Dow Jones futures leaned lower early Wednesday, while S&P 500 futures and Nasdaq futures fell. Microsoft and Google parent Alphabet posted big late gains.
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The stock market’s rally attempt gained momentum Tuesday amid firm Treasury yields, and earnings reactions were generally positive. This time the major indices closed with good gains as the S&P 500 returned above its 200-day line.
Investors still need to be careful. The rally attempt is barely underway and has proven nothing.
Microsoft stock jumped on earnings, but trimmed gains on guidance. Google stock fell.
Microsoft’s earnings and guidance, along with Google’s, are extremely important for the technology sector, especially artificial intelligence and cloud computing. Meta platforms and Amazon.com follow later this week. Meta and Amazon stock fell overnight.
Visa fell on earnings Tuesday night.
Fellow Boeing giant Dow Jones is on standby Wednesday morning, along with Vertiv and CME Group.
Meta stock is on the IBD Leaderboard. Microsoft stock is on IBD’s long-term leaders. META is IBD 50 listed.
Dow jones futures today
Dow futures lost a fraction to fair value, despite a boost from MSFT. S&P 500 futures fell 0.5%. Nasdaq 100 futures fell 0.6%, helped by Microsoft but Google stock fell. Meta and Amazon stocks also weighed on S&P 500 and Nasdaq futures.
Remember, overnight action in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
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Trying to rise in the stock market
The stock market rally attempt saw some good gains on Tuesday. For the second session in a row, major indexes rebounded and then fell. On Monday, however, they closed in the top third of their daily ranges after bouncing back.
Earnings feedback on Tuesday was generally positive, after mostly negative feedback last week. Many of these earnings gains were in beaten-down stocks, such as Dow components Verizon, 3M and Coca-Cola.
The Dow Jones Industrial Average rose 0.6% in stock market trading Tuesday. The S&P 500 rose 0.7%, crossing its 200-day line. The Nasdaq Composite rose 0.9%.
Tuesday marked the second day of an attempted rally for the Nasdaq stock market and only the first day for the Dow Jones and S&P 500. A mediocre day or two doesn’t mean much in a market correction. But if the attempted rally builds momentum — amid huge gains — investors may look for a follow-up day later this week to confirm the new uptrend.
The S&P 500 is reaching resistance at the 200-day line.
Market breadth was positive, but it was terrible for weeks or months. New lows keep crushing new highs.
The Russell 2000 small-cap index rose 0.8%, but after hitting a 52-week low on Monday.
The equal-weighted First Trust Nasdaq 100 is up 0.96% versus 0.97% for the Nasdaq 100. But the QQEW is just below 200 days. The Nasdaq 100, with Meta, Microsoft, and Google above their 50-day lines, is no closer to 200 days.
With a yield of 4.84%, the 10-year Treasury was practically flat. The 10-year bond yield rose to 4.89%, but that’s after falling from 5% on Monday.
US crude oil prices fell 2.1% to $83.74 per barrel.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF jumped 1.9% in stock market trading Tuesday. The iShares Expanded Technology Software Sector Fund rose 0.91%, with MSFT a key IGV stock. * VanEck Vectors Semiconductor ETF had a 1.2% increase.
Reflecting the more speculative story stocks, the ARK Innovation ETF rose nearly 3% and the ARK Genomics ETF advanced 2.9%.
The SPDR S&P Metals and Mining ETF rose 1.5% and the Global The US Global Jets ETF fell 0.33%. The SPDR S&P Homebuilders ETF fell 0.2%. The Energy Select SPDR ETF fell 1.4% and the Healthcare Sector SPDR ETF gained 0.3%.
Meanwhile, the Industrial Sector SPDR Fund rose 0.75%.
The Financial Select SPDR ETF rose 0.7%. Visa stock makes up a sizable portion of the ETF, along with CME.
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Microsoft profits
Microsoft’s earnings easily beat estimates for the first quarter of 2024, while revenue also topped. Azure cloud computing revenue grew 28%, slightly above views.
On the conference call, the administration repeatedly referenced artificial intelligence while also noting cybersecurity gains. Overall, Microsoft guided for a modest rise in Q2 revenue, although that includes newly acquired Activision. It sees Azure growth of 26.5%, with nearly flat growth in the second half.
MSFT stock pared its after-hours gains somewhat after Microsoft issued guidance, but rose more than 3% early Wednesday, pointing to potential buying opportunities on Wednesday. Shares have an official buy point of 366.78, but investors can use the October 19 high of 336.88 or the September 14 high of 340.86 as early entries.
Microsoft stock rose 0.4% to 330.53 on Tuesday, after breaking out of a 50-day line on Monday.
Google earnings
Google’s earnings and revenue modestly outperformed views. Ad revenue was strong but Google Cloud revenue missed expectations slightly.
Google’s remarks are significant because the company is likewise pushing hard for AI.
Google stock fell 7% in pre-market trading. Shares rose 1.7% to 138.81 on Tuesday, extending Monday’s rebound from the 50-day line. The relative strength line is at its highest levels.
In the wake of Google and Microsoft’s earnings, Meta stock lost a small portion in extended trading. Shares fell on Tuesday as 42 states filed a lawsuit against the social media giant, alleging that Facebook and Instagram features are addictive and target children. Meta has slowly pulled back from the buy point it set nearly two weeks ago.
AMZN stock fell slightly overnight, consolidating but below its 50-day level. Amazon stock rose 1.6% on Tuesday.