Dow Jones futures tilted lower overnight, along with S&P 500 futures and Nasdaq futures. Amazon.com[ticker symb=AMZN] was the latest megacap earnings winner overnight.
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The stock market rally advanced strongly Thursday. Meta Platforms (META) boomed, with Microsoft (MSFT) stock, Apple (AAPL), Google parent Alphabet (GOOGL) and AMZN all up solidly too.
There were strong gains outside of these tech megacaps. However, market breadth remains a concern. Meanwhile, Mobileye (MBLY) and Crocs (CROX) plummeted on weak guidance.
Amazon, Cloudflare (NET), Skechers (SKX), First Solar (FSLR), Dexcom (DXCM) and Snap (SNAP) were notable earnings reports Thursday night.
Amazon stock reversed solidly lower late after initially surging on results. But NET stock crashed on mixed results and guidance. SNAP also dived on weak revenue and guidance. FSLR stock and Dexcom fell. SKX stock edged higher.
Exxon Mobil (XOM) and Dow Jones giant Chevron (CVX) are due Friday morning.
META stock is on IBD Leaderboard, with DXCM stock an earnings options play. MSFT stock is on IBD Long-Term Leaders.
Dow Jones Futures Today
Dow Jones futures lost 0.1% vs. fair value. S&P 500 futures edged lower. Nasdaq 100 futures dipped 0.1%. AMZN stock is an S&P 500 and Nasdaq giant.
The Commerce Department will release the PCE price index for March at 8:30 a.m. ET. The PCE and core PCE are the Fed’s favorite inflation gauges, but Thursday’s Q1 GDP report gave some strong signals about what that will be.
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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Amazon Earnings
Amazon earnings easily beat Q1 views with revenue also topping. The e-commerce and cloud computing giant guided in line for Q2 revenue, but slightly lower on operating profit. On the Amazon earnings call, management said the Amazon Web Services cloud unit is seeing slower growth in April vs. Q1.
AMZN stock, which initially spiked more than 10% after hours, fell 2% due to the cloud comments.
Shares popped 4.6% to 109.82 in Thursday’s regular session, reclaiming the 200-day line and topping last week’s high. If it weren’t for the earnings report, investors could have used that as an early entry for Amazon stock in a bottoming base going back to Feb. 2.
Other Key Earnings
Cloudflare earnings topped, but revenue just fell short. The cloud and security software firm guided up on Q2 and full-year EPS but down on revenue. NET stock dived 25% in extended action. Shares edged up 0.1% to 59.58 on Thursday, closing near session lows and below the 50-day line. Cloudflare stock has had a 66.30 cup-with-handle base buy point.
Skechers earnings topped views but Q2 guidance was weak. SKX edged higher in overnight action. Shares dipped 0.3% to 49.87 on Thursday, but after plunging to 47 soon after the open in sympathy with CROX stock. That briefly undercut a 47.80 handle buy point.
First Solar earnings and revenue fell well short of views but the company gave upbeat guidance. FSLR stock fell 8%in overnight action, signaling a drop below the 50-day line. Shares inched up 0.7% to 208.83 on Thursday. First Solar stock skidded 5.2% on Wednesday on weak guidance from Enphase Energy (ENPH). Investors could use a strong bounce from the 50-day line as a buy opportunity, or view the recent consolidation as a quasi-flat base with an entry around 219-221.
Dexcom earnings modestly beat views with full-year revenue guidance in line. DXCM stock declined 3% in late trade. The maker of continuous glucose monitors fell 1.1% to 123.58 on Thursday. Intraday, Dexcom stock briefly topped a 125.65 handle buy point.
SNAP stock crashed overnight. The Snapchat parent earned 1 cent a share in Q1 vs. the expected 1-cent loss. But revenue, users and revenue per user came in light. Snap also guided low on Q2 revenue. SNAP stock had rallied 6.3% Thursday in sympathy with Meta Platforms, but closed just below its 50-day and 200-day lines.
In addition to these names, Intel (INTC) popped overnight on earnings, while Gilead Sciences (GILD) and Amgen (AMGN) were little changed. Alteryx (AYX) and Pinterest (PINS) sold off.
XOM stock rose 1.2% to 116.87 on Thursday, slightly below a 117.28 cup-with-handle buy point, according to MarketSmith analysis.
CVX stock edged up 0.6% to 166.95 on Thursday, finding support at the 200-day line. Chevron stock has a 189.78 consolidation buy point but looks a lot weaker than Exxon right now.
Stock Market Rally
The stock market rally opened higher and gained steam during the day.
The Dow Jones Industrial Average bounced 1.6% in Thursday’s stock market trading. The S&P 500 index jumped nearly 2%. The Nasdaq composite leapt 2.4%. The small-cap Russell 2000 advanced 1.3%.
U.S. crude oil prices edged up 0.6% to $74.76 a barrel.
The 10-year Treasury yield jumped 10 basis points to 3.53%. The 2-year yield spiked 17 basis points to 4.1%. With economic data Thursday showing weaker growth, stronger inflation and tighter labor markets than expected, the odds of another Fed rate hike next Wednesday are back to a virtual lock.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) slid 0.9%, hit by some big earnings losers such as MBLY stock and Crocs. The Innovator IBD Breakout Opportunities ETF (BOUT) rose 0.4%. The iShares Expanded Tech-Software Sector ETF (IGV) gained 1.6%, buoyed by MSFT stock. The VanEck Vectors Semiconductor ETF (SMH) advanced 1%, led by chip-equipment giants while some early 2023 chip winners crumbled.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) bounced 1.4% and ARK Genomics ETF (ARKG) edged up 0.5%.
SPDR S&P Metals & Mining ETF (XME) rebounded 1.85% and the Global X U.S. Infrastructure Development ETF (PAVE) advanced 2.4%. U.S. Global Jets ETF (JETS) ascended 0.5%. SPDR S&P Homebuilders ETF (XHB) stepped up 3.4%. The Energy Select SPDR ETF (XLE) climbed 0.4%. XOM stock and Chevron are massive holdings in XLE. The Health Care Select Sector SPDR Fund (XLV) rose 0.5%. DXCM stock is in XLV.
The Financial Select SPDR ETF (XLF) gained 1.6%. The SPDR S&P Regional Banking ETF (KRE) bounced 1.9%.
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Market Rally Analysis
The stock market rally continues to be heavily reliant on megacap techs.
Meta stock spiked 14% to a 52-week high on earnings. Microsoft rose 3.2%, adding to Wednesday’s 7.2% gain. GOOGL stock popped 3.7%, back in a buy zone. Apple stock gained 2.8% and Amazon cleared key levels into earnings.
However, unlike Wednesday, all the major indexes rose Thursday.
The Nasdaq composite jumped back above the 12,000 level and reclaimed the 21-day moving average, a day after rebounding from the 50-day line. The S&P 500 and Dow Jones also are back above their 21-day lines.
More importantly, market gains were robust outside of the megacaps.
The First Trust Nasdaq-100 Equal Weighted Index ETF (QQEW) started slow but ultimately rose 1.65%, back above its 50-day line. The Invesco S&P 500 Equal Weight ETF (RSP) gained 1.6%, running above its 200-day, with the 50-day line just above that. But both of these ETFs are still down 1% or more for the week.
Winners topped losers solidly Thursday, but market breadth remains a concern. New lows easily beat new highs, especially on the Nasdaq.
Some leading stocks flashed buy signals Thursday, but many are extended or moving back into position. More broadly, market leadership is narrow and quick to shift.
The major indexes still need to get above their April highs and clear 2023 peaks. Getting RSP above the 50-day line would also signal broader participation beyond Meta, Microsoft and other tech megacaps. More buying opportunities also would be a positive sign.
For now, the stock market rally remains an uptrend under pressure.
Beware Earnings Season
Net stock and Snap look like the latest major losers on earnings.
Several leading stocks suffered massive earnings sell-offs Thursday. Impinj (PI) crashed 39% while Mobileye and CROX stock dived 19% and 16%, respectively, after all closed around buy points. Even if with a decent cushion, say a 10% gain heading into earnings, investors suffered painful losses.
The slew of massive earnings moves in recent days should remind investors to be aware of upcoming report dates for their positions and setting rules for holding or selling before results.
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What To Do Now
The market rally had a solid session, though not as strong as the big-cap indexes would suggest. There weren’t a whole lot of stocks flashing buy signals Thursday, though many found key support intraday. Many stocks setting up still have earnings in the next couple of weeks.
If the market rally continues to recover, buying opportunities will ramp up. Investors should have their watchlists ready with potential leaders across various sectors. But also be ready to exit if the broad market deteriorates.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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