Dow Jones futures and S&P 500 futures edged lower early Friday, while Nasdaq futures fell slightly. Dow giants Intel, Visa and American Express were among the notable earnings reports overnight.
The stock market rally wavered again Thursday, but the key indexes all advanced.
The fourth-quarter GDP report showed surprisingly strong economic growth but with inflation remaining tame. But Tesla plunged, triggering several negative technical signals, but also spurring Cathie Wood's Ark Invest to add TSLA shares. Humana issued a major warning on medical costs, hitting health insurers broadly.
On the upside, Expedia, Adobe, Caterpillar and New Oriental Education flashed buy signals Thursday.
Still, investors should be cautious about new buys in the very short term.
EXPE stock joined the IBD Leaderboard watchlist on Thursday. Caterpillar was Thursday's IBD Stock Of The Day.
Dow Jones Futures Today
Dow Jones futures were just below fair value. Intel and Visa are Dow components, along with American Express. S&P 500 futures edged lower. Nasdaq 100 futures slid 0.3%.
The 10-year Treasury yield edged down to 4.12%.
Crude oil futures fell 1%.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Earnings
Intel, KLA Corp., Visa and Capital One, Fair Isaac and T-Mobile US reported Thursday night, with American Express out early Friday.
Intel and KLA both beat views, but both gave weak guidance. INTC stock dived, set to undercut its 50-day line. KLA is down modestly.
Capital One edged lower as earnings missed amid higher loss provisions and higher charge-offs. T-Mobile slipped as an EPS miss overshadowed subscriber growth. Visa stock retreated after topping views, but missed on payment volume and guided for higher expenses. FICO stock fell solidly on an earnings and revenue miss.
American Express just missed on earnings and revenue, but guided higher on 2024 EPS. AXP stock, in range from a 10-week line pullback, rose modestly before the open.
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Stock Market Rally
The stock market rally advanced on the GDP report and other data signaling a soft economic landing, shrugging off the Tesla and Humana sell-offs.
The Dow Jones Industrial Average rose 0.6% in Thursday's stock market trading, even with Boeing and UnitedHealth significant drags. The S&P 500 index climbed 0.5%, with Tesla and Humana the worst performers by far.
The Nasdaq advanced 0.2% after briefly turning negative.
Market breadth was clearly strong though. The small-cap Russell 2000 climbed 0.7%.
The Invesco S&P 500 Equal Weight ETF jumped 1%, doubling the S&P 500's performance. The First Trust Nasdaq 100 Equal Weighted Index ETF gained 0.4% vs. the Nasdaq 100's 0.1% uptick.
Still, recent Nasdaq gains have come on lighter volume. The Nasdaq has been getting slightly extended with earnings season in full force. That raises the risk of a pullback.
On the plus side, even just a few days of sideways action or a mild pullback would let key moving averages catch up.
U.S. crude oil prices jumped 3% to 77.36 a barrel, the highest since late November.
The 10-year Treasury yield fell 5 basis points to 4.13%, just below the 50-day line.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF rose 0.3%, with ADBE stock a big IGV holding. The VanEck Vectors Semiconductor ETF closed flat. Intel and LRCX stock are significant SMH components.
Reflecting more-speculative story stocks, ARK Innovation ETF fell 1% while ARK Genomics ETF climbed 0.9%. Tesla stock is a major holding across Ark Invest ETFs.
SPDR S&P Metals & Mining ETF declined 0.8%. U.S. Global Jets ETF ascended 3.1%. SPDR S&P Homebuilders ETF rebounded 2%. The Energy Select SPDR ETF gained 2.25%.The Health Care Select Sector SPDR Fund dipped 0.15%, with Humana and other health insurers weighing on this ETF.
The Industrial Select Sector SPDR Fund climbed nearly 1%. CAT stock is a big XLI stock. The Financial Select SPDR ETF added 0.5%.
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Stocks In Buy Zones
Expedia stock rose 2.5% to 152.30, rebounding from the 21-day and 10-week lines and at least testing a short trendline. EXPE stock is actionable now and is on track to have a flat base with a 155.84 buy point after Friday's close. Other travel stocks also are acting well generally.
Adobe stock popped 2.65% to 622.58, moving in heavy volume toward a 633.89 flat base buy point, according to MarketSmith analysis. On Thursday, ADBE stock extended a 50-day line bounce, clearing Monday's high of 620.96 and offering an early entry.
Caterpillar stock gained 3.5% to 300.77, back above a 293.88 consolidation buy point initially cleared in late December. CAT stock jumped on strong results from United Rentals, which gapped up nearly 13% on Thursday. Caterpillar earnings are due Feb. 5.
New Oriental Education stock jumped 6.5% to 81.05, adding to Wednesday's 5.8% gain on strong earnings and guidance. On Thursday, EDU stock closed above a trendline entry and a 78.19 short-term high, offering early entries. The Chinese for-profit education firm has an 83.73 consolidation buy point.
Tesla Stock
Tesla had already sold off in 2024, below all its moving averages heading in Q4 results Wednesday night. But the weak results and a "train wreck" earnings call triggered several more red flags for the Tesla stock chart.
Shares plunged 12.1% to 182.63, breaking below late October lows to hit their worst levels since May. Volume was the highest since last June. Finally, the relative strength line, which tracks a stock's performance vs. the S&P 500, dived to a one-year low.
Shares rose slightly early Friday.
Ark Invest's Ark Innovation ETF bought 148,246 Tesla shares on Thursday, while Ark Next Generation Internet ETF added 29,624 shares. The 177,870 Tesla shares that Cathie Wood bought were worth $32.48 million as of Thursday's close.
Cathie Wood's Ark often buys stocks when they've fallen sharply.
With no big potential positive catalysts until at least 2026, and Elon Musk even undercutting moonshot hopes such as in-house Dojo chips, the Tesla growth story is over for the foreseeable future — a year after Tesla earnings growth ended.
While TSLA stock is breaking lower, one reading remains high. Its price/earnings ratio is still a lofty 66.
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What To Do Now
The stock market rally could be due for a breather as investors hold their breath heading into peak earnings season next week.
After Taiwan Semiconductor and ASML raised expectations for earnings, Tesla, Humana and perhaps Intel showed the downside. Even ServiceNow, which had strong results and guidance, reversed slightly lower after running up over several months.
It's probably not a great time to add significant exposure. You could choose to make incremental buys, but know your exit strategies.
Consider taking partial profits on winners, depending on your time horizon. Be quick to cut losers. Doing this would reduce overall exposure slightly, a preemptive measure amid some technical headwinds and earnings uncertainty.
Still, a lot of stocks are setting up and they could offer buying opportunities in the coming days, including some names that may have fallen back since Monday morning.
That would be especially true if the market rally holds up over the big earnings crush. So keep your watchlists up to date.
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