Dow Jones futures rose Wednesday morning, along with S&P 500 futures and especially Nasdaq futures. Credit Netflix, ASML, Chinese stimulus and lower Treasury yields. Tesla and ServiceNow earnings are on tap.
The stock market rally was narrowly mixed Tuesday while Treasury yields continued to climb.
In addition to Netflix and chip-gear giant ASML, big earnings movers overnight included Stride, Intuitive Surgical, Texas Instruments and Steel Dynamics.
In other news, German software giant SAP plans to cut 8,000 jobs in a major restructuring to focus on artificial intelligence. SAP, which also announced strong growth in its cloud-order backlog, jumped early Wednesday, signaling a possible record high.
Tesla and ServiceNow headline big earnings Wednesday night.
ServiceNow stock is on IBD Leaderboard. NOW stock is on the IBD 50. ASML stock and ServiceNow are on the IBD Big Cap 20.
Dow Jones Futures Today
Dow Jones futures were 0.4% above fair value. S&P 500 futures climbed 0.6% and Nasdaq 100 futures rose 0.9%. NFLX stock and Intuitive Surgical are both S&P 500 and Nasdaq 100 components, with ASML in the Nasdaq 100.
The 10-year Treasury yield dipped to 4.11%.
Crude oil futures edged higher.
China will cut bank reserve requirements in early February, People's Bank of China Gov. Pan Gongsheng said, to encourage more lending and boost a flagging economy. It's the latest move or report that Chinese authorities are aiming to buoy Chinese stock markets. Hong Kong's Hang Seng index leapt 3.6% after Tuesday's 2.6% jump.
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 closed mixed in a quiet session, with the major indexes right at record or multiyear highs.
The Dow Jones Industrial Average fell 0.25% in Tuesday's stock market trading, with several Dow giants moving on earnings. The S&P 500 index rose 0.3% and the Nasdaq composite 0.4%, both closing near intraday highs.
Advancers edged out decliners after decliners edged out advancers after winners dominated for two sessions. Still, the overall trend one of lackluster breadth so far in 2024.
The small-cap Russell 2000 fell 0.4%, but held the bulk of its three-day advance and closed above the 21-day line.
Homebuilders and some construction and materials firms were big losers as D.R. Horton reported weaker-than-expected earnings and orders. Rising Treasury yields also are weighing on the sector.
Some stocks that flashed buy signals Monday morning and pared gains fell back on Tuesday, including Affirm Holdings. But some held up, including UiPath.
The 10-year Treasury yield climbed five basis points to 4.14%, right up to the 50-day line.
U.S. crude oil prices fell 0.5% to $74.37 a barrel.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF climbed 0.2%. NOW stock is a key IGV component. The VanEck Vectors Semiconductor ETF advanced 0.5%. ASML stock is notable SMH holding, along with Lam Research and Taiwan Semi.
Reflecting more-speculative story stocks, ARK Innovation ETF edged up 0.1% and ARK Genomics ETF rose 0.5%. Tesla stock remains a major holding across Ark Invest's ETFs.
SPDR S&P Metals & Mining ETF popped 1.1%. U.S. Global Jets ETF ascended 2.3%. SPDR S&P Homebuilders ETF tumbled 3.1%. The Energy Select SPDR ETF rose 0.2% and the Health Care Select Sector SPDR Fund dipped 0.1%
The Industrial Select Sector SPDR Fund gained 0.2%. The Financial Select SPDR ETF lost 0.1%.
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Netflix Earnings
NFLX stock jumped 10% early Wednesday as investors ignored Netflix earnings falling short. That's because Netflix subscribers grew by 13.1 million in the fourth quarter, far above views, as the new ad-tier and password crackdowns pay off.
Shares climbed 1.3% in Tuesday's session to 492.19, rising within range of a 482.70 handle buy point.
Early Tuesday, Netflix and TKO Group said that the streaming platform will carry the WWE's flagship program Raw starting next year.
Other Earnings
ISRG stock leapt in premarket trade as Intuitive Surgical earnings beat recently raised guidance. Intuitive Surgical stock fell 1.2% to 371.41. The robotic surgical systems leader reported strong preliminary revenue and procedures growth earlier this month. Shares had surged on the preliminary figures.
LRN stock rose solidly early Wednesday after Stride earnings and revenue topped fiscal Q2 views. The K-12 online education firm closed flat at 62.09 on Tuesday. Stride stock is set to clear a 62.56 flat-base buy point on Wednesday
TXN stock fell modestly in premarket trade. Texas Instruments earnings slightly beat while revenue just missed, with weak guidance for the current quarter. Shares edged down 0.3% on Tuesday to 174.34. Texas Instruments is in range of a 172.31 cup-with-handle buy point, but the relative strength line has been lagging for some time.
STLD stock fell modestly in overnight action with Steel Dynamics earnings in line while revenue edged past views. STLD stock edged up 0.6% to 116.14 on Tuesday, moving off the 50-day line and testing a downtrend within a new flat base. The official buy point is 128.57, according to MarketSmith analysis.
ASML earnings came in better than expected for the fourth quarter early Wednesday, with orders tripling. Shares of the Dutch chip-equipment giant popped before the open, signaling a move out of buy range. ASML stock rose 1.5% on Tuesday to 778.39, a two-year high. ASML stock has a 765.79 cup-with-handle buy point. Chip-equipment makers surged late last week following the bullish guidance at Taiwan Semiconductor
Lam Research reports Wednesday night with KLA Corp. due Thursday night. Both are stretched from the 50-day line.
Tesla Earnings
Tesla earnings are due Wednesday night. Analysts expect EPS to plunge 39% with revenue up some 5% to $25.62 billion. The focus will be on the 2024 outlook for gross margins and deliveries, especially with hefty price cuts and incentives continuing early in 2024.
Tesla stock edged up 0.2% to 209.14 on Tuesday. But shares have fallen for several weeks. The RS line has tumbled to an eight-month low, reflecting TSLA stock's deterioration vs. the S&P 500.
Tesla has told suppliers that it wants to start production of a next-generation, small electric vehicle in mid-2025, according to new Reuters report. The EV giant has a history of pushing back the start of new models.
Tesla stock rose slightly early Wednesday.
ServiceNow Earnings
While Tesla results will get the most attention Wednesday night, ServiceNow earnings and guidance may be the most important as the first big software maker to report for the quarter.
ServiceNow stock also is a leader in the market rally. NOW stock nudged 0.1% higher to 753.42 on Tuesday. Shares are up 23% from an early November breakout.
NOW stock climbed slightly before the open.
What To Do Now
The stock market rally is still acting well.
Investors should be significantly invested. It may be a good time to let your positions work. A number of winners are stretched while some recent buys have pulled back, so new opportunities aren't flush at the moment.
Earnings season ramping up to full force is another reason to be cautious. While there have been some big earnings winners, there have been notable losers as well. Definitely be aware of earnings that can affect your portfolio. Follow your rules on holding or selling stocks into earnings.
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