Dow Jones futures edged lower Friday morning, while S&P 500 futures and Nasdaq futures rose modestly. Coinbase, Roku, DraftKings and Applied Materials are among big earnings movers overnight.
The stock market rally overcame weakness in megacap techs such as Nvidia and Google parent Alphabet. Small caps soared as market breadth was strong once again.
But with bullish sentiment high and the indexes slightly extended, investors should be careful about new buys.
Coinbase Global, DoorDash, Trade Desk, Roku, Applied Materials and DraftKings were part of a busy Thursday night of earnings. Coinbase, Roku and DraftKings are top holdings at Cathie Wood's Ark Invest.
Nvidia is on IBD Leaderboard, while DraftKings stock is on the Leaderboard watchlist. NVDA stock is on SwingTrader. Nvidia, DraftKings and DoorDash stock are on the IBD 50.
Dow Jones Futures Today
Dow Jones futures lost about 0.1% vs. fair value. S&P 500 futures rose 0.2%. Nasdaq 100 futures climbed 0.5%.
The 10-year Treasury yield rose a few basis points to 4.27%.
Crude oil fell nearly 1%.
The Labor Department will release the January producer price index at 8:30 a.m. ET.
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
Coinbase earnings and revenue easily beat. COIN stock jumped more than 10% in premarket trade. Shares advanced 3.3% to 165.67 on Thursday, helped by a JPMorgan upgrade and Bitcoin hitting fresh two-year highs. Coinbase has a 187.39 cup-base buy point.
Roku reported an in-line loss while revenue, several other key metrics and guidance were strong. But average revenue per user fell and the streaming media platform warned of a "challenging year" for media and entertainment spending. Shares plunged more than 15% in overnight action. Roku stock rose 3.6% to 94.50 on Thursday, moving back above the 50-day line. It has a 108.84 consolidation buy point.
DraftKings reported better-than-expected earnings while revenue fractionally missed. The online sports betting giant also said it will buy lottery jackpot app Jackpocket for $750 million. DKNG stock fell modestly early Friday, coming off overnight lows. Shares climbed 1.3% to 44.46 on Thursday, a fresh two-year high and greatly extended.
Applied Materials earnings beat with the chip-equipment maker guiding up amid AI tailwinds. AMAT stock soared more than 10% before Friday's open. Shares edged up 0.8% to 187.66 on Thursday, a fresh high but extended.
Trade Desk earnings were mixed, but guidance was strong. TTD stock surged over 15% in extended action. The online advertising platform popped added 1.9% to 75.71 on Thursday, closing back above the 200-day line and breaking a downtrend going back to the end of July.
DoorDash reported a much-wider-than expected loss, but adjusted EBITDA tripled and revenue beat. DASH stock fell sharply overnight. Shares leapt 5.2% to 126.27 on Thursday to a 22-month high.
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Stock Market Rally
The stock market rally had a broad-based advance Thursday.
Meta Platforms rose modestly and Tesla jumped Thursday, but those are the smallest of the Magnificent Seven stocks. The other five all retreated, with Google stock off 2.2% and Nvidia down 1.7%.
The Dow Jones Industrial Average climbed 0.9% in Thursday's stock market trading. The S&P 500 index advanced 0.6% to a new closing high. The Nasdaq composite rose 0.3%.
The Dow Jones and S&P 500 are now slightly higher for the week while the Nasdaq has slashed losses.
The small-cap Russell 2000 jumped 2.45% Thursday, nearly back to 52-week highs. It's now up 2.6% for the week despite Tuesday's 4% plunge.
Market breadth was impressive for a second session. The Invesco S&P 500 Equal Weight ETF rose 1.2%, outpacing the S&P 500 and hitting a fresh 22-month high, just two days after testing the 10-week line. The First Trust Nasdaq 100 Equal Weighted Index ETF gained 0.8%, a new record close and much better than the Nasdaq 100's 0.2% advance.
U.S. crude oil prices rose 1.8% to $78.03 a barrel, a three-month high.
The 10-year Treasury yield fell three basis points to 4.24%, pulling back modestly for a second straight day after Tuesday's spike.
The Nasdaq composite is 5.3% above its 50-day line, slightly extended. In the past several weeks, the Nasdaq being 6%-7% above its 50-day has been a trigger for a retreat, if only temporarily.
Various psychological indicators show bullishness at elevated levels, on the verge of being extreme.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF dipped 0.15%. The VanEck Vectors Semiconductor ETF fell 0.3%. Nvidia stock is the No. 1 holding in SMH, with AMAT a notable holding.
Reflecting more-speculative story stocks, ARK Innovation ETF rallied 2.3% and ARK Genomics ETF popped 3.2%. Coinbase is the No. 1 holding across Ark Invest's ETFs. Roku and DraftKings are also top-10 Cathie Wood holdings.
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What To Do Now
The market rally has shrugged off Tuesday's sell-off, but there aren't many stocks to buy outside of being earnings movers.
The Nasdaq is close to extended while many leading stocks are greatly stretched amid near-giddy bullish sentiment. Those are reasons to be cautious about new buys, while Nvidia earnings on Feb. 21 could have major market implications.
Is your portfolio too concentrated in certain sectors or themes such as AI? With many of those names, including Nvidia, up sharply in recent months, their weighting will naturally increase in your portfolio.
You could consider taking partial profits in such names. Or, depending on your exposure levels, you could look for new buys outside of tech. Such steps could reduce the risk of huge one-day losses in your account.
It still makes sense to be significantly or heavily invested. So keep working on watchlists, looking for buying opportunities.
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