Dow Jones futures tilted lower overnight, along with S&P 500 futures and Nasdaq futures. Netflix headlined key earnings reports Tuesday night, with Tesla looming Wednesday.
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The stock market rally continues to trade sideways, with the major indexes closing little changed once again on Tuesday.
Netflix (NFLX) was volatile on mixed results, while Intuitive Surgical (ISRG) jumped toward a buy point. Interactive Brokers (IBKR) and United Airlines (UAL) also reported. Meanwhile, hard-hit regional banks Western Alliance Bancorp (WAL) and Metropolitan Bank Holding (MCB) surged on better-than-feared earnings.
Chip equipment giant ASML (ASML) reports early Wednesday, with peer Lam Research (LRCX) due late Wednesday.
Finally, Tesla (TSLA) reports Wednesday night. Analysts expect a big Tesla earnings decline amid sharp price cuts. Tesla stock is near multiple possible buy points, however.
The video embedded in this article reviews the market action and analyzes Mobileye (MBLY), Las Vegas Sands (LVS) and Lockheed Martin (LMT).
Dow Jones Futures Today
Dow Jones futures lost 0.1% vs. fair value. S&P 500 futures and Nasdaq 100 futures edged lower. Netflix stock is a notable S&P 500 and Nasdaq 100 component, along with ISRG and UAL.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Key Earnings
NFLX stock lost a fraction overnight after initially plunging and then briefly turning positive. Netflix subscriber growth fell short, slowing significantly vs. Q4. Earnings just beat and revenue just missed. The streaming TV giant also said it crack down on password sharing in the U.S. soon and will increase buybacks during the year. Shares had closed up 0.3% to 333.70, finding support at the 50-day line. Netflix stock has a 349.90 cup-with-handle base after the streaming giant more than doubled from May 2022 to early February 2023.
Before Tuesday’s close, Netflix said it would shut down its DVD-by-mail business on Sept. 29.
ISRG stock jumped in after-hours action, signaling a possible breakout. Intuitive Surgical earnings and revenue modestly beat, while procedure growth rose sharply. Shares edged up 0.15% to 269.28 on Tuesday. Intuitive Surgical stock has a 285.19 cup-base buy point after clearing a 259.12 early entry from a too-low handle.
UAL stock rose slightly after United Airlines earnings topped views. Shares rose 1.6% to 43.04 on Tuesday, rebounding this week from the 200-day line but still trying to recover from an early March sell-off.
IBKR stock fell solidly in extended trading after Interactive Brokers earnings fell short while revenue was in line. Interactive Brokers rose 1.1% to 84.74 on Tuesday, flashing an early entry from the 50-day line. But IBKR stock is now signaling a move back below that key level.
WAL stock surged overnight after the Phoenix-based bank beat views and said deposits have increased since the end of March. Western Alliance stock fell 0.9% on Tuesday to 32.51. Shares are well off their 11-year low of 7.46 in March but down more than 50% from their early-March levels.
MBC stock also leapt after hours as the New York City-based bank also topped, with core deposits up slightly as of March 31 vs. the end of 2022. Metropolitan Bank stock slipped 1.2% to 30.80.
Superregional U.S. Bancorp (USB) and Morgan Stanley (MS) are due early Wednesday.
ASML earnings will be out very early Wednesday morning. ASML stock edged up 0.7% to 643.33 on Tuesday but hit resistance at the 50-day line. The Dutch chip equipment giant has a 683.28 cup-with-handle buy point, according to MarketSmith analysis.
On Monday, ASML stock tumbled 4.1% on a report that Taiwan Semiconductor (TSM) will slash capital spending plans when it reports Q1 results early Thursday.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally
The stock market rally opened higher, erased gains, then traded narrowly mixed for most of the session.
The Dow Jones Industrial Average lost a fraction in Tuesday’s stock market trading. The S&P 500 index rose 0.1%. The Nasdaq composite edged lower. The small-cap Russell 2000 fell 0.4%.
U.S. crude oil prices edged up 3 cents to $80.86 a barrel.
The 10-year Treasury yield fell 2 basis points to 3.57%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) popped up 2%, hitting its best levels since early December. The iShares Expanded Tech-Software Sector ETF (IGV) edged up 0.2%. The VanEck Vectors Semiconductor ETF (SMH) rose 0.45%, with ASML and LRCX stock both SMH holdings.
Reflecting stocks with more speculative stories, the ARK Innovation ETF (ARKK) dipped 0.2%, continuing to trade just below its 50-day and 200-day moving averages. ARK Genomics ETF (ARKG) fell 0.9%. TSLA stock remains the No. 1 holding across Ark Invest’s ETFs.
The SPDR S&P Metals & Mining ETF (XME) climbed 0.6%. U.S. Global Jets (JETS) advanced 0.9%, with UAL stock a big member. The SPDR S&P Homebuilders ETF (XHB) gained 1.7%. The Energy Select SPDR ETF (XLE) advanced 0.4% and the Health Care Select Sector SPDR Fund (XLV) declined 0.7%.
The Financial Select SPDR ETF (XLF) edged down 0.3%. The SPDR S&P Regional Banking ETF (KRE), which includes WAL stock, slumped 2.2% on Tuesday.
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Tesla Earnings
Tesla earnings are expected to fall 20% vs. a year earlier, as deep price cuts took their toll on gross margins. Revenue should rise 26% to $23.73 billion, but down sequentially vs. Q4.
Already in April, Tesla has cut prices further in the U.S., Europe and other key markets. China EV rivals are rolling out a slew of new models this week, many challenging Tesla’s aging lineup. So analysts will want to get a sense of how low margins might go, and whether deliveries will keep rising. Investors also will want updates on the Tesla Cybertruck, a refreshed Model 3 and any hints on a next-generation platform. Tesla bulls also have high hopes for the company’s energy storage business.
Tesla Stock
Tesla stock fell 1.5% to 184.31 on Tuesday, continuing to face resistance at the 50-day moving average. Shares have a 207.89 buy point from a cup-with-handle base that formed just below the 200-day moving average. Investors might prefer to use a decisive break of the 200-day line, currently around 213, as a TSLA stock entry. A third possible buy point for Tesla stock would be a strong move above the 50-day line following earnings, offering an early entry.
Market Rally Analysis
The stock market rally had another quiet day, with the major indexes not moving much after giving up some early gains.
There’s nothing wrong with the market digesting gains and trading tightly near the top of recent consolidations and 2023 highs, especially heading into earnings season. That is letting top stocks take a breather while others set up.
While market breadth has improved significantly on the NYSE, it’s been less impressive on the Nasdaq. There is a tug of war between new highs vs. new lows.
The Invesco S&P 50 500 Equal Weight ETF (RSP) has improved in recent weeks but hasn’t decisively cleared its 50-day line.
The Russell 2000, home to many bank stocks, is below its 200-day and 50-day lines.
Homebuilders and some other housing-related stocks are powering higher. D.R. Horton (DHI) reports earnings Thursday, kicking off a number of reports in the group.
Chip stocks tried to move out Tuesday morning after the SMH ETF found support at the 50-day line. But the ETF faded despite solid Nvidia (NVDA) gains, with several chip plays reversing lower. ASML, Lam Research and Taiwan Semiconductor earnings may have a big impact on the chip sector and the market rally overall.
Travel, commodity, footwear, software, defense/aerospace, medical products, gaming and other groups also have several stocks in or near buy zones. A little more market strength and breadth could see a lot of buying opportunities.
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What To Do Now
Buying opportunities have been relatively limited over the past several days, though investors could have chosen to nibble on some of them. It’s not a time to be ramping up market exposure significantly from current levels, whatever those may be. The market’s sideways action, though constructive, isn’t providing a real push to individual stocks. That’s likely why many promising stock moves near the open have often faded.
Also, earnings season is likely to swing stocks, sectors and indexes over the next several sessions.
But there are a lot of stocks showing interesting action from a variety of sectors. Investors want to be ready to step up exposure more meaningfully. So have your watchlists ready.
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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