Dow Jones Futures Rise After Market Rally Rebounds From Key Levels; 5 Earnings Winner

Dow Jones futures rose on Thursday, along with S&P 500 futures and Nasdaq futures. Thursday morning’s stock market rally fell as the Fed’s hawkish remarks extended Wednesday’s losses. But major indices rose from some key levels to close slightly lower.




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Treasury yields rose again as crude oil prices fell.

apple (AAPL), Microsoft (MSFT) and parent Google Alphabet ( GOOGL ), the only three-trillion-dollar U.S. stock, rose after testing support at its 50-day moving average. In the meantime, Tesla ( TSLA ) retreated to bear market lows.

Investors should be cautious in the current market, add exposure slowly and be prepared to take profits and cut losses quickly.

Earnings

Applied materials (AMAT), Palo Alto Networks (PANW), Clearfield (CLFD) and Ross Stores ( ROST ) all beat EPS and sales views on Thursday, with guidance generally strong.

AMAT shares are poised to break above their 200-day line on Thursday. PANW shares rose, pointing to a move above the 50-day. CLFD shares rose in extended trade looking to race above the 50-day line as it tries to build the right side of a double bottom base. ROST stock rose to the 2022 high after closing the gap from the bottom base.

JD.com (JD) and Atkore (ATKR) reported on Friday morning.

JD.com’s earnings beat estimates, while revenue fell Alibaba (DAD) Thursday morning. JD shares rose slightly in premarket trading. On Thursday, shares rose 7.5% to the 200-day line following Alibaba’s results.

Shares of ATKR rose strongly on Friday as building products maker Atkore beat FY4Q views and raised Q1 and 2023 earnings. ATKR shares fell 3.5% on Thursday, but were comfortably above their 200-day line as they worked to the right of a deep cup base.

Dow Jones Futures today

Dow Jones futures rose 0.65% to fair value. S&P 500 futures gained 0.9%. Nasdaq 100 futures rose 1% with tech stocks AMAT and PANW picking up.

The 10-year Treasury yield rose 3 basis points to 3.8%.

Crude oil futures fell nearly 2%, and natural gas futures fell more than 3%.

Remember that an overnight move in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.


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Stock market rally

With hawkish statements from St. Louis Fed President James Bullard and Kansas City Fed President Esther George, the stock market rally was clearly down. Major indices rose again, closing flat slightly lower.

The Dow Jones industrial average was slightly lower in stock trading on Thursday. The S&P 500 index fell 0.3%. The Nasdaq composite fell 0.35%. The small-cap Russell 2000 yielded 0.9%.

Apple shares rose 1.3%. Microsoft shares gave back two cents, while Google shares fell 0.5%. All tested their 50-day lines intraday. All are below their 200-day lines with no clear buy points. Tesla shares fell 2%, near their November 9 market low.

The price of crude oil in the United States fell by 4.6% to $81.64 per barrel. In addition to the Fed’s blunt comments, blame Beijing’s re-emphasis on “zero-Covid” policies. China’s State Council has reportedly warned cities to avoid an “irresponsible relaxation” of Covid-19 measures, a week after the top body backed easing rules. On Wednesday, Peking University was closed due to a case. The number of cases of coronavirus infection in China has increased over the past two weeks.

Hawkish Fed raises Treasury yields

The 10-year Treasury yield rose 8 basis points to 3.77%.

The St. Louis Fed’s Bullard said the fed funds rate, currently at 3.75% to 4%, may need to rise to 7%, much higher than the consensus of around 5%. The Kansas City Fed’s George said it may take a recession to bring down inflation.

One reason politicians are hawkish is to boost market prices and curb a stock market rally. If financial conditions ease significantly based on the Fed’s pivot hopes, inflation could remain high for longer, forcing the Fed to tighten official rates even further.


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ETFs

Among the top ETFs, the Innovator IBD 50 ETF ( FFTY ) fell 0.1%. The iShares Expanded Tech-Software Sector ETF ( IGV ) fell 2.65%, even though it is a major component of the MSFT fund. PANW stock is also an IGV holding. VanEck Vectors Semiconductor ETF ( SMH ) fell 0.5%, while AMAT shares have a significant SMH holding.

The SPDR S&P Metals & Mining ETF ( XME ) fell 2.1%. The SPDR S&P Homebuilders ETF ( XHB ) fell 2%. The Energy Select SPDR ETF ( XLE ) was down 0.5%, while the Health Care Select Sector SPDR Fund ( XLV ) was down 0.2%.

Reflecting more speculative story stocks, the ARK Innovation ETF ( ARKK ) gave up 2.8% and the ARK Genomics ETF ( ARKG ) gave up 3.2%. TSLA stock is a core holding among Ark Invest’s ETFs.


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Stock Market Rally Analysis

The stock rally tested some key levels at Thursday’s open. The Nasdaq found support just above its 50-day moving average. The S&P 500 briefly fell to an October high. The Russell 2000 bounced back from near its 21-day line. The S&P 400 MidCap crossed the 200-day line.

After a strong run and the S&P 500 nearing its 200-day line, the market should have pulled back. Meanwhile, the market rally found support in key areas on Thursday. So, the last few days have been normal and somewhat constructive for the major indices – assuming they can hold Thursday’s lows and eventually move higher.

However, the market’s pullback from Tuesday’s intraday high to Thursday morning’s low has hit a number of stocks that have bled or fizzled out over the past few days. A few have tested these inputs or failed completely. Some rebound and some can. In some cases, previous purchase points are still valid, while others may need to set new handles or other records. Others may struggle for a long time.

Various stocks and sectors are showing interesting movements.

In all these cases, a healthy market rally will be key.

Apple shares, Microsoft and Google are not market leaders and may not be for some time. But it would be a big help if they could prevent the backlog.


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What to do now

The stock market rally showed promising action on Thursday. Over the past few weeks, the overall trend has been higher. But it has been a circuitous road for investors.

Anyone who bought stock after October 21st was probably underwater by early November. The Nasdaq, S&P 500 and Russell 2000 have all been down since then, although the indexes rose on a subdued CPI report on Nov. 10.

In a stock market rally, sector rotation and large intraday swings complicate matters. Buying opportunities have often been the moment the market pulls the rug out from investors.

So keep the lighting on. Add exposure gradually – and be prepared to reduce exposure based on market conditions or individual stock sales rules.

Keep your watchlist up to date so you can see new leads.

Read The Big Picture daily to stay in sync with market direction and leading stocks and sectors.

Follow Ed Carson on Twitter @IBD_ECarson for stock updates and more.

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