Dow Jones futures fell slightly early Thursday, while S&P 500 futures and especially Nasdaq futures sold off. Facebook parent Meta Platforms, Spotify and Qualcomm headlined after-hours earnings.
The market rally rose modestly Wednesday as Google parent Alphabet and AMD stock jumped on earnings, offsetting PYPL stock and weak overall breadth.
Google stock broke out after the open on strong earnings and a 20-for-1 split, but pulled back below the 3,019.43 buy point. Shares still jumped 7.5% to 2,960. The relative strength line for GOOGL stock hit a new high. Advanced Micro Devices popped 5.1% on hot results and guidance, but is still below its 50-day line.
Meanwhile, PayPal and Dynatrace were among several earnings losers Wednesday. PYPL stock crashed nearly 25% to the lowest point since May 2020. DT stock skidded 18%, hitting a 52-week low. They also triggered big losses in beaten-down growth stocks that have tried to rebound. Shopify and Snowflake fell sharply. Tesla stock retreated modestly, still comfortably above its 200-day line.
The video embedded in this article reviewed the market rally and analyzed Google, AMD stock and Equity Residential.
Meta Earnings
Meta Platforms earnings unexpectedly fell 5% while revenue narrowly beat. The Facebook parent also guided lower on Q1 revenue.
FB stock crashed 22% in extended trade, signaling at least an 11-month low. That's after rising 1.25% Wednesday in reaction to Google earnings.
SNAP stock sold off more than 10% while Twitter and Trade Desk retreated significantly. Even Google stock fell modestly. Snapchat parent Snap reports Thursday.
Other Key Earnings
Qualcomm earnings were better than expected while guidance also appeared solid. QCOM stock edged lower early Thursday. Shares had popped 6.25% to 188.20 on Wednesday, powering back above the 50-day line. The RS line hit a record high, but it's not clear what a good Qualcomm stock buy point would be.
Another chipmaker, MaxLinear, had a beat-and-raise report as well. MXL stock edged higher in extended action. Shares climbed 1.4% on Wednesday to 61, rising for a fourth straight session after finding support at its 200-day line.
Spotify results were roughly in line, but paid subscriber guidance was a little light. Spotify is dealing with some musicians pulling their content, claiming Covid misinformation by podcast host Joe Rogan. SPOT stock plunged 11% overnight.
Tesla is on IBD Leaderboard. Google stock is on IBD Long-Term Leaders. Tesla and MXL stock are on the IBD 50. Google was IBD Stock Of The Day.
Dow Jones Futures Today
Dow Jones futures fell 0.25% vs. fair value. S&P 500 futures sank 1.1%. Nasdaq 100 futures plunged 2.2%. FB stock is slamming Nasdaq futures, but many other techs are losing ground as well.
The Bank of England raised interest rates for a second straight month. The European Central Bank said it would end asset buys in March.
The 10-year Treasury yield rose 3 basis points to 1.8%.
Crude oil futures fell more than 1%.
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 was indecisive Wednesday morning, but the major indexes ultimately closed higher, though small caps struggled.
The Dow Jones Industrial Average rose 0.6% in Tuesday's stock market trading. The S&P 500 index climbed 0.9%. The Nasdaq composite advanced 0.5%. The small-cap Russell 2000 retreated 1%.
Google stock and AMD buoyed the Nasdaq, though AMD closed off early highs. FB stock and Nvidia rallied on those results, while Microsoft continued to advance.
But there were plenty of earnings losers. PYPL stock and Dynatrace hit related payment and software names. But those two names, along with FB stock and Spotify overnight, sent a broader warning to hard-hit growth stocks.
Tesla stock fell 2.75%, but it's still up 7% this week as the EV giant rebounded from its 200-day line. SNOW stock sank 5.5% Wednesday, still up nearly 6% this week. Shopify tumbled 10% on Wednesday, still up 1.6% for the week.
The 10-year Treasury yield fell 3 basis points to 1.77%, with the ADP Employment Report showing private payrolls down 301,000, unexpectedly.
Crude oil prices were up and down, ultimately closing 6 cents higher to $88.26 a barrel as OPEC+ continued to slowly unwind Covid crash output cuts. Natural gas prices jumped.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF rose 1%, while the Innovator IBD Breakout Opportunities ETF edged up 0.4%. The iShares Expanded Tech-Software Sector ETF sank 1%, even with big component Microsoft advancing. The VanEck Vectors Semiconductor ETF popped 2.55%, with AMD and Qualcomm stock notable holdings.
SPDR S&P Metals & Mining ETF rose 1.3% and Global X U.S. Infrastructure Development ETF added 0.7%. U.S. Global Jets ETF dipped 0.5%. SPDR S&P Homebuilders ETF climbed 0.5%. The Energy Select SPDR ETF picked up 0.3% and the Financial Select SPDR ETF advanced 0.7%. The Health Care Select Sector SPDR Fund rallied 1.35%.
Reflecting more-speculative story stocks, ARK Innovation ETF slumped 5.1% and ARK Genomics ETF gave up 3%. Tesla stock is the No. 1 holding across ARK Invest's ETFs. ARKK also owns a lot of SPOT stock.
Five Best Chinese Stocks To Watch Now
Market Rally Analysis
The stock market rally ultimately extended a recent winning streak Wednesday, with the S&P 500 leading the way. The Nasdaq composite opened solidly higher, but reversed lower before settling for modest gains.
The Nasdaq is still some distance below its 200-day moving average, though it did close just above its 21-day moving average. The Nasdaq 100 cleared that long-term level Wednesday and the 21-day line. The S&P 500 index moved toward its 50-day line while the Dow reclaimed that.
The Russell 2000 retreated however. Unlike some recent up days for the major indexes, overall market breadth was weak, with decliners beating advancers by 2-to-1 on the Nasdaq.
Overnight futures don't bode well for Thursday's open, especially on the Nasdaq. That could be a test for the market rally.
Will stocks continue to move higher, or reverse back toward recent lows? The major indexes moving sideways for a few days or weeks could be positive. It would let stocks form proper consolidations, with leading stocks showing relative strength. But the market could pause for a day or two or three and then suddenly break higher or lower.
Apple, Microsoft and Google stock, megacap techs with modest price-to-earnings ratios, are healthy. But techs generally aren't providing much leadership.
Fertilizer and several shipping stocks still look strong, along with the energy sector.
REITs such as Equity Residential fared well Wednesday as Treasury yields retreated. But those gains could reverse quickly if yields move back up.
Credit card companies are rallying even as digital upstarts such as PYPL stock flounder. A number of machinery and industrial stocks are not far from setting up. So are some travel names.
Various medical stocks look interesting.
Time The Market With IBD's ETF Market Strategy
What To Do Now
Investors should be cautious about getting too heavily exposed. You could even take partial profits on recent buys — especially volatile rebound plays — to let the trade pay for itself in case of a reversal.
If the market rally continues to trend higher, there will plenty of chances to ramp up exposure as top stocks flash buy signals.
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.
