Dow Jones futures fell slightly overnight, while S&P 500 futures and especially Nasdaq futures lost more ground. Microsoft (MSFT) and Google parent Alphabet (GOOGL) marks a night full of earnings.
The stock market rally had another strong session as Treasury yields and the dollar retreated. But the S&P 500 and the Nasdaq are coming to a key resistance level. Investors should take part in the confirmed uptrend, but not rush.
Intel (INTC) is adjusted to price the IPO. furniture (MBLY) Driverless car unit on Tuesday. excitement (TWTR) has approached the takeover price on recent signals. tesla (TSLA) CEO Elon Musk will close the deal by Friday.
Microsoft and Google kicked off their megacap tech earnings Tuesday night. Enphase Energy (ENPH) and Chipotle Mexican Grill (CMG) also reported.
Microsoft beat earnings and revenue, but MSFT stock fell sharply overnight amid disappointing cloud revenue and poor guidance. Google stock fell after missing views. Enphase assembled with strong results. CMG stock initially rose, but then fell modestly.
Microsoft and Google shares are on the IBD Long-Term Leaders list. ENPH stock is in IBD Big Cap 20.
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Stock investors that Tesla CEO Elon Musk plans to take over Twitter received paperwork today, the latest sign that Musk will close the $44 billion deal by Friday, CNBC reported on Tuesday.
Bloomberg reports that Musk told banks on Friday that he plans to shut down the Twitter takeover. Twitter stock added to its intraday gains and rose 2.6% to $52.84, closer to the deal price of $54.20. Tesla stock briefly trimmed its gains Tuesday afternoon, but finished up 5.3% at 222.41.
Concerns that Musk would need to sell more shares to pay off the Twitter deal weighed on TSLA stock.
The video attached to this article discusses Tuesday’s market rally and analysis shock wave medical (SWAV), Perfect Energy (EE) and Dollar General (DG).
Dow Jones Futures Today
Dow Jones futures fell 0.3% to fair value. S&P 500 futures fell 1.1 percent. Nasdaq 100 futures fell 2.2 percent. Microsoft stock is a Dow Jones, S&P 500 and Nasdaq giant. Google stock and Enphase are components of the S&P 500 and Nasdaq.
Note that an overnight move in Dow futures and elsewhere does not necessarily translate into real trading in the next regular stock market session.
Join the IBD experts as they analyze stock rally tradable stocks on IBD Live
The stock market rally continued on Tuesday, with technologies and small-cap companies leading the strong session.
The Dow Jones Industrial Average rose 1.1% in Tuesday’s stock market trading. The S&P 500 index rose 1.6 percent. The Nasdaq composite rose 2.25%. The small-cap Russell 2000 was up 2.7%.
The 10-year Treasury yield fell 13 basis points to 4.11%. Falling Treasury yields also put pressure on the US dollar. Still, the two-year Treasury yield, which is more closely tied to Fed policy, fell just 3 basis points to 4.47%.
US crude oil prices rose 0.9% to $85.32 per barrel. Natural gas futures continued their recovery after falling 23% last week, jumping 8%.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) was up 0.55%. The iShares Extended Technology-Software Industry ETF (IGV) rose 2.5%. MSFT stock is a large IGV holding. The VanEck Vectors Semiconductor ETF (SMH) was up 1.6%.
SPDR S&P Metals & Mining (XME) was up 1.8%. SPDR S&P Homebuilders (XHB) jumped 4.35%. The Energy Select SPDR ETF (XLE) was up 0.1%. The Healthcare Selected Sector SPDR Fund (XLV) added 0.8%.
Reflecting stocks with more speculative stories, the ARK Innovation ETF (ARKK) rose 6.7% and ARK Genomics (ARKG) rose 5.4%. Tesla stock is a major holding in Ark Invest’s ETFs.
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Microsoft earnings and revenue modestly surpassed their first-quarter financial outlook. Cloud computing revenue led the way but missed at least some targets. The software giant later warned of second-quarter revenue in advertising, PC and currency fluctuations.
MSFT stock was sold in overnight trading. Shares rose 1.4% to 250.66 on Tuesday and hit the 50-day mark. But Microsoft stock is well below the 200-day line and still isn’t far from bear market lows. Cloud software stocks fell with Microsoft’s results.
Both Google earnings and revenues were hijacked. While YouTube revenue fell, online advertising grew only 2.5%. Cloud computing revenue tops forecasts. GOOGL stock fell in a prolonged move. Shares rose 1.9% to 104.48 on Tuesday, closing the 50-day mark again. However, like Microsoft, Google stock is not far from bear market lows, with some 200 days off.
Microsoft and Google cloud computing results show growth of Amazon Web Services amazon.com (AMZN) Thursday night earnings. AMZN stock fell slightly overnight.
Execution earnings comfortably beat as it smashed revenues. ENPH stock rose solidly overnight. Enphase stock climbed 4.85% to 265.59 on Tuesday, breaking above the 21-day line. Shares may start to form the right side of a new bottom, but still below the 50-day line.
First Sun As reported Thursday night (FSLR), Enphase showed little change in earnings.
Chipotle earnings beat with same-store sales and impressive margins. CMG stock fell slightly in expanded trading amid concerns about future margins. Shares rose 2.5% to 1,584.02 on Tuesday. Chipotle stock is approaching its 50-day line as it is working to the right of a short base with a buy point of 1,754.66, according to MarketSmith analysis.
boeing (BA), General Dynamics (GD), Waste Management (WM) and Hilton Worldwide (HLT) reported earlier on Wednesday.
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Market Rally Analysis
The stock market rally continued to gain momentum as Treasury yields fell and the US dollar provided a tailwind for equities.
The Nasdaq and small caps led the gains on Tuesday. The Dow Jones fell behind on Tuesday but remained the rally leader and climbed above the 50-day mark. The S&P 500 and Russell 2000 are approaching this key level. There is still some distance for the Nasdaq to reach 50 days. However, S&P, Russell and Nasdaq are above their 10-week lines.
It’s still unclear if this is just another bear market rally. Can the S&P 500 and then the Nasdaq move decisively above its 50-day moving averages? And if so, can major indexes clear 200 days?
On the plus side, a number of growth stocks were bullish, including Shockwave. DoubleVerify (DV) and roblox (RBLX).
They join medical leaders, including biotech, health insurers, and drug distributors. Auto parts retailers are doing well.
Energy stocks continue to do well.
Treasury yields, earnings and economic data could undermine this new rise.
Microsoft and Google reported on Tuesday night Meta Platforms (META), Apple (AAPL) and Amazon earnings later this week.
It’s no coincidence that Microsoft, Google, Amazon and Apple shares closed at or just below their 50-day lines on Tuesday. Even Meta stock, which nearly hit a bear market low on Friday, is back to 50 days.
Microsoft, Google and Amazon are all ready to step back from this key level. Futures are pointing to the S&P 500, and the Nasdaq will do so at Wednesday’s open.
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what to do now
A confirmed stock market rally is gaining as a number of leading stocks, including some high-growth names, give or break buy signals.
Therefore, investors should be cautiously involved in this market rally by taking positions in quality stocks or broad market ETFs. Step slowly. If your positions and the market rally are working, you can add risk gradually.
Major indices facing a series of resistance levels are another reason to move in, not move in.
But be prepared to quickly make profits or cut losses.
Keep working on watchlists. A few days of market gains are putting more stocks in position.
Read the Big Picture daily to stay in tune with the market direction and leading stocks and industries.
Please follow Ed Carson on Twitter at: @IBD_ECarson for stock market updates and more.
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