Health Care Select Sector SPDR Fund advanced 0.6%.
The Industrial Select Sector SPDR Fund retreated 0.7%. The Financial Select SPDR ETF sank 1.5%.
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Growth Stocks
Palantir stock retreated 5.2% to 106.21 after Wednesday's 10.8% loss. PLTR stock undercut the 21-day line intraday, but came well off a low at 95.80. Talk of big U.S. defense cuts raised concerns for the data analytics firm, which has a lot of Pentagon contracts.
Axon stock dived 8.7% after Wednesday's 16.4% meltdown in a huge breakout failure as a second analyst downgraded the Taser and body camera maker. Axon has now undercut the low of its recent cup base.
CVNA stock plunged 12.1% to 247.72, a clear breakout failure, though it found support at the 50-day line. Carvana easily beat profit and revenue views late Wednesday, but margin declines hit shares.
AppLovin tumbled 8.9%, undercutting the low of last week's earnings gap up but still above the prior base.
Royal Caribbean slumped 7.6% to 243.89, triggering the 7%-8% sell rule intraday, though shares nearly regained the 50-day line by the close. Commerce Secretary Howard Lutnick suggested the Trump administration will crack down on taxes not paid by the industry.
Many other stocks suffered solid losses, sometimes triggering sell rules and sometimes not.
Palantir, Axon, Carvana and Royal Caribbean edged higher early Friday.
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Nvidia Stock
Nvidia stock edged up 0.6% to 140.11. It's the fourth straight tight close for NVDA stock within an ugly base offering either a 153.13 consolidation buy point or 148.97 double-bottom entry. Investors could use 143.44 for a trendline buy point. However, Nvidia earnings are due Feb. 26.
What To Do Now
The stock market rally is suddenly struggling. The S&P 500 and Nasdaq still look OK, though it's disappointing to see a pullback from record highs. But judge the market based on the major indexes and leading stocks. Many growth stocks have seen huge losses, including some of the biggest winners of the past year.
Investors need to protect themselves, paring back exposure to varying degrees. If you had positions that were hard hit, such as Axon, you might be slashing exposure just based on individual holdings. Do not let small losses turn into big losses. Definitely don't let big losses turn into catastrophic losses.
Selling, especially in winning stocks, doesn't have to be all at once. You can scale out, waiting to see if stocks find support, such as Palantir.
It's not a time to be making buys, barring swing trades, though that could quickly change. It's important to have your watchlists and exit strategies up to date.
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