Dow Jones futures rose modestly early Friday, along with S&P 500 futures and Nasdaq futures, with the October jobs report looming large.
The stock market rally, now under pressure, continued to digest Fed chief Jerome Powell's hawkish comments that the peak or "terminal" fed funds rate may be higher than previously expected.
The major indexes fell Thursday morning. They bounced off early lows, with the Dow Jones briefly turning positive, but stocks faded into the close.
Megacap techs continue to weigh on the major indexes, especially the Nasdaq. Microsoft stock joined Amazon.com, Facebook parent Meta Platforms and Google parent Alphabet in setting bear market lows. Apple is still above its June bottom, but has tumbled this week back toward its October lows.
Key earnings movers Thursday night included Amgen, Yelp, EOG Resources, PayPal, Square parent Block, Progyny, Cloudflare and Paylocity.
Amgen stock was little changed while Yelp and PYPL stock tumbled. NET stock also dived, with cloud software names cratering overnight. SQ stock spiked and PGNY jumped. PCTY was not yet trading. EOG stock edged higher.
Cardinal Health topped views early Friday. CAH stock rose slightly, already extended from a buy zone.
Jobs Report
Economists expect the October jobs report to show nonfarm payrolls up by 210,000, with the jobless rate nudging up to 3.6%. That would be the third straight month of slowing hiring and the smallest jobs gain since December 2020, but not cool enough for the Fed's liking.
There are reasons to believe October employment data will be much weaker than expected.
However, other labor data this week has been hotter than expected, including September job openings and weekly jobless claims.
Friday's October jobs report will be key for Fed rate hike expectations and perhaps stock market direction, at least in the short run. The November jobs report and two CPI inflation reports also will arrive before the December Fed meeting.
Markets now see a 53% chance of a fifth 75-basis-point hike on Dec. 14.
Dow Jones Futures Today
Dow Jones futures rose 0.4% vs. fair value. S&P 500 futures gained 0.6% and Nasdaq 100 futures climbed 0.6%.
The 10-year Treasury yield was up 4 basis points to 4.16%.
U.S. crude oil futures climbed more than 3% to above $91 a barrel. Copper futures ran up more than 5%.
Hong Kong's Hang Seng Index jumped 5.4% and the Hang Seng Tech Index leapt 7.5%, amid fresh social media chatter that China will relax its zero-Covid policy.
The Labor Department's October jobs report is due out at 8:30 a.m. ET on Friday. Expect big moves, possibly whipsaw action, for Dow futures and Treasury yields.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
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Stock Market Rally
The stock market rally lost more ground Thursday, with the Nasdaq suffering the most once again.
The Dow Jones Industrial Average dropped 0.5% in Thursday's stock market trading. The S&P 500 index retreated 1.1%. The Nasdaq composite tumbled 1.7%. The small-cap Russell 2000 gave up 0.6%.
The 10-year Treasury yield rose 6 basis points to 4.12%, but off an intraday high of 4.2%. The dollar popped after a strong upside reversal Wednesday.
U.S. crude oil prices fell 2% to $88.17 a barrel, amid the strong dollar and concerns about global demand.
Apple Stock, Megacaps
Apple stock sold off 4.2%. Now down 10.2% for the week, the Dow Jones, S&P 500 and Nasdaq titan has fallen back from its 200-day line and knifed below its 50-day line.
Google stock gave up 4.1%, hitting a two-year low. GOOGL stock is down 10.4% for the week.
Microsoft stock slid 2.7% to 214.25, finally breaking below its October lows to its worst levels since January 2021. MSFT stock has skidded 9.2% this week.
Amazon stock lost 3.1% to the lowest point since March 2020. AMZN stock has plunged 13.6% this week.
META stock retreated 1.8%, hitting a seven-year low. The Facebook parent has lost 10.4% this week after crashing nearly 24% last week.
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ETFs
Among the best ETFs, the Innovator IBD 50 ETF edged up 0.4%. The iShares Expanded Tech-Software Sector ETF skidded 2.5%, with MSFT stock a major component. The VanEck Vectors Semiconductor ETF lost 1.2%.
SPDR S&P Metals & Mining ETF dipped 0.3%. U.S. Global Jets ETF dipped 0.1%. The Energy Select SPDR ETF rose 1.85% and the Financial Select SPDR ETF shed 1.1%. The Health Care Select Sector SPDR Fund dropped 0.4%.
Reflecting more-speculative story stocks, ARK Innovation ETF slipped 0.7% and ARK Genomics ETF gave up 0.9%.
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Market Rally Analysis
The stock market rally moved to "uptrend under pressure" after Wednesday's big downside reversal on Fed chief Powell's hawkish comments.
The Nasdaq closed below the low of the Oct. 21 follow-through day. That's a very bearish sign for the market rally, though the Nasdaq has clearly been the laggard in the current uptrend. The other key indexes are well above the FTD lows, though the S&P 500 fell below its 50-day line and the Dow Jones undercut its 200-day line.
The selling continued Thursday, with the Nasdaq once again leading the declines and finishing near session lows.
That's in large part due to the megacaps Apple, Amazon, Microsoft, Google and Meta Platforms.
The S&P 500, Dow Jones and Russell 2000 fared better, but wilted into the close.
The Russell 2000 did manage to finish above its 50-day and 21-day lines.
The Invest S&P 500 Equal Weight ETF fell 0.5%, much better than the megacap-heavy S&P 500, but closed below its 50-day.
Don't overstate market rally resilience outside Apple and the megacaps. The Russell 2000 and RSP ETF reversed hard on Wednesday, along with most leading stocks. And they lost more ground Thursday.
With the Fed once again reinforcing its hawkish stance and Treasury yields rebounding, the stock market will struggle to hold on, let alone make a meaningful advance.
Friday's jobs report could shore up the market rally, or send the major indexes tumbling toward bear market lows.
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What To Do Now
With the market under pressure and leading stocks volatile, investors should keep their exposure light. If the rally rebounds, such as the S&P 500 reclaiming its 50-day line, that could be a signal to consider gradually increasing exposure again.
There are a number of stocks that are relatively close to being actionable. So work on those watchlists. Stay engaged and be flexible so you're ready to add exposure or move to the sidelines.
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.
