Dow Jones futures fell modestly Thursday morning, while S&P 500 futures and Nasdaq futures rose slightly. Shopify, Cisco, Crocs and Roku stock headlined earnings overnight, with another big batch of economic data due before the open.
The Nasdaq led a positive session Wednesday for the market rally, despite booming retail sales and other better-than-expected economic data.
More stocks broke out, with earnings gap-ups for Airbnb and Martin Marietta Materials. First Solar made a bullish move from its 50-day line.
Shopify, Albemarle, Synopsys, Roku, Cisco Systems, Allison Transmission and Fastly were big earnings reports late Wednesday. Crocs, Datadog and Toast report early Thursday.
Dow Jones Futures Today
Dow Jones futures declined 0.3% vs. fair value. S&P 500 futures fell 0.4%. Nasdaq 100 futures lost 0.5%. CSCO stock is a Dow Jones, S&P 500 and Nasdaq 100 component.
The 10-year Treasury yield fell 1 basis point to 3.8%.
Copper prices rose 1.5%, rebounding from Wednesday. At 8:30 a.m. ET, investors will get the January producer price index and housing starts reports, the February Philly Fed manufacturing index and the latest jobless claims data.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Key Earnings
SHOP stock plunged in overnight trading. Shopify reported a surprise profit but its revenue guidance was weak. Shopify stock rallied 6.55% in Wednesday's session, extended from a bottoming base.
ALB stock rose modestly in premarket trading as Albemarle earnings and revenue slightly topped raised views, while it guided higher on 2023 revenue. The lithium giant preannounced strong Q4 results in late January and gave bullish guidance. EPS surged 753% and revenue 193%, the fourth straight quarter of accelerating growth for both.
ALB stock edged up 0.8% to 272.79 on Wednesday following mixed Livent earnings. Albemarle stock has a 292.08 cup-with-handle buy point, according to MarketSmith analysis, but might offer an early entry Thursday.
Roku stock soared in extended action after its Q4 loss and revenue slightly beat views. The streaming media platform added more users than expected as well. Roku also guided higher for Q1 revenue and sees a return to positive adjusted EBITDA in 2024. Roku stock already jumped 12% to 63.49 on Wednesday. Shares are up 66% from their late December low. Roku stock is still below its 200-day line, but could test that key level Thursday.
SNPS stock retreated modestly overnight, signaling a move back below a buy point. Synopsys earnings beat Q1 views while revenue was in line. But the chip design software firm guided lower on Q2 EPS. Shares rose 0.9% on Wednesday to 379.48, still in range from a 364.09 double-bottom base buy point. Synopsys stock broke out Tuesday following strong results from rival Cadence Design Systems. CDNS stock rose 1.6%, extending Tuesday's earnings breakout, still in a buy zone.
CSCO stock rose solidly Thursday morning, close to possible entries. Cisco earnings topped fiscal Q2 views. The Dow Jones giant guided comfortably higher for fiscal Q3 and 2023. Cisco stock climbed 1.6% to 48.45 on Wednesday, retaking the 50-day line. Shares are working on a 50.81 buy point from a flat base, with an early entry above 49.56.
ALSN stock rose solidly after Allison Transmission earnings and revenue easily beat views. Shares edged up 0.1% to 45.58, continuing to trade just above a 45.43 cup-base buy point.
FSLY stock edged lower before the open. The edge networking platform reported a smaller-than-expected loss and topped revenue targets. Fastly stock climbed 3.3% on Wednesday, up 41% so far this week.
CROX rose solidly early Thursday on strong earnings and guidance. Crocs stock has been rebounding from a first 50-day line test since an early November breakout.
DDOG stock tumbled despite Datadog earnings topping views. The app monitoring software maker guided low on Q1 and 2023. Datadog stock had been on the cusp of retaking its 200-day line for the first time since last March.
TOST stock plunged on a wider-than-expected loss, though revenue beat. Toast stock had been modestly extended from a bottoming base.
SNPS stock is on the IBD Long-Term Leaders list, along with Cadence Design. Crocs and TOST stock are on the IBD 50.
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Stock Market Rally
Retail sales soared in January, far above views. Industrial production was flat, below views, but manufacturing output beat. Meanwhile, the New York Fed's Empire State manufacturing index showed a much smaller decline in February, beating expectations.
The Dow Jones Industrial Average edged up 0.1% in Wednesday's stock market trading, turning positive shortly before the close. The S&P 500 index climbed 0.3%. The Nasdaq composite advanced 0.9%. The small-cap Russell 2000 popped 1.05%.
The 10-year Treasury yield rose 5 basis points to 3.81%, a 2023 high. But short-term rates, more closely tied to the Fed, didn't move much. Investors still expect quarter-point Fed rate hikes at the March and May meetings. Markets are leaning toward a third hike in June or July, but the odds dipped slightly Wednesday.
The U.S. dollar popped to its highest level since Jan. 6.
U.S. crude oil prices sank 0.6% to $78.59 a barrel, off intraday lows. U.S. crude inventories jumped, while the stronger dollar also weighed on commodities. Copper futures sank 1.4%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF edged up 0.2%. The iShares Expanded Tech-Software Sector ETF rose 1.1%. The VanEck Vectors Semiconductor ETF was flat.
SPDR S&P Metals & Mining ETF dipped 0.1% and the Global X U.S. Infrastructure Development ETF gained 1.1%. U.S. Global Jets ETF ascended 0.3%. SPDR S&P Homebuilders ETF stepped up 0.6%. The Energy Select SPDR ETF slumped 1.7% and the Financial Select SPDR ETF inched up 0.1%. The Health Care Select Sector SPDR Fund sank 0.5%
Reflecting more-speculative story stocks, ARK Innovation ETF jumped 5.9% and ARK Genomics ETF 2.2%. Roku stock is a big holding cross Ark Invest's ETFs.
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Market Rally Analysis
The stock market rally continues to advance amid mixed economic data and earnings.
Despite hot economic data, the Nasdaq rose for a third straight session, back above the 12,000 level. The S&P 500 is edging higher while the Dow Jones and Russell 2000 rebounded from their 21-day lines once again.
Treasury yields have risen sharply since early February, acting as a modest headwind to the stock market rally but not the gale force they were last year. Unlike in 2022, when they rose primarily on inflation and Fed fears, yields are climbing now on easing recession fears. While Wall Street would like to see Fed rate hikes end, it doesn't want to see the economy go under either.
Rising yields are usually bad news for growth stocks, because future earnings are discounted at a higher rate. So it's notable that growth, especially speculative growth, continues to lead the market rally, including Roku stock and Fastly.
It's also notable that stocks generally are holding up despite the rebounding dollar. It's no coincidence that the market rally had its follow-through day on Jan. 6, when the dollar and Treasury yields sold off hard, and hit a high-water mark on Feb. 2, right as the 10-year yield and dollar were bottoming.
Energy and mining stocks did have a down day, as crude oil and metals prices fell in part on the stronger greenback. But a positive day or two for the underlying goods would make these areas intriguing again.
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What To Do Now
The stock market rally continues to offer reasons and opportunities to add exposure. Do so gradually, especially with the major indexes trading mixed within their recent range.
Breakouts and buying opportunities are generally working, but not always. So be ready to cut your losses quickly. Don't buy extended and do diversify your holdings.
While some leading stocks are flashing buy signals, many others are setting up amid the market rally's pause. So keep updating your 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.
