Dow Jones futures edged lower overnight, along with S&P 500 futures and Nasdaq futures. The June jobs report looms large.
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The stock market rally retreated Thursday as strong economic data sent Treasury yields soaring, though indexes pared morning losses somewhat. The ADP Employment Report estimated private payrolls skyrocketed 497,000 in June, more than double forecasts. The ISM services sector index rose more than expected. Initial jobless claims rose modestly, but the four-week average fell while continuing claims slipped. Announced layoff plans declined significantly last month.
Meta Platforms (META) held up well as its Threads app grabbed 30 million sign-ups in less than a day for the Twitter rival, perhaps 48 million in 24 hours. It’s the fastest number of downloads ever. Twitter threatened legal action vs. its new rival. Tesla (TSLA) CEO Elon Musk, who owns Twitter, said “cheating” is not OK.
Microsoft (MSFT) rallied amid a price target hike.
Looking for stocks holding up; Visa (V) and Mastercard (MA) are holding in buy zones, along with DexCom (DXCM). Nvidia (NVDA) continues to trade tightly. HubSpot (HUBS) skidded Thursday morning, but rallied off key support.
Meanwhile, the FDA approved Biogen’s Alzheimer’s treatment Leqembi late Thursday. Biogen (BIIB) and partner Eisai already have accelerated approval, but full FDA approval boosts their chances of getting Medicare reimbursement for Leqembi.
Biogen stock was halted after hours. Shares edged down 0.3% during Thursday’s regular session. Eli Lilly (LLY), which has a similar Alzheimer’s treatment in trial. edged higher overnight. LLY stock dipped 0.5% Thursday.
META stock, Nvidia and HubSpot are on IBD Leaderboard. Microsoft stock is on IBD Long-Term Leaders. HUBS stock is on the IBD Big Cap 20.
The video embedded in this article discussed Thursday’s market action and analyzed MSFT stock, Adobe (ADBE) and HubSpot.
Jobs Report: What To Expect
The Labor Department will release the June jobs report at 8:30 a.m. ET.
Economists expect to see an increase of 213,000 jobs, down from May’s 339,000. The unemployment rate should slip down to 3.6%. Average hourly wage growth is seen cooling to 4.2% from May’s 4.3%.
The ADP doesn’t have a great track record of predicting Labor’s nonfarm payrolls. Still, the odds of a July 26 Fed rate hike are now a near lock at 93%. The odds of yet another quarter-point hike in November rose to roughly 56%, up significantly from a couple weeks ago.
Dow Jones Futures Today
Dow Jones futures lost a fraction vs. fair value. S&P 500 futures and Nasdaq 100 futures fell 0.1%.
The jobs report is sure to swing Treasury yields and Dow futures before the open.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally Analysis
The stock market rally sold off on soaring yields following the ADP report, though indexes did close off lows. The 10-year Treasury yield advanced 10 basis points to 4.04%, a four-month high. The 2-year yield climbed 5 basis points to 5% after spiking to a 16-year high of 5.12% intraday.
The Dow Jones Industrial Average retreated 1.1% in Thursday’s stock market trading. The S&P 500 index and Nasdaq composite gave up 0.8%. The small-cap Russell 2000 slumped 1.6% after Wednesday’s 1% slide.
The Nasdaq and S&P 500 found support around their 10-day moving averages. But the Dow Jones tumbled below its 10-day and 21-day lines, not far from its 50-day average.
Market breadth was terrible Thursday, with losers trouncing winners by 6-to-1 on the NYSE and by 3-to-1 on the Nasdaq. That followed negative breadth on Wednesday.
The Invesco S&P 500 Equal Weight ETF (RSP) shed 0.8% and the First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) gave up 1.3%. But both rebounded from their 21-day lines.
U.S. crude oil prices rose 1 cent to $71.80 a barrel.
Leading stocks retreated further on Thursday. Many found support at key levels, but not all.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) declined 2%. The iShares Expanded Tech-Software Sector ETF (IGV) gave up just over 1%. MSFT stock is a major IGV component. The VanEck Vectors Semiconductor ETF (SMH) fell 1.2% after Wednesday’s 1.9% loss. NVDA stock is the No. 1 SMH holding.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) tumbled 3.8% and ARK Genomics ETF (ARKG) 3.6%.
SPDR S&P Metals & Mining ETF (XME) shed 1.75%. U.S. Global Jets ETF (JETS) descended 2.2%. SPDR S&P Homebuilders ETF (XHB) stepped down 2%. The Energy Select SPDR ETF (XLE) receded 2.25% and the Health Care Select Sector SPDR Fund (XLV) faltered 0.8%.
The Industrial Select Sector SPDR Fund (XLI) lost 0.75%.
The Financial Select SPDR ETF (XLF) slid 0.9%, with Visa stock and MA big parts of the XLF ETF. The SPDR S&P Regional Banking ETF (KRE) slid 0.6%.
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Meta Stock
META stock dipped 0.8% to 291.99, holding strong after climbing 2.9% to a 17-month high Wednesday in anticipation of the Threads launch.
The text-based Threads, part of Instagram, launched Wednesday night and grabbed more than 30 million sign-ups within the first 16 hours. In the first 24 hours, sign-ups topped 48 million, according to one media report, citing internal Meta data. Even the lower figure is by far the best first-day download on record. For comparison, ChatGPT got 1 million downloads in its first five days.
With many celebrities, high-profile journalists and other power Twitter users quickly posting, Threads appears to be the biggest threat yet to Twitter. That site has struggled since Elon Musk bought Twitter for $44 billion last fall. Musk has alienated many users and especially advertisers with various restrictions.
A lawyer for Twitter threatened legal action vs Meta. In a letter to Meta CEO Mark Zuckerberg, Alex Spiro accused Meta of poaching former Twitter staff and engaging in “unlawful misappropriation of Twitter’s trade secrets and other intellectual property.”
Musk, in a reply to a tweet about that Twitter legal threat, wrote “Competition is fine, cheating is not.”
Meta, in a response to the Twitter legal threat, said “No one on the the Threads engineering team is a former Twitter employee.”
Microsoft Stock
Microsoft stock edged up 0.9% to 341.27, bouncing from near its 21-day line. Morgan Stanley raised its MSFT stock price target to 415 from 335. Shares have consolidated for the past few weeks since hitting a record high 351.47 on June 16. Investors could view the recent pause as a high handle to a consolidation going back to late 2021. But investors should probably wait for a longer pause before seeking out a Microsoft stock entry.
Stocks To Watch
Visa stock slipped 0.2% to 238.88, continuing to hold above a 235.57 flat-base buy point. Mastercard stock dipped 0.3% to 393.14, just above a 392.20 flat-base buy point, according to MarketSmith analysis. The payment giants offered early entries last week, but both are still within range of the 50-day line.
Nvidia stock gave up 0.5% to 421.03, above its 10-day line. Shares aren’t far from their 21-day line, but they haven’t touched that short-term level in two months. NVDA stock has a three-weeks-tight pattern that could turn into a four weeks tight after Friday. A test of the 21-day line, or possibly the 400 level, could be a nice shakeout and let the fast-rising 50-day line close the gap. The official buy point is 439.90, but Wednesday’s high of 431.77 would offer an early entry.
DexCom stock shaved 0.3% to 127.70, closing above its 126.44 flat-base buy point after finding support at its 21-day line for a third straight session. DXCM stock has struggled to clear a range from the start of November. But shares have trended higher, in choppy form, since late January.
HubSpot eked out a 0.1% gain to 521.34, closing above the 21-day line. Shares skidded to an intraday low 497.03 but rebounded from the 10-week line. Investors who bought HUBS stock as it tried to clear a four-weeks-tight at the end of June may have gotten shaken out. But it could set up again.
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What To Do Now
The new or renewed market pullback could be constructive, letting new buying opportunities emerge from pullbacks to key levels and possibly forging bases.
But investors don’t know that current slide will be mild once again, or that their positions will hold up relatively well.
It’s a time to consider trimming some profits and being quick to cut losses, especially on newer buys.
Meanwhile, investors should look for those constructive pullbacks and stocks holding key levels and showing relative strength, such as HUBS stock, Visa and perhaps Nvidia. Watchlists once again may need serious revision in the coming days. But that work can deliver big gains when the market rally revs higher again.
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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