Dow Jones futures rose early Thursday, along with S&P 500 futures and Nasdaq futures in day two reaction to Wednesday's Federal Reserve meeting. Carvana and Qualcomm led earnings reports Wednesday night.
The stock market rally attempt had a wild afternoon. The major indexes rose sharply after the Fed agreed to slow the pace of balance sheet reductions while Fed chief Jerome Powell didn't take a hawkish tone. But in the final hour they slashed gains, closing mixed.
AI stocks had a tough day after Advanced Micro Devices and Super Micro Computer sold off after earnings. Nvidia pared sharp losses somewhat, but faded again into the close.
After the close, Qualcomm, DoorDash, Sprouts Farmers Market and Carvana reported.
Novo Nordisk headlined earnings early Thursday while Apple reports after Thursday's close.
Nvidia stock and Novo Nordisk are on IBD Leaderboard. Novo Nordisk stock is on the IBD 50. Nvidia and Super Micro stock are on the IBD Big Cap 20.
Fed Meeting
The Federal Reserve left rates steady, with the Fed meeting statement noting "a lack of further progress" in recent months toward the 2% inflation target.
Starting in June, the Fed will reduce the runoff from its balance sheet to $60 billion a month from $95 billion. This slowdown in quantitative tightening is a de facto easing.
Fed chief Powell said it will likely take "longer than previously expected" for inflation to cool. But, allaying fears of a more-hawkish tone, Powell says he still expects inflation to cool before year-end, though his confidence is lower than earlier this year.
The odds of a Fed rate cut by the September meeting are now at 53.8% vs. 45.9% on Tuesday and 69.8% a week earlier. Markets only expect one rate cut by year-end, with a slim chance of no move.
Early Wednesday, the Labor Department reported job openings fell in March to their lowest in three years. Meanwhile, the ISM manufacturing index unexpectedly fell just below the break-even 50 level. But the ISM prices paid gauge rose more than expected.
On Friday, the Labor Department will release the April jobs report.
Dow Jones Futures Today
Dow Jones futures rose 0.5% vs. fair value. S&P 500 climbed 0.7% and Nasdaq 100 futures advanced 0.9%.
The 10-year Treasury rose slightly to 4.61%.
Crude oil futures edged higher.
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 didn't do a whole lot until the 2 p.m. ET Fed announcement. But the major indexes, after initial big gains on Fed chief Powell's news conference, came well off highs to close mixed, slightly worse than before the Fed news.
The Dow Jones Industrial Average rose 0.2% in Wednesday's stock market trading. The S&P 500 index and Nasdaq composite fell 0.3%. The small-cap Russell 2000 advanced 0.25%.
At session highs, the stock market seemed on track for a by-the-book follow-through day to confirm its rally attempt.
But the major indexes never topped their 50-day moving averages and all closed below their 21-day lines.
The stock market could have a day two reaction to the Fed meeting, with Friday's jobs report putting Powell comments in a new light.
Super Micro stock plunged 14%, while AMD lost nearly 9%, after the AI plays gave lackluster guidance. Nvidia, the most important stock and company of the AI boom, rebounded from a 6% intraday loss but still sank 3.9%, below its 50-day line.
TransMedics, Powell Industries, Garmin and Pinterest all skyrocketed on earnings.
U.S. crude oil prices tumbled 3.6% to $79 a barrel, off 5.8% so far this week, as domestic stockpiles swelled. Gasoline futures sank 4.2% Wednesday
The 10-year Treasury yield fell 9 basis points to 4.59%.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF edged up 0.2%. The VanEck Vectors Semiconductor ETF slumped 2.9%. Nvidia stock is the No. 1 stock in SMH, with AMD also a key holding.
SPDR S&P Metals & Mining ETF closed just above break-even. The SPDR S&P Homebuilders ETF fell 0.4%. The Energy Select SPDR ETF retreated 1.6% while the Health Care Select Sector SPDR Fund climbed 0.2%.
The Industrial Select Sector SPDR Fund dipped 0.25%. The Financial Select SPDR ETF closed flat.
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Earnings
Qualcomm earnings and guidance were strong, sending QCOM stock solidly higher overnight. The wireless chip giant dipped 1.1% to 164.03 on Wednesday, slightly below the 50-day. Qualcomm stock has a 175.99 double-bottom buy point.
DoorDash reported a wider-than-expected loss. DASH stock plunged in extended action. The delivery app giant slipped 1.45% to 127.38 on Wednesday. DASH stock had been close to forging a flat base.
Sprouts earnings topped. SFM stock rose solidly overnight back into a buy zone. The natural foods grocer fell 2.6% to 64.29 on Wednesday, below a 65.53 flat-base buy point.
Carvana earnings easily beat views while guidance was strong. CVNA stock skyrocketed 35% in premarket action. The online used-car seller jumped 5% to 87.09 on Wednesday, holding above the 50-day. Carvana stock has been consolidating since late March, but is set to blast above that.
Novo Nordisk earnings beat views early Thursday on booming sales of its weight-loss drugs, with the Danish pharma giant also raising guidance. Shares were little changed before the open. NVO stock edged up 0.7% Wednesday to 129.21, just above the 50-day. Novo has a 138.28 flat-base buy point, but Tuesday's high of 130.46 could serve as an early entry. Rival Eli Lilly popped Tuesday on strong earnings and guidance.
Apple earnings are due Thursday night. Expectations are low, while the stock has been trending lower since mid-December. The Dow tech giant rose slightly before the open. AAPL stock edged down 0.6% to 169.30 on Wednesday, falling back from 50-day line resistance. It's still a gigantic company that can move markets. Investors would like to hear hints about AI products but that may have to wait for a later date.
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What To Do Now
The stock market rally had a dispiriting day. In the final hour, the market went from a likely follow-through day to a mixed-to-negative session.
It's a reminder that investors should be waiting for real signs of strength before getting aggressive.
A number of leading stocks are just above or below their 50-day lines, often within bases. It wouldn't take a big move for many of these names to look actionable. But it wouldn't take much for many to look seriously damaged.
So have your watchlists up to date and your exit plan ready.
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