Dow Jones futures tilted higher early Wednesday, along with S&P 500 futures and Nasdaq futures. Chip gear giant ASML reported early Wednesday, with Tesla and Netflix earnings due Wednesday night.
The stock market rally had a positive session, with the Dow rising to a 52-week high. Microsoft soared on news about its AI-powered Office tools and its AI alliance with Meta Platforms. META stock rose slightly, while AI chip leader Nvidia kept climbing. Financials continued to rally on bank earnings.
Less-than-truckload trucking firm ArcBest gapped out of a base. Drug giants Eli Lilly and Novartis flashed buy signals, as did Skechers and building materials firm Atkore.
Earnings
J.B. Hunt Transport Services, a full truckload firm, reported earnings late Tuesday. So did Interactive Brokers and advertising giant Omnicom Group.
JBHT stock rose modestly overnight even though J.B. Hunt earnings and revenue fell short. Shares rose 2.6% to 188.17 Tuesday. JBHT stock has a 200.64 consolidation buy point, but investors could use 188.53 as a stand-in handle entry.
IBKR stock declined solidly in extended trading after Interactive Brokers earnings and revenue missed. Shares climbed nearly 3% to 86.27 on Tuesday. The official buy point is 90.19, but investors can use a move above resistance around 87 as an entry.
OMC stock tumbled in overnight action after Omnicom earnings were in line and revenue slightly missed. Shares edged down 0.3% to 97.92 on Tuesday, holding in a buy zone from a 94.77 cup-with-handle buy point.
ASML, reporting early Wednesday, beat second-quarter earnings and revenue views. The Dutch chip-equipment maker guided up on Q3 revenue and raised its full-year sales target. Shares fell 1% in premarket trade. ASML edged up 0.3% to 757.03 on Tuesday, holding above a 747.13 flat-base buy point.
Carvana reported better-than-expected Q2 revenue and said it expects to achieve positive EBITDA in Q3. The used-car dealer, which late Tuesday moved up results from Aug. 3, also announced a deal to cut debt by $1.2 billion. CVNA stock spiked higher in volatile premarket trade. Carvana has skyrocketed in 2023, but remains heavily shorted.
Halliburton reported mixed results, while fellow oil services giant Baker Hughes slightly beat. Both stocks have been rebounding in recent weeks, but they fell modestly Wednesday. Goldman Sachs missed on EPS. Shares, which have been bouncing back, fell slightly.
Tesla stock and Netflix will be in focus Wednesday night.
ASML and TSLA stock are on IBD Leaderboard. Microsoft stock is on IBD Long-Term Leaders. ASML stock is on the IBD 50. Eli Lilly was Tuesday's IBD Stock Of The Day.
The video embedded in the article discusses Tuesday market action and analyzes Microsoft, Atkore and LLY stock.
Dow Jones Futures Today
Dow Jones futures rose 0.1% vs. fair value. S&P 500 futures edged higher and Nasdaq 100 futures climbed 0.2%.
The 10-year Treasury yield fell 5 basis points to 3.74%. The U.K. inflation rate fell to a still-hot 7.9% in June from May's 8.7%. Analysts had expected a milder drop to 8.2%. Core inflation cooled slightly to 6.9% from May's 31-year high of 7.1%.
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 continued apace.
The Dow Jones Industrial Average popped 1.1% in Tuesday's stock market trading, clearing 2023 highs to hit its best levels since April 2022. Microsoft fueled the Dow, along with beaten-down names such as Verizon Communications and GS stock. The S&P 500 index climbed 0.7%. The Nasdaq composite rose 0.8%, turning higher on the Microsoft AI news. The small-cap Russell 2000 jumped 1.3%.
Advancers led decliners decisively. But many stocks had modest gains, often coming well off intraday highs.
The Invesco S&P 500 Equal Weight ETF grew 0.6%.
The First Trust Nasdaq 100 Equal Weighted Index ETF climbed 0.5%.
More stocks flashed buy signals, while many others extended runs.
The Nasdaq is now 8.5% above its 50-day moving average, while the Nasdaq 100 is 9.1% above. Those are close to highly extended levels, making a market pullback increasingly likely. But the Nasdaq could get more extended before that happens.
U.S. crude oil prices rose 2.2% to $75.75 a barrel.
The 10-year Treasury yield fell 1 basis point to 3.79% but found support at its 50-day line.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF rose 1.25%, while the Innovator IBD Breakout Opportunities ETF climbed 1%. The iShares Expanded Tech-Software Sector ETF advanced 0.9%. Microsoft stock is a major IGV component. The VanEck Vectors Semiconductor ETF edged up 0.3%. Nvidia stock is SMH's top holding, with ASML also a notable member.
Reflecting stocks with more speculative stories, the ARK Innovation ETF climbed 0.4% and the ARK Genomics ETF was up 1.5%. Tesla stock is the No. 1 holding across ARK Invest's ETFs.
The SPDR S&P Metals & Mining ETF gained 1.6% and the Global X U.S. Infrastructure Development ETF tacked on 1.1%. The U.S. Global Jets ETF ascended 1.9%. SPDR S&P Homebuilders stepped up 0.7%. The Energy Select SPDR ETF rose 1%.
The Health Care Select Sector SPDR Fund advanced 0.7%. LLY stock is in XLV.
The Industrial Select Sector SPDR Fund climbed 0.6%
The Financial Select SPDR ETF gained 1.1%. The SPDR S&P Regional Banking ETF leapt 4.2%.
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Microsoft AI Prices
Microsoft 365 Copilot will cost $30 a month for enterprise customers, on top of their existing subscriptions, the Dow Jones tech giant said. Wedbush analyst Dan Ives said the pricing details are "very bullish."
Separately, Microsoft will use Meta's new AI large language model, Llama 2, via its Azure cloud-computing service. It's notable because Microsoft is pushing a big AI model not from OpenAI, which powers ChatGPT.
Microsoft stock popped 4% to 359.49, clearing a four-week consolidation to a fresh record high. Investors could have used 351.47 as an add-on buy point, but it seems stretched from moving averages now.
META stock edged up 0.5% to 312.05, right around record highs. While Meta won't directly make money on the Microsoft deal, it'll get Llama 2 before users and developers.
Meta's Llama 2 will also be available for download as well as from Amazon Web Services and more. The social media giant also is teaming with wireless chip giant Qualcomm on running AI models on phones.
NVDA stock climbed 2.2% to 474.94, a record close, on expectations that Nvidia chips will be powering the AI boom from Microsoft and others.
Microsoft earnings are due on July 24, with Meta the next day and Amazon.com the day after that.
Stocks In Buy Zones
ARCB stock leapt 4.8% to 100.59. Shares hit 104.56 intraday, topping a 101.49 handle buy point.
NVS stock popped 4.6% to 103.47, clearing a 103.15 double-bottom buy point. Novartis topped earnings views and raised full-year guidance, while also announcing a $15 billion share buyback.
LLY stock edged up 0.85% to 450.93, bouncing from the 50-day line for the first time since its last breakout in April. It's actionable, with 450 as a possible specific trigger, just above the 21-day line.
SKX stock stepped up 1.9% to 53.90. Shares briefly cleared a 54.77 flat-base buy point, according to MarketSmith analysis. Skechers stock still seems actionable from the 50-day line.
ATKR stock jumped 5% to 161.83, clearing a 147.45 alternate entry just above a base. Volume was above average. While still in range from that buy point, Atkore is well-extended from its 50-day line.
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Tesla Earnings
Tesla earnings are expected to edge up 4% vs. a year earlier to 80 cents a share, with revenue jumping 43% to $24.22 billion. The EV giant's Shanghai plant was shut down for several weeks in Q2 2022 due to Covid lockdowns. In Q1, Tesla earned 85 cents a share on $24.3 billion in revenue.
A weaker dollar in Q2 is a key driver of Tesla earnings, along with many other global companies.
Q2 deliveries easily topped views, amid ongoing discounts and incentives that likely put more pressure on gross margins. Tesla's gross profit margin was 19.3%, down from 23.8% in Q4 and 29.1% in Q1 2022.
But investors are bullish on TSLA stock. Shares have skyrocketed 138% in 2023. Tesla stock rose 1% to 293.34 on Tuesday, but after revving up 3.2% on Monday as the EV giant touted its first Austin, Texas-made Cybertruck.
Investors will be interested in when the Cybertruck will ramp up production and deliveries, as well as when an upgraded Model 3 will hit the streets.
Tesla stock is closing in on a 313.80 buy point from a very deep cup base, but a meaningful handle or pause would come in handy.
Netflix Earnings
Netflix subscribers likely grew by 1.8 million in the second quarter, after the streamer ended Q1 with 232.5 million paying customers worldwide. Analysts expect Netflix earnings to fall 12% vs. a year earlier, with revenue up 4% to $8.27 billion.
NFLX stock popped 5.5% to 474.80, the highest since January 2022. Shares are decisively clearing a messy, short-term consolidation.
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What To Do Now
Investors could still be taking advantage of buying opportunities. But there is a heightened risk of a market pullback. That may be no big deal for holdings with a decent cushion, but could bring new buys underwater.
Nontech growth stocks such as Eli Lilly, ArcBest or Atkore might be less at risk from any Nasdaq-led market pullback.
Earning season is ramping up. That means big moves for many stocks and perhaps the market rally.
Definitely build up your watchlists. A broad, strong market advance is creating a large number of stocks that are actionable or setting up.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
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