The major stock market indexes shook off early selling pressure and rallied strongly in the first half of Friday's session. Amazon.com added to the growing tech wreck, but Apple gained more than 7.5% after a strong report and defensive outlook, which is as good as it gets these days.
The Dow Jones Industrial Average traded higher by 1.9% into the lunch hour while the S&P 500 surged 1.6%. The Nasdaq composite rallied 1.8%. The Russell 2000 small-cap index lagged blue chips, up 1.3% at this hour.
Volume on the NYSE and Nasdaq held close to the same levels as Thursday at this time.
The 10-year Treasury note yield topped the psychologically important 4% level early, but fell back to 3.99%. Crude oil sold off a buck or so, down to $87.85 per barrel. Gold fell once again, down more than 1%.
All major indexes are trading higher for the week.
But the Invesco QQQ trust and Nasdaq composite are just above break-even after Facebook parent Meta Platforms, Alphabet, Microsoft and now Amazon violated major support levels with high-percentage declines in high volume.
September pending home sales fell 10.2%, much worse than the -5.1% consensus.
On the flip side, the October University of Michigan consumer sentiment survey posted a 59.9 final reading, holding near consensus. This number shows little anxiety from high inflation.
In addition, September personal spending beat expectations for a 0.4% rise, lifting a solid 0.6%. So, we're seeing healthy consumer activity at the same time that Amazon is warning about falling sales.
Obviously, something does not compute.
Regardless, the current rally attempt is alive and well, primarily due to strong blue-chip and small-cap buying interest. In this topsy-turvy environment, investors with strong risk management skills can hold small positions, keeping at least two-thirds of assets in cash.
Stock Market Movers And Shakers
Dow component Apple beat Q3 EPS estimates by just 2 cents, posting a profit of $1.29 per share. Revenues beat by $1.4 billion, rising 7.8% year over year to $90.15 billion.
However, the megatech missed iPhone sales expectation, with CEO Tim Cook blaming supply issues.
Earnings growth has been decelerating since March 2021, and Apple warned this downtrend will continue in the current quarter. AAPL stock traded back above its 50-day moving average.
Dow Jones component Exxon Mobil rallied 1.7% to an all-time high after strong Q3 results. The oil major beat top- and bottom-line estimates by wide margins. The conference call played down the impact of the Russia exit while touting production ramps in the Permian Basin (in Texas and New Mexico) and Guyana.
XOM stock lifted into the buy zone after mounting a three-month consolidation with a 105.67 buy point.
Amazon got crushed after reporting in-line Q3 results but warning about Q4 revenue. AMZN stock traded lower 9.1% at the lunch hour.
Tech Wreck In Progress
The Amazon sell-off marks the fourth big tech blowup this week, waving red flags all over the current rally attempt. Worse yet, we're only halfway through Q3 earnings season.
Big tech is widely held by investors and has led most of the major uptrends so far this century. The stock market is showing resilience, despite that group's breakdown, but will need much stronger catalysts to break 200-day moving average resistance on the major indexes.
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IBD 50 Leaders
Harmony Biosciences rallied past a cup-with-handle buy point at 52.62 and pulled back. The 80 EPS Rating isn't great, but earnings are expected to surge an impressive 112% in 2023.
AMN Healthcare rallied 4.0% into the 125.04 buy point of a 10-month cup with handle and pulled back. The health care staffing firm has attracted many institutional buyers, with the number of funds holding the stock rising in each of the last two quarters.
Unitedhealth Group rallied within 1% of the 553.23 buy point of a six-month cup with handle. The Dow Jones component is expected to post double-digit earnings growth in 2022 and 2023.
Follow Alan Farley on Twitter at @msttrader.
