Dow Jones futures rose slightly early Friday, along with S&P 500 futures and Nasdaq futures. Adobe headlined earnings late Thursday.
The stock market rally retreated as another hot inflation report sent Treasury yields sharply higher. The major indexes suffered modest losses, largely due to Microsoft, Apple, Google parent Alphabet and Amazon.com.
Fellow Magnificent Seven plays Nvidia and Tesla were notable losers but their charts look quite different.
Market breadth overall was weak, with small caps hammered.
Microsoft stock flashed a buy signal Thursday. So did Google stock, with some caveats. Meanwhile, Arista Networks, Ares Management and HubSpot are close to forging new bases, with HUBS arguably offering an early entry.
Adobe and Ulta Beauty reported Thursday night, with Jabil and highflier GigaGloud Technology reporting early Friday.
Nvidia stock is on IBD Leaderboard. Microsoft stock is on the IBD Long-Term Leaders list. GigaCloud stock, Nvidia, Arista Networks, Microsoft, HubSpot and Ares are on the IBD 50. Nvidia and Arista stock are on the IBD Big Cap 20. Ares was Thursday's IBD Stock Of The Day.
Dow Jones Futures Today
Dow Jones futures rose 0.15% vs. fair value. S&P 500 futures climbed 0.1%. Nasdaq 100 futures edged higher, even with ADBE stock weighing on techs.
The 10-year Treasury yield dipped to 4.27%.
Bitcoin fell solidly down to below $68,000.
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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Earnings
Adobe earnings slightly beat views but the software giant guided just below consensus for current-quarter revenue. ADBE stock sold off overnight, even as Adobe announced a $25 billion buyback.
Shares dipped 0.5% to 570.45 Thursday. Adobe stock plunged in mid-February on fears that OpenAI text-to-video tools will be a competitive threat. Shares found support at the 200-day line but have hit resistance at the 50-day.
Ulta Beauty earnings topped views, but the beauty retail chain guided slightly lower on 2024 EPS. ULTA stock fell solidly in premarket trade. Shares edged down 0.3% to 565.44 on Thursday after hitting a record high intraday. Shares are extended.
Jabil stock plunged early Friday on mixed results and weak guidance. Shares edged u 0.8% to 147.55 on Thursday, pulling back from last week's record high and modestly above a prior buy point.
GigaCloud earnings easily beat Q4 views. GCT rose sharply before the open. Shares retreated 7.7% to 34.99 on Thursday, holding above the 21-day line. That has generally acted as support during a massive run since the Q3 earnings report.
Stock Market Rally
The stock market rally lost ground Thursday as a stronger-than-expected producer price index pushed up Treasury yields and continued to chip away after Fed rate-cut expectations.
The Dow Jones Industrial Average fell 0.35% in Thursday's stock market trading. The S&P 500 index and Nasdaq composite slipped 0.3%. The Dow and S&P 500 are above their 10-day moving averages, with the Nasdaq above its 21-day line.
But a lot of that reflected Microsoft and some other megacaps pushing higher.
MSFT stock, easily the world's most valuable company at $3.16 trillion, rose 2.4%. Apple stock ($2.67 trillion), also a Dow Jones, S&P 500 and Nasdaq component, climbed 1.1%. Amazon stock ($1.86 trillion) and Google ($1.78 trillion), advanced 1.2% and 2.4%, respectively.
Market breadth was anemic Thursday, with losers decisively besting winners.
The small-cap Russell 2000 tumbled 2%, cutting below the 21-day moving average and now clearly below the late December highs.
The Invesco S&P 500 Equal Weight ETF sank 0.9%. The First Trust Nasdaq 100 Equal Weighted Index ETF retreated 0.7%, below its 21-day line.
The market rally overall has been pausing for a few days. An extended market pause or modest pullback could be healthy, letting the rally's big winners forge new buying opportunities or even bases. A Nasdaq pullback to the 50-day line would give more room for the next push higher. A market pause also might ease bullish sentiment, which has reached excessive levels.
The market may continue to quickly bounce back — until it doesn't.
U.S. crude oil prices climbed 1.9% to $81.26 a barrel, the highest close since early November.
The 10-year Treasury yield surged nearly 11 basis points to 4.3%, up 21 basis points so far this week and nearing the 2024 high of 4.35%.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF edged down 0.5%. MSFT stock and Adobe are huge IGV holdings, with HubSpot also in the ETF. The VanEck Vectors Semiconductor ETF slumped 1.8%, with Nvidia stock the dominant holding.
Reflecting more-speculative story stocks, ARK Innovation ETF skidded 3.2% and ARK Genomics ETF 3.8%. Tesla stock is still a major holding across Ark Invest's ETFs. Cathie Wood bought roughly 217,000 TSLA shares Thursday.
SPDR S&P Metals & Mining ETF retreated 1.9% and the Global X U.S. Infrastructure Development ETF fell 0.7%. U.S. Global Jets ETF descended 0.8%. SPDR S&P Homebuilders ETF stepped down 1.85%.
The Energy Select SPDR ETF rose 1% and the Health Care Select Sector SPDR Fund slipped 0.35%. The Industrial Select Sector SPDR Fund gave up 0.4%.
The Financial Select SPDR ETF declined 0.8%. The SPDR S&P Regional Banking ETF slumped 2.6%, with a number of regional banks falling below recent buy points.
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Stocks Near Buy Points
Microsoft stock popped 2.4% to 425.22, hitting a record high in above-average volume. Shares cleared a short consolidation that would have become a flat base after Friday. Investors could still use 420.82 as a legitimate buy point. Shares have rebounded this week from the 10-week line. The relative strength line, after gradually lagging in the past few months, is back near record highs.
On Thursday, Microsoft said Copilot for Security, a generative AI cybersecurity tool, will launch April 1. The Dow tech giant will hold its "New Era Of Work" event on March 21, showcasing AI features and more.
Google stock climbed 2.4% to 143.10, moving above the 50-day moving average. That offered an early entry. GOOGL stock has an official 153.78 consolidation buy point, according to MarketSurge analysis. However, the RS line has lagged considerably from late January or even October, amid fears that OpenAI will threaten Google's search dominance.
Arista stock rose 1.2% to 284.02, continuing this week's bounce from the 50-day and 10-week lines. Shares are on track to have a flat base at the end of the week with a 292.66 buy point.
Ares stock edged down 0.75% to 132.78 on Thursday, continuing to find support at the 21-day line. After a prior breakout, the investment manager has been consolidating tightly since early February. It's due to have a flat base with a 139.48 buy point after Friday. Investors might use a downward-sloping trendline for an early entry.
HubSpot stock edged up 0.8% to 630.01. Shares are up 4.2% this week, bouncing from the 10-week line. HUBS stock is just above a downward-sloping trendline, offering an early entry. Investors might choose to use Thursday's 637.77 high as an aggressive buy. After Friday, the marketing software maker is on track to forge a flat base, base-on-base formation with a 660 buy point.
Tesla And Nvidia Stock
Tesla stock fell 4.1% to 162.47 in Thursday's trading, while Nvidia slumped 3.2% to 879.44.
But Tesla is breaking down, tumbling to a 10-month low. Shares are down 34.6% in 2024, the worst performer on the S&P 500.
Nvidia stock is still holding its 10-day line, where it's generally found support in 2024. Shares are still trading inside Tuesday's big gain. NVDA stock is the top performer in the S&P 500 this year, up 77.6%, after leading the way in 2023.
But while Nvidia is still holding up, a lot of other chip names are slashing or erasing recent gains, including Advanced Micro Devices. It's an example of why investors should look for the true leaders vs. also-rans. Further, if Nvidia does have a significant correction, the fallout for chips could be severe.
Nvidia holds its annual GTC conference next week, with its latest AI and chip advances taking center stage.
Tesla Breaking Down As BYD Rebounds Amid Aggressive Expansion
Market Rally Analysis
The stock market rally is pausing right now. When the major indexes are moving sideways, some stocks will flash buy signals but often will soon pull back, testing or undercutting the entries.
It may be a time for investors to pause as well, holding significant exposure but with cash on hand.
Cut losses quickly and consider taking some profits. The major indexes had modest declines, but a number of leading techs were down 3%-5%. Consider what would happen if the Nasdaq were to drop to the 50-day moving average or worse.
If the market moves higher again, especially after a longer pause, a number of leading stocks will offer buying opportunities.
The key is to stay engaged and be prepared. Have your watchlists up to date — and your exit strategies.
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