Dow Jones futures rose modestly early Thursday, with S&P 500 futures and especially Nasdaq futures advancing strongly. Meta Platforms headlined a slew of earnings reports overnight, while solar play Nextracker flashed a buy signal.
The stock market rally closed narrowly mixed after the Federal Reserve raised rates and Fed chief Jerome Powell gave some slightly dovish signals. The Dow Jones extended its win streak to 13 sessions, the longest since 1987. MSFT stock weighed on the S&P 500 and Nasdaq, with many software names and suppliers retreating on Microsoft guidance and comments on cloud computing and artificial intelligence.
Google parent Alphabet and Boeing broke out Tuesday on their earnings reports.
Key Earnings
Meta Platforms reported strong earnings and bullish guidance, while also cutting capital spending. META stock jumped 10%.
Nextracker reported strong earnings for the solar tracking play. NXT stock surged more than 15%, signaling at least an early entry if not a full breakout.
ServiceNow, Chipotle Mexican Grill, United Rentals, Edwards Lifesciences, and Lam Research also released quarterly results.
ServiceNow edged higher after narrowly beating views, raising full-year guidance, setting a $1.5 billion buyback and announcing an AI partnership with Nvidia. Chipotle tumbled as Q2 sales and Q3 same-store guidance were a little light. Lam Research rose modestly on solid results and guidance. EW stock skidded despite edging past quarterly views. United Rentals declined modestly despite strong quarterly results and raised guidance.
McDonald's rose modestly after reporting earnings and sales topped views, with strong growth in all regions. MCD stock is bouncing from the 50-day line, near a buy point. Mastercard edged higher in the buy zone after reporting earnings slightly above views.
META stock is on IBD Leaderboard, with CMG stock on the Leaderboard watchlist. Microsoft stock is on the IBD Long-Term Leaders list. ServiceNow and URI stock are on the IBD 50. NOW stock is on the IBD Big Cap 20.
Boeing was Wednesday's IBD Stock Of The Day.
Fed Rate Hike
Fed policymakers raised their main interest rate by a quarter-point to a 5.25%-5.5% target range, as expected, followed a pause at the June meeting.
"Job gains have been robust in recent months," the statement said. "Inflation remains elevated."
Fed chief Jerome Powell, speaking shortly after the rate increase, said that it's "certainly possible" that the central bank could hike or pause in September.
Notably, Powell said, "We're coming to a place where there really are risks on both sides," Powell said. After the June meeting, he said the inflation risks are "to the upside." He also said that monetary policy is already "restrictive ... putting downward pressure on economic activity and inflation."
Fed staff is no longer forecasting a mild recession later this year, Powell said. He has said throughout the tightening cycle that a "soft landing" was possible.
Markets now see a 35% chance of a Fed hike by the November meeting, down from 41% before the Fed rate hike and Powell's comments.
On Thursday, the European Central Bank raised its key rate by a quarter-point to 3.75%.
Dow Jones Futures Today
Dow Jones futures rose 0.3% vs. fair value. S&P 500 futures advanced 0.7%. Nasdaq 100 futures jumped 1.4%, with META stock providing a big lift.
Crude oil prices climbed 1%.
At 8:30 a.m. ET, the Commerce Department will release its first reading on second-quarter GDP. Economists expect 1.5% annualized growth, slowing from Q1's 2% pace. Consumer spending is also seen cooling to 1.5%, but from a robust 4.2% advance in Q1. The report's inflation gauge will provide clues to Friday's June PCE price index, the Fed's favorite inflation gauge.
Commerce also will release June durable goods figures at 8:30 a.m. Thursday.
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
The stock market rally closed mixed Wednesday. While stocks wavered following the Fed announcement and Powell's comments, there were no huge gyrations and reversals.
The Dow Jones Industrial Average rose 0.2% in Wednesday's stock market trading. The S&P 500 index closed a fraction lower. The Nasdaq composite dipped 0.1%. The small-cap Russell 2000 popped 0.7%, buoyed by banks.
Microsoft stock sank 3.7% to 337.92. Google stock jumped 5.8% and Boeing soared 8.7%, both clearing official buy points. Google and Boeing offset MSFT stock's direct impact, but the software giant triggered losses in a number of notable techs.
Still, advancers easily outpaced decliners on the NYSE and Nasdaq.
The Invesco S&P 500 Equal Weight ETF rose 0.2%.
The First Trust Nasdaq 100 Equal Weighted Index ETF fell 0.3%, about the same as the Nasdaq 100.
U.S. crude oil prices fell 1.1% to $78.78 a barrel, pulling back from a three-month high.
The 10-year Treasury yield sank 6 basis points to 3.85%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF dipped 0.3%. The iShares Expanded Tech-Software Sector ETF slumped 1%. NOW stock is a notable IGV holding, with Microsoft a major position. The VanEck Vectors Semiconductor ETF retreated 1.2%. LRCX stock is an SMH component.
Reflecting more-speculative story stocks, ARK Innovation ETF gained 2.1% and ARK Genomics ETF 1.7%.
SPDR S&P Metals & Mining ETF dipped 0.1%. U.S. Global Jets ETF climbed 1.3%. SPDR S&P Homebuilders ETF edged up 0.2%. The Energy Select SPDR ETF closed just above break-even and the Health Care Select Sector SPDR Fund dipped 0.1%.
The Industrial Select Sector SPDR Fund climbed 0.7%. URI stock is in XLI, with Boeing a big component.
The Financial Select SPDR ETF climbed 0.6%. The SPDR S&P Regional Banking ETF soared 4.8%, more than recouping Tuesday's 1.9% loss as investors viewed the PacWest takeover deal as positive for regional banks.
Five Best Chinese Stocks To Watch Now
What To Do Now
Microsoft shows why investors need to pay close attention to earnings season beyond their own holdings, especially for the first big companies reporting in various sectors. That's especially true of Microsoft, because it's at the forefront of so many different fields. Datadog and Arista Networks investors got the message on Wednesday.
With some big earnings and the Fed meeting out of the way, there are fewer huge uncertainties ahead. But markets often have a day two reaction to Fed meetings. Plus, there are still a huge number of companies reporting through next week, along with big economic data.
So be cautious about making new buys and be ready to step back out quickly.
But keep working on watchlists.
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.
