Dow Jones futures rose Thursday morning, along with S&P 500 futures and especially Nasdaq futures rising as Meta Platforms and ServiceNow headlined another flood of earnings, along with Eli Lilly and Mobileye.
The stock market rally closed mixed on Wednesday, as Microsoft surged 7% on earnings, also lifting cloud software and some AI plays. But elsewhere, the market was generally negative.
First Republic Bank continued to plunge Wednesday to new lows as the California bank and regulators aim to avoid a bank seizure, but with few good outcomes for FRC stock investors.
Facebook and Instagram parent Meta Platforms, ServiceNow, Align Technology, Meritage Homes and Impinj reported late Wednesday.
Meta shares jumped overnight. But NOW stock edged lower and Align Tech retreated solidly. PI stock plummeted. Meritage was not active.
Reporting early Thursday, Mobileye dived on results while Merck and Eli Lilly rose modestly. AbbVie and Crocs fell.
Mastercard also is due before the open.
Meta stock and Meritage Homes are on IBD Leaderboard. Mobileye and MTH stock are on the IBD 50. MBLY stock is also on the IBD Big Cap 20.
Dow Jones Futures Today
Dow Jones futures advanced 0.5% vs. fair value, with earnings from Merck, Caterpillar and Honeywell. S&P 500 futures climbed 0.65%. Nasdaq 100 futures jumped 1.1%.
The 10-year Treasury-yield rose 2 basis points to 3.45%.
The Commerce Department will release its initial estimate of first-quarter GDP at 8:30 a.m. Thursday. Economists expect to see a 2% annual gain. The report also will include Q1 inflation data that will give strong signals about Friday's PCE price gauge for March.
The Labor Department will release weekly jobless claims data at 8:30 a.m.
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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Meta Earnings
Meta earnings comfortably topped views, with revenue rising for the first time in four quarters. The social giant also guided higher on Q2 revenue.
Meta stock soared 12% in premarket trade. Shares rose 0.9% to 209.40 on Wednesday, as megacap techs rallied on Microsoft results. But Meta closed near session lows, below the 21-day line.
Other Key Earnings
ServiceNow earnings topped views with the business software giant also guiding higher on subscription revenue. NOW stock fell a fraction early Thursday. Shares climbed 2.7% to 454.03 on Wednesday, regaining the 50-day line but only recouping a portion of Tuesday's 6.5% tumble. ServiceNow stock has a 485.68 cup-with-handle buy point.
Meritage Homes earnings topped views. MTH stock is not yet active in extended action. Shares slid 2.5% to 121.85 on Wednesday, but still close to the April 20 all-time high of 130.68. Meritage stock has a 117.32 consolidation entry, with the 5% buy zone extending to 123.19.
Align earnings beat views with the Invisalign maker guiding up on Q2 revenue. ALGN stock tumbled 8% in extended action. Shares edged up 0.9% to 354.55 on Wednesday. Align stock is working on a 368.97 , according to MarketSmith.
Impinj earnings fell short while the tracking-chip maker also guided low for the current quarter. PI stock crashed more than 25% in overnight trade. Shares fell 0.5% to 135.32. Impinj stock has been working on a consolidation with a 145 buy point.
Early Thursday, Mobileye earnings topped views but the driver-assistance systems maker cut its outlook, citing weaker China EV sales. MBLY stock plunged more than 10% from near a buy point.
Merck earnings topped views. MRK stock climbed modestly in premarket trade. Shares retreated below a buy point Wednesday.
Eli Lilly missed on earnings but topped on sales. On Thursday, it released phase 3 trial data showing that patients with Type 2 diabetes on average lost 15.7% of their body weight over 72 weeks taking Mounjaro. Lilly said it will soon finalize its application for FDA approval to sell its diabetes drug Mounjaro as a weight-loss treatment, widely prescribed off-label for such purpose already.
LLY stock rose modestly after pulling back Wednesday to around a 375.35 buy point.
Crocs earnings topped forecasts but the specialty footwear maker lower guidance. Shares fell modestly. CROX stock closed Wednesday technically in buy range, but extended from an early entry and the 50-day line.
AbbVie earnings missed while sales were in line. ABBV stock retreated solidly early Thursday after falling below a buy point Wednesday.
Mastercard earnings modestly beat. MA stock fell a fraction in premarket trade. On Wednesday, Mastercard stock retreated below an official entry.
Stock Market Rally
The stock market rally started off higher, fueled by Microsoft, but weakened throughout the session, closing mixed amid negative breadth.
The Dow Jones Industrial Average fell 0.7% in Wednesday's stock market trading. The S&P 500 index declined 0.4%. The Nasdaq composite closed up 0.5%. The small-cap Russell 2000 sank 0.9%.
U.S. crude oil prices skidded 3.6% to $74.30 a barrel, a four-week low.
The 10-year Treasury yield rose 3 basis points to 3.43%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF fell 0.75%. The iShares Expanded Tech-Software Sector ETF climbed 0.3%, with Microsoft stock and NOW big IGV holdings. The VanEck Vectors Semiconductor ETF rose 0.7%.
Reflecting more-speculative story stocks, ARK Innovation ETF sank 1.9% and ARK Genomics ETF 1.4%.
SPDR S&P Metals & Mining ETF retreated 1.1% and the Global X U.S. Infrastructure Development ETF 1.6%. U.S. Global Jets ETF descended 1%. SPDR S&P Homebuilders ETF gave up 1.4%. The Energy Select SPDR ETF slid 1.3% and the Health Care Select Sector SPDR Fund declined 1.4%. LLY stock, Merck and AbbVie are all significant XLV holdings. ALGN stock also is in XLV.
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First Republic, Other Bank Stocks Hit
FRC stock tumbled 30% Wednesday to 5.63, hitting fresh all-time lows after crashing 49% Tuesday as First Republic Bank disclosed massive deposit flight in Q1. The California-based bank was looking for banking giants to buy many of its assets at above-market prices.
The pitch? Buy these assets at above-market prices, effectively absorbing some losses, to avoid FDIC taking control of First Republic and ultimately charging big banks a higher bill to offset the cost. It's possible that any asset sales — or outright First Republic sale — would need some sort of government guarantees or incentives.
If an asset sale takes place, First Republic might then issue more shares at depressed prices.
Financial regulators have hinted that they could soon lower their assessment of the bank's health, cutting its access to federal backstops.
The FDIC may be wary of protecting all First Republic deposits because that includes the $30 billion injected by JPMorgan Chase and other giants last month. But not doing so in the event of a First Republic collapse would likely trigger a widespread bank deposit run.
Meanwhile, PacWest Bancorp jumped 7.5% Wednesday after disclosing that deposits have stabilized and even risen slightly in the past few weeks.
Notably, regional banks overall nudged higher Wednesday while banking giants retreated.
The SPDR S&P Regional Banking ETF rose 0.6% after tumbling Tuesday to the lowest level since late 2020. FRC stock and PacWest are KRE components.
The Financial Select SPDR ETF, dominated by financial giants, sank 0.95%, off for a fifth straight session. JPM stock, which is not far from highs, fell 1.8% to 135.23 on Wednesday, testing its 50-day line.
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Market Rally Analysis
The stock market rally went to "uptrend under pressure" on Tuesday, and Wednesday's action didn't really change that.
The Nasdaq composite, fueled by Microsoft, rebounded from its 50-day line but hit resistance at the 21-day. On Tuesday, the Nasdaq tumbled 2%, closing below the low of its March 29 follow-through day. That's a bearish sign for the market rally.
The S&P 500, after quickly hitting 21-day line resistance, fell modestly, nearing the 50-day line. The Dow Jones fell through the 21-day line, also close to the 50-day.
The Russell 2000 is below all its moving averages and not that far from six-month lows.
Microsoft wasn't the only stock rallying Wednesday, though it felt like it. Amazon.com and several cloud software names got a lift from Microsoft's results and comments, along with chip-giant Nvidia and networking leader Arista Networks. META stock and ServiceNow also got modest bounces.
Still, market breadth was weak, with losers outpacing winners once again.
On Tuesday, the Nasdaq advance/decline line undercut recent lows. The NYSE advance/decline looks better, but also has weakened over the past couple of weeks.
The First Trust Nasdaq-100 Equal Weighted Index ETF fell 0.75% after tumbling below its 50-day line on Tuesday. The Invesco S&P 500 Equal Weight ETF gave up 1%, decisively below the 200-day line after closing just below that key level Tuesday.
Drugmakers such as Merck and Eli Lilly retreated Wednesday. The defensive growth field had been strong, but money flowed Wednesday into Microsoft and cloud-related names. Is that a one-day blip or something more?
Chipmakers bounced, but generally retook just a fraction of losses on Tuesday and recent days.
Homebuilders and footwear, including Meritage and CROX stock, still look strong.
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What To Do Now
With the market rally under pressure, breadth weak and sector rotation continuing, it's hard to get excited about a mixed, Microsoft-led bounce. Not many stocks flashed buy signals Wednesday in any case.
Investors should have modest exposure, cutting back on many recent buys.
Yes, if earnings season goes well over the next few days, banking fears subside and the market reacts well to the Fed meeting next week, the market rally could revive and buying opportunities flourish. But investors have to be prepared for other scenarios, such as further weakness or volatile market action.
Keep your watchlists up to date, but also have your exit strategies ready. Stay engaged and flexible amid a struggling rally and a massive news cycle.
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