The Dow Jones futures rose marginally overnight, along with the S&P 500 futures and Nasdaq futures. meta platform (META) earnings declined, though a jump in its spending lifted several large tech suppliers.
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Apple stock and Amazon.com are on deck Thursday night.
The stock market rally on Wednesday saw major volatility, but the major indices eventually closed near session lows. Nasdaq fell sharply Microsoft (MSFT) and Google earnings.
A few more stocks showed buying signals, including Enphase Energy (ENPH), wingstop (wing) and rollins (ROL).
separately, Tesla (TSLA) is reportedly facing a criminal investigation over its self-driving claims.
revenue
facebook parent meta platform, wolfspeed (wolf), ford motor (F), impinj (PI), Molina Health (MOH), aspen technology (AZPN) and service now (now) reported after the shutdown.
Meta stock broke on weak earnings and guidance. But Meta’s hefty spending plans excited several chip and networking firms, including NVIDIA (NVDA) and Arista Network (A trap).
WOLF stock fell under its guidance. Aspen Technology, ServiceNow and Pi stock were big earnings winners, with Molina Health popping up. Ford fell a bit. AZPN Stock was not active yet.
Merck (MRK), Shopify (shop), master card (M.A), McDonald’s (MCD) and Kamla (CAT) report early Thursday.
But then all eyes will be on Thursday night Apple (AAPL) On Tap, Together Amazon.Com (AMZN) and the biotech giant Vertex Pharmaceuticals (VRTX).
Apple stock and Amazon fell near their 50-day line on Wednesday. VRTX stock is in buy mode.
Vertex Stock and Wingstop are on the IBD leaderboard. WOLF is on the stock leaderboard watchlist. Moses stock is at IBD 50. Vertex, Molina Health and ENPH stocks IBD Big Cap are at 20. Enphase Energy was the IBD Stock of the Day for Wednesday.
The video embedded in this article discusses the volatile action of the market and analysis of Wing Stock, Enphase and clear field (CLFD).
Tesla Criminal Investigation
Tesla is facing a criminal investigation over its self-driving claims, Reuters reported on Wednesday. According to the report, the Justice Department’s investigation began last year and is nowhere close to reaching a conclusion. The criminal investigation comes amid an ongoing Autopilot investigation by the National Highway Traffic Safety Administration.
The new criminal investigation did not affect TSLA stock. The stock closed up 1% from the session’s high at 224.64 as the market faded from its late-morning peak.
Meanwhile, Tesla CEO Elon Musk quits Twitter (TWTR) headquarters and changed his Twitter bio to “chief tweet,” with all signs pointing to the close of his $44 billion acquisition as of Friday evening. TWTR stock rose 1.2% to 53.42 on Wednesday, down 7% and a $54.20 price tag so far this week.
Twitter stock rose 1% overnight to 53.90, as the NYSE said TWTR would be delisted from Friday’s close.
It’s unclear whether Musk still has to sell more Tesla stock to finance the Twitter acquisition.
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dow jones futures today
Dow Jones futures rose 0.5% versus fair value. S&P 500 futures rose 0.45%. Nasdaq 100 futures advanced 0.5% as the meta fell while now rose.
Remember that overnight action in Dow futures and elsewhere does not necessarily entail actual trading in the next regular stock market session.
Join IBD experts as they analyze stock market rally actionable stocks on IBD Live
stock market rally
There was a mixed trend in the rally of the stock market on Wednesday.
The Dow Jones Industrial Average closed up 2 points in Wednesday’s stock market trading, even as MSFT stock was down 7% and Boeing (BA) 9% off. The S&P 500 index fell 0.7%. The Nasdaq Composite slipped 2%. The small-cap Russell 2000 rose 0.5%.
The 10-year Treasury yield fell 10 basis points to 4.01%, continuing a sharp return from last Friday’s intraday high. The 10-year Treasury yield, lower than the 3-month yield, declined to 4.03% on Wednesday. The 3-month/10-year reversal is seen as a stronger bearish signal than the 2-year/10-year reversal.
Bank of Canada increased rates by 50 basis points. More central banks tend to be less aggressive than the expected 75 basis points. The Federal Reserve is in a virtual lock-in to hike rates by 75 basis points for a fourth straight meeting next week. But the markets are leaning towards a move of 50 basis points in December.
The US dollar fell strong for the second session.
US crude oil prices rose 3% to $87.91 a barrel.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) gained 0.2%. The iShares Extended Tech-Software Sector ETF (IGV) fell 1.75%, with Microsoft stock being a large component and ServiceNow also a notable holding. The VanEck Vector Semiconductor ETF (SMH) offered a 1% discount.
The SPDR S&P Metals & Mining ETF (XME) advanced 1.1%. The Energy Select SPDR ETF (XLE) gained 1.4%. Health Care Select Sector SPDR Fund (XLV) climbed 1.1%.
Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) climbed 0.2% and the ARK Genomics ETF (ARKG) rose 2.8%. Tesla stock remains a major holding in Arch Invest’s ETF.
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major earnings
Meta Platforms revenue was well below Q3 views, although revenue topped. Facebook parents also offered weak guidance.
The meta stock fell nearly 20% in overnight action, marking its worst level decline since late 2016. Shares already fell 5.6% to 129.82 on Wednesday after Google’s earnings crunch on weak online ad revenue. It was followed by weak revenue from Snapchat parent crack (Snap) Earlier this month.
On the plus side, Nvidia, Marvel Technology (MRVL) and ANET shares rose due to heavy spending by Facebook.
Wolfspeed reported a quarterly loss and sales that looked slightly up. The EV-exposed chipmaker delivered disappointing guidance.
WOLF stock crashed 26% in extended trading, indicating a fall below recent lows and the 200-day moving average. The stock rose 1.3% to 106.44 on Wednesday, hitting resistance at the 50-day line. WOLF stock has been close to having a fair basis.
Earnings from the tracking-chip maker Impinj also topped sales estimates.
Pi stock climbed 18% overnight, marking a gap above the 99.10 consolidation buy point. Impinj’s stock rose 1.3% to 89.23 on Wednesday, well above its 50-day line.
Ford’s earnings and revenue were largely in line with lower views last month after the automaker warned on supply-chain woes and costs.
Ford stock fell 1% in extended action. The stock fell 0.1% to 12.82 on Wednesday. According to MarketSmith analysis, Ford stock is acting as a buy point from a low of 16.78, but is still below the 50-day and 200-day moving averages.
Molina Health’s earnings topped modestly. MOH stock rose 5% in overnight trading. The stock rose 0.8% to 369.23 on Wednesday, moving from a flat base into buying territory. The flat base is part of the base-on-base formation, which has a 361.35 buy point. Molina stock is set to open ahead of the 5% buy zone, ending at 379.42.
Aspen Technology’s earnings crushed views, with revenue also topping the charts. AZPN stock was not yet trading in extended action. Shares of the supply-chain and engineering software maker fell 1.7% to 248.40 on Wednesday, but found support at its 21-day moving average. AZPN stock has been consolidating for a few weeks after a strong run, but needs more time to build a proper base.
ServiceNow earnings topped but revenue fell and the business software giant cut its Q4 subscription revenue target. However, the stock is now up 13%, indicating at least a test of falling below the 50-day line. ServiceNow stock fell 2.7% on Wednesday to 366.41 on Microsoft results and guidance.
market rally analysis
Wednesday was a strange day for the stock market to rise. Nasdaq fell openly on Microsoft and Google earnings. The tech-heavy index erased losses by late morning, but then the stock rebounded back to session lows. The S&P 500, which moved above its 50-day line intraday, fell back.
Nasdaq, after retreating near its 50-day line, now needs support near the 21-day line.
The Russell 2000, although it closed higher, has shifted its 50-day line, indicating how the weakness of the market was concentrated in the megacaps. Microsoft and Google parent Alphabet (GOOGL) were the main culprits, but Meta, Amazon and Apple were also significant losers.
The Invesco S&P 500 Equal Weight ETF (RSP) gained 0.2%, though closed near session lows.
Advancers outperformed decliners on the NYSE and Nasdaq. New highs surpassed new lows.
It is not surprising to see a pullback on Wednesday due to bad news from major tech sectors. What matters is how the market rally reacts from here.
Big amounts of earnings are still due this week, including Apple stock and Vertex, with a heavy load next week. Also next week: another Fed meeting with October’s jobs report and other key economic data and rate hikes.
On the plus side, key stocks in various sectors are flashing buy signals and extending gains, including ENPH stock.
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What should we do now
Wednesday’s roller-coaster session, closing near lows, underscores the need for caution.
Investors should have added exposure gradually in recent days as the market rally strengthened and more stocks showed buying signals. But participating in new positions runs the risk of getting loaded at intraday highs or before a more significant pullback.
While there are reasons to be optimistic, many technical hurdles and macroeconomic challenges remain.
Explore new opportunities by working on your watchlist. But be prepared to scale back if there is an uptrend or if your stocks are in trouble.
Read The Big Picture every day to keep up with the market direction and key stocks and sectors.
Please follow Ed Carson on Twitter @ibd_ecarson For stock market updates and much more.
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