Dow Jones futures fell slightly overnight, while S&P 500 futures and especially Nasdaq futures lost more ground, with Microsoft (MSFT) and parent Google Alphabet (GOOGL) headlined a heavy night of earnings.
The stock market had another strong session, as Treasury yields and the dollar retreated. But the S&P 500 and Nasdaq are reaching key resistance levels. Investors should participate in the approved development, but do not rush.
Intel (INTC) is set to price for that IPO Mobile (MBLY) Tuesday autonomous car unit. Twitter (TWTR) was close to its touch price on the latest signals Tesla ( TSLA ) CEO Elon Musk will close the deal by Friday.
Microsoft and Google opened megacap tech earnings on Tuesday night. Enphase Energy (ENPH) and Chipotle Mexican Grill (CMG) also announced.
Microsoft’s revenue and earnings fell, but MSFT stock fell sharply overnight on disappointing cloud revenue and weak guidance. Google stock fell after missing views. Enphase rose to strong results. CMG stock initially rose, but then declined slightly.
Microsoft Corporation and Google are on IBD’s Long-Term Leaders list. ENPH stock is on the IBD Big Cap 20.
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Equity investors in Tesla CEO Elon Musk’s Twitter deal received papers today, the latest indication that Musk will close the $44 billion deal by Friday, CNBC reported Tuesday.
Bloomberg reported that Musk told banks he would close the Twitter takeover on Friday. Twitter stock rallied on intraday gains, closing up 2.6% at 52.84, not far from the contract price of $54.20. Tesla stock briefly pared gains on Tuesday afternoon, but was 5.3% higher at 222.41.
Concerns that Musk will need to sell more shares to pay for the Twitter deal have weighed on TSLA stock.
The video embedded in this article discusses Tuesday’s market rally and analysis Shockwave Medical (SWAV), Increase energy (EE) and Dollar General (DG).
Dow Jones Futures Today
Dow Jones futures fell 0.2 percent against fair value. S&P 500 futures fell 0.9%. Nasdaq futures lost 1.8%. Microsoft is a Dow Jones, S&P 500 and Nasdaq giant. Google and Enphase stocks are components of the S&P 500 and Nasdaq.
Remember that overnight activity in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular market session.
Join IBD experts as they analyze active stocks in the market rally on IBD Live
Stock Market Rally
The stock market rally continued on Tuesday, with tech and small caps leading a strong session.
The Dow Jones Industrial Average rose 1.1% in Tuesday’s stock trading. The S&P 500 index rose 1.6 percent. The Nasdaq composite rose 2.25%. The small-cap Russell 2000 rose 2.7%.
The 10-year Treasury yield fell 13 basis points to 4.11%. The decrease in Treasury income also weighed on the US dollar. Still, the two-year Treasury yield, which is more closely tied to Fed policy, fell just 3 basis points to 4.47%.
The price of American crude oil increased by 0.9 percent and reached 85.32 dollars. Natural gas futures rose 8 percent, after falling 23 percent last week.
Among the best ETFs, the Innovator IBD 50 ETF ( FFTY ) rose 0.55%. The iShares Technology-Software Expanded Sector ETF ( IGV ) rose 2.5%. MSFT Corporation has a large IGV. VanEck Vectors Semiconductor ETF (SMH) advanced 1.6%.
SPDR S&P Metals & Mining (XME) climbed 1.8%. SPDR S&P Homebuilders (XHB) rose 4.35%. The Energy Select SPDR ETF (XLE) rose 0.1%. The SPDR Health Care Select Sector Fund ( XLV ) rose 0.8%.
Highlighting stocks with more speculative stories, ARK Innovation ETF ( ARKK ) rose 6.7% and ARK Genomics ( ARKG ) rose 5.4%. Tesla Inc. is a major holding in all of Ark Invest’s ETFs.
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Microsoft’s revenue and earnings came out on top of its fiscal Q1 findings. Cloud-computing led the way but missed at least some of the goals. The software giant then warned about Q2 revenue on ad, PC and currency headwinds.
MSFT stock was traded in overnight trading. Shares rose 1.4% on Tuesday to 250.66, touching the 50-day line. But Microsoft stock is well below the 200-day line and still not that far from a market low. Cloud software stocks fell on Microsoft’s results.
Both lost Google’s revenue and revenue. YouTube revenue fell, while online advertising grew just 2.5%. Cloud-computing revenue was above estimates. GOOGL stock fell in broad action. Shares rose 1.9% to 104.48 on Tuesday, while also closing above the 50-day line. But, like Microsoft, Google’s stock is not far from a market low, with some distance from the 200-day mark.
Microsoft and Google’s cloud computing results could predict the growth of Amazon Web Services Amazon.com (AMZN) earnings Thursday night. AMZN stock fell slightly overnight.
Enphase’s earnings are falling flat as are earnings views. ENPH stock rose sharply overnight. Enphase stock fell 4.85% to 265.59 on Tuesday, returning to its 21-day low. Shares may be starting to form a new base to the right but are still below the 50-day line.
First Solar ( FSLR ), reporting Thursday night, was little changed on Enphase earnings.
Chipotle’s earnings are rocking, affecting same-store sales and margins. CMG stock was slightly lower in extended trading amid concerns about future margins. Shares advanced 2.5% to 1,584.02 on Tuesday. According to MarketSmith analysis, Chipotle stock is near the 50-day line as it works to the right of a short base with a buy point of 1,754.66.
Boeing (BA), General Dynamics (GD), Waste Management (WM) and Hilton Worldwide (HLT) reports early Wednesday.
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Market Rally Analysis
The stock market continues to rise, with falling Treasury yields and the US Dollar providing a boost for equities.
The Nasdaq and small caps led Tuesday’s gains. The Dow Jones retreated on Tuesday, but remains the leader of the rally, rising above the 50-day line. The S&P 500 and Russell 2000 are close to that key level. The Nasdaq still has some way to go to reach the 50-day mark. But the S&P, Russell and Nasdaq are all at their 10-week highs.
It is not yet clear whether this is just another market rally. Could the S&P 500 and then the Nasdaq break decisively above its 50-day moving average? And if so, can the main indicators clear the 200-day?
On the positive side, a number of growth stocks showed great activity, including Shockwave, DoubleVerify (DV) and Roblox (RBLX).
They join medical leaders, including biotech, health insurers and drug distributors. Auto parts dealers are doing well.
Energy stocks are doing well.
Treasury yields, earnings and economic data could derail that new rally.
Microsoft and Google announced Tuesday night, with Meta Platforms (META), The night (AAPL) and Amazon earnings later this week.
It’s no coincidence that Microsoft, Google, Amazon and Apple stocks all closed at or below their 50-day lines on Tuesday. Even Meta stock, which nearly hit a market low on Friday, is back to its 50-day high.
Microsoft, Google and Amazon are all poised to retreat from that mainstream. Futures indicate that the S&P 500 and Nasdaq will do the same at Wednesday’s open.
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What to do now
The acknowledged stock market rally is producing gains, with a number of leading stocks flashing buy signals or falling, including some high-growth names.
Therefore, investors should carefully participate in this market rally, investing in quality stocks or broad market ETFs. Take it slow. If your positions and the market rally are working, you can gradually increase the exposure.
Major indices that face a series of resistance levels are another reason to enter, do not work.
But be prepared to take profits or cut losses quickly.
Work on checklists. Several days of market gains bring more stocks into position.
Read The Big Picture every day to stay in sync with market direction and leading companies and sectors.
Please follow Ed Carson on Twitter @IBD_ECarson for stock updates and more.
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