Dow Jones futures rose overnight along with S&P 500 futures and particularly Nasdaq futures Apple (AAPL) and Amazon.com (AMZN) to headline another wave of overnight earnings.
The stock market rally showed strength on Thursday, shaking off a post-Fed pullback and weak earnings to move slightly higher.
Key earnings overnight
In addition to Apple and Amazon first sun (FSLR), intel (INTC) and roku (ROKU) were notable reports.
Apple stock rose slightly overnight on better-than-expected Q3 earnings and upbeat comments.
Amazon stock rose sharply in extended trading. The e-commerce and cloud computing giant topped sales numbers.
FSLR stock rose modestly overnight after First Solar slightly outperformed EPS views and also outperformed sales. Shares rose 15% on Thursday as Congress made progress on legislation that includes incentives for solar and green power.
Intel stock plummeted in extended action after the ailing chip giant severely missed second-quarter prospects and cut full-year estimates.
Roku stock tumbled late after the streaming platform reported a bigger-than-expected loss and lagged in earnings, indicating a “significant slowdown” in advertising. Streaming hours watched are down slightly compared to Q1. Roku also led significantly lower in the third quarter. Roku stock is expected to fall to its lowest level since the March 2020 coronavirus lows.
early friday, Exxon Mobile (XOM), rafters (CVX), AstraZeneca (AZN) and AbbVie (ABBV) are available. AZN stock and AbbVie are not far from highs. XOM stock and Dow Jones giant Chevron are beginning to recover after a pullback.
Dow Jones futures today
Dow Jones futures rose 0.1% from fair value. S&P 500 futures were up 0.6%. Nasdaq 100 futures were up 1.1%. Apple stock and Intel are components of Dow Jones, S&P 500 and Nasdaq.
Keep in mind that overnight action in Dow futures and elsewhere doesn’t necessarily translate to actual trading in the next regular trading session.
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stock market rally
The stock market rally tailed off shortly after the open but quickly strengthened with major indices rising solidly.
US GDP fell at an annual rate of 0.9%, the second consecutive quarter of modest economic activity. However, consumer spending remained positive. The data further eases the Fed’s rate hike forecasts without signaling a massive slump.
A new push for a tax and spending bill that includes green provisions pushed solar stocks and other green energy stocks higher.
The Dow Jones Industrial Average was up 1% in trading on Thursday. The S&P 500 Index gained 1.2%. The Nasdaq Composite gained 1.1%. Small-cap Russell 2000 gained 1.4%.
US crude prices turned lower, falling 0.9% to $96.42 a barrel.
The 10-year government bond yield fell 5 basis points to 2.68%, the lowest level since April.
The probability of a 50 basis point rate hike by the Fed on Sept. 21 rose to 76% from 60.5% on Wednesday and 40% on Tuesday. Markets are betting for a quarter point move in November and then maybe a quarter point move in December.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) is up 1.8%, while the Innovator IBD Breakout Opportunities ETF (BOUT) is up 1.75%. The iShares Expanded Tech-Software Sector ETF (IGV) is up 1.9%. The VanEck Vectors Semiconductor ETF (SMH) was up 1.2%, with Intel stock taking a notable position.
SPDR S&P Metals & Mining ETF (XME) added 0.75% and Global X US Infrastructure Development ETF (PAVE) added 2.7%. The US Global Jets ETF (JETS) edged up 0.5%. The SPDR S&P Homebuilders ETF (XHB) is up 2.1%. The Energy Select SPDR ETF (XLE) was up 0.6%, with Exxon and CVX stock both being huge components. The Financial Select SPDR ETF (XLF) is up 0.7%. The Health Care Select Sector SPDR Fund (XLV) rose 0.6%.
Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) is down 0.4% and ARK Genomics ETF (ARKG) is down 1.3%. Roku stock is a notable ARKK holding.
The five best Chinese stocks to watch right now
Apple revenue fell 8% but slightly outperformed views. Revenue rose 2% to $82.96 billion, slightly beating expectations for the third quarter. The iPhone giant expects sales growth to accelerate despite “pockets of softness.”
Apple shares are up 3% overnight, hinting at a possible move above the 200-day moving average.
Shares rose 0.4% in regular trading on Wednesday to 157.35. AAPL stock has surged since hitting a 52-week low on June 16. The relative strength line is right at new highs. The RS line, the blue line in the provided charts, tracks a stock’s performance relative to the S&P 500 index.
Amazon’s earnings have been a bit confusing, with a $2 billion net loss marred by various special items. But revenue rose 7% to $121.2 billion, beating expectations as Amazon Web Services revenue growth accelerated to 33%.
Amazon also gave bullish Q3 sales.
AMZN stock is up 14% in prolonged action, signaling a move towards its 200-day moving average. Shares rose 1.1% on Thursday to 122.28. Amazon stock recently regained its 50-day moving average.
Analysis of the market rally
The stock market rally retreated Thursday morning, with the Nasdaq down more than 1% for the day. But the major indices quickly shrugged that off and moved higher. The Nasdaq surged above last week’s highs after the Dow and S&P did so on Wednesday.
Responding to the Fed’s second day meeting after Wednesday’s big rally and with major indices at some key technical levels, a pullback would not have come as a surprise. Weak result or guidance off meta platforms (META), Qualcomm (QCOM) and others also offered a reason for a retreat.
So, Thursday’s market action definitely showed strength.
The early June highs are the next market hurdle. A market break of a few days or even weeks would not be bad. That would cause some stocks to form handles and catch up with the moving averages.
Hershey (HSY) toyed with an early buy point for profit roll (ROL) broke out sharply in a reaction to gains on the second day. Carlisle (CSL), meanwhile, gaped out of a winning base Quanta Services (PWR) broke out on the green power boost, but both are slightly extended from their 50-day moving averages.
Pfizer (PFE) fell after the gains but bounced off lows not far from a trend line. Apex Pharma (VRTX) bounced off its 50-day moving average within a buying zone.
Time the market with IBD’s ETF market strategy
The rally in stock markets shows significantly more strength as a week of news almost comes to an end. Investors should benefit by increasing their exposure. But do this with care. There is still a risk that there will be individual market shakeouts or that the market will meet resistance.
Market and sector ETFs remain an attractive way to gain exposure to a limited number of quality stocks in position.
Work on those watch lists.
Read The Big Picture every day to keep up with market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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