Dow Jones futures rose early Friday, along with S&P 500 futures and especially Nasdaq futures. Microsoft (MSFT) jumped and Google parent Alphabet (GOOGL) rose in earnings, leading to another big night of quarterly results.
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The attempted stock market rally suffered sharp losses Thursday morning Metaplatforms (META) plummeted on guidance and a GDP report that showed slower-than-expected growth and high inflation. But the major indices have pared losses.
Nvidia (NVDA), Broadcom (AVGO) and other AI chip and hardware plays rebounded thanks to Meta’s hefty investment plans.
Meanwhile, a number of non-tech sectors and leading stocks made progress. Remarkable Chipotle Mexican Grill (CMG) broke out on the back of earnings results, while several other restaurant stocks made bullish moves.
The market rally attempt showed some resilience on Thursday, but has not yet proven anything. Investors need patience.
Microsoft and Google’s revenue, guidance and spending plans will have a huge impact on so many sectors.
Dexcom (DXCM) and West Digital (WDC) were among hundreds of other companies reporting Thursday evening.
Early Friday, ExxonMobil (XOM) and Dow giant Chevron (CVX) are on tap.
Investors will also get March results on Friday for the main PCE price index, the Fed’s favorite inflation report. That data may have less impact on the market, given Thursday’s first-quarter PCE data in the GDP report.
Nvidia stock is on the IBD Leaderboard. Microsoft stock is on the IBD Long-Term Leaders list. Google stock is on the IBD 50 and the IBD Big Cap 20. Chipotle was the IBD Stock of the Day on Thursday.
Dow Jones futures today
Dow Jones futures rose 0.2% versus fair value. S&P 500 futures rose 0.9%. Nasdaq 100 futures rose 1.2%. Microsoft is a Dow Jones, S&P 500, and Nasdaq component, while Google stock is an S&P 500 and Nasdaq giant.
The yield on ten-year government bonds fell to 4.7%.
Remember, overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading during the next regular stock market session.
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Attempted stock market rally
After a bounce Monday through Tuesday and a stagnation on Wednesday, the stock market’s attempted rally was sold off Thursday morning on Meta Platforms and the hot inflation numbers in the GDP report. The major indices rebounded well from early lows, but it was a down session.
The Dow Jones Industrial Average fell 1% during stock trading on Thursday IBM (IBM) and Caterpillar (CAT) plummets due to weak sales. The S&P 500 index fell 0.5%. The Nasdaq composite fell 0.6% after plunging 2.35% shortly after the open. The small-cap Russell 2000 lost 0.7%
Meta shares fell 10.6% to 441.38, although they did hit a low of 414.50. Nvidia stock rose 3.7% to 826.32, although it is still below the 50-day line. Shares of Broadcom rose 3% and hit resistance at the 50-day line. 50 days. Arista Networks (ANET), which counts Meta and Microsoft among its two largest customers, rose 3.85%.
A follow-up day could come at any time to confirm the new attempt at a market recovery. Microsoft and Google could provide that catalyst. But it is also possible that the market will go down and continue a longer correction.
US crude oil prices rose 0.9% to $83.57 per barrel.
The yield on ten-year government bonds rose by 5 basis points to 4.71%, the highest level since November 1. The yield on two-year government bonds, a good indicator of the Fed’s interest rate outlook, is back at the 5% level.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) fell 0.9%. Microsoft is a major IGV member. The VanEck Vectors Semiconductor ETF (SMH) gained 2%, with NVDA stock the largest component and Broadcom a major position.
SPDR S&P Metals & Mining ETF (XME) recovered 1.7%. SPDR S&P Homebuilders ETF (XHB) fell 0.2%. The Energy Select SPDR ETF (XLE) advanced 0.5%, with Exxon and Chevron accounting for 40% of the ETF’s shares. The Health Care Select Sector SPDR Fund (XLV) fell 0.6%, with Dexcom shares as a holding.
The Industrial Select Sector SPDR Fund (XLI) rose 0.3%. The Financial Select SPDR ETF (XLF) fell 0.5%.
Time the market with IBD’s ETF market strategy
Microsoft earnings
Microsoft’s earnings and revenue growth modestly exceeded expectations. Azure and other cloud services revenue grew 31%, exceeding views and up from 30% in the second quarter.
The Dow tech titan was optimistic about AI demand during the conference call. Microsoft predicts strong cloud growth in the future, although it was somewhat cautious on overall profit and revenue. It expects capital expenditures to increase ‘materially’ in the current fourth quarter.
Shares of Microsoft rose solidly in extended trading, signaling a return to the 50-day line. Shares fell 2.45% to 399.04 on Thursday after hitting a three-month low of 388.03 intraday.
Nvidia shares rose modestly overnight on continued spending from Big Tech, signaling a possible 50-day test. Arista, which Microsoft counts as a major customer along with Meta Platforms, also made progress.
Several software stocks retreated on Thursday Service now (NOW) recovered overnight on Microsoft.
Google revenue
Google revenue rose 61%, easily beating views. Google Cloud, YouTube advertising and online search advertising revenue growth all exceeded expectations.
Google announced its first-ever quarterly dividend of 20 cents per share, as well as a $70 billion buyback.
Google shares shot up more than 10% overnight. Shares fell to a low of 150.87 on Thursday morning and recovered to close down 2% at 138.01. GOOGL stock closed within the buy point range at 152.15 and 153.78.
Other incomes
Dexcom revenue beats views. The diabetes products giant raised full-year sales expectations, but it was a bit light at the midpoint. Shares fell after hours, signaling they were falling below a buy point. Dexcom shares rose 0.1% to 138.01 on Thursday, staying within a flat-base buy point range of 132.03. Shares have consolidated in recent weeks and have found 50-day line support.
Western Digital’s earnings beat expectations, but fourth-quarter sales expectations were a bit light. WDC shares fell modestly in overnight trading. Shares of the memory game fell 0.2% to 69.44 on Thursday, recovering from an intraday test of the 10-week line and an ascending base buy point of 65.92.
In the meantime, T-Mobile USA (TMUS), Intel (INTC), Snap (SNAP), Roku (ROKU), CLA (KLAC) and Atlassian (TEAM) were the many other earnings reports late Thursday.
Exxon, Chevron on tap
Exxon and Chevron’s results will be announced Friday morning. Exxon shares rose 0.3% to 121.36 on Thursday, just above a base buy point of 120.70. XOM stock has a three-week entry at 123.75, which could also serve as a high-handle buy point.
Shares of Chevron rose 1% to 165.27 on Thursday, clearing a 163.87 cup-with-handle buy point. It was the seventh straight increase for CVX shares, with the first seeing above-average volume on Thursday.
Chipotle Stock Leads Restaurant Rally
Chipotle’s earnings beat expectations, with growth accelerating for the second straight quarter. CMG shares rose 6.3% to 3,111.97, decisively passing the 3,023.98 buy point after a three-week squeeze.
Wing stop (WING) climbed 2% to 369.90, recovering from the 10-week line to near the top of a range dating back to early March. But the winnings must appear on May 1.
Cava group (CAVA) reversed higher, rising 3.6% to 62.59, reclaiming the 50-day line and a steep downtrend, offering an entry. The cava revenues are not expected for a few weeks.
What to do now
The market is in a correction. An attempted market rally has begun this week, but has yet to signal any real change in character.
Waiting doesn’t mean sitting on your hands. It’s important to be ready for the next market turn, whether it happens Friday, next week or months later.
Some energy, infrastructure, financial, medical and restaurant stocks continue to perform well. But most technicians need some or a lot of repair work.
So cast a wide net for your watchlists and stay engaged in the market. Look for stocks that are maintaining or regaining support and showing relative strength in a weak market.
Read The Big Picture every day to stay informed about market direction and the most important stocks and sectors.
Follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
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