Dow Jones futures rose slightly overnight, along with S&P 500 and Nasdaq futures, as Metaplatforms (META) plunged on earnings. Apple and Amazon.com stocks are on deck Thursday night.
The stock market rally saw sharp intraday swings on Wednesday, but the major indexes eventually closed near session lows. The Nasdaq fell sharply on Microsoft (MSFT) and Google’s revenue.
Other stocks issued buy signals, including Enphase Energy (ENPH), wing stop (WING) and rollin (ROL).
Separately, You’re here (TSLA) would face a criminal investigation into its self-driving allegations.
Facebook’s parent meta-platforms, Wolfspeed (WOLF), Ford engine (F), Impinj (IP), Molina Health (MOH), Aspen Technology (AZPN) and ServiceNow (NOW) reported after the close.
Meta stock fell on weak earnings and forecasts. WOLF stock plunged on its guideline. Aspen Technology, ServiceNow and PI stock were the big earners in earnings, Molina Health said. Ford fell slightly. The AZPN action was not yet active.
Merck (MRK), Shopify (STORE), MasterCard (MY), McDonald’s (MCD) and caterpillar (CAT) report early Thursday.
But then all eyes will be on Thursday night, with Apple (AAPL) on tap, as well as Amazon.co.uk (AMZN) and biotech giant Vertex Pharmaceuticals (VRTX).
Apple and Amazon shares fell close to their 50-day line on Wednesday. VRTX stock is in a buy zone.
Vertex stock and Wingstop are on the IBD ranking. WOLF stock is on the rating watch list. MUSA stock is on the IBD 50. Vertex, Molina Health and ENPH stocks are on the IBD Big Cap 20. Enphase Energy was the IBD stock of the day on Wednesday.
The video embedded in this article discusses volatile market action and analyzes WING, Enphase and Free field (CLFD).
Tesla Criminal Probe
Tesla is facing a criminal investigation over its self-driving claims, Reuters reported on Wednesday. The Justice Department’s investigation began last year and is no closer to drawing any conclusions, according to the report. The criminal investigation is part of an ongoing Autopilot investigation by the National Highway Traffic Safety Administration.
The new criminal investigation does not appear to affect TSLA stock. Shares closed up 1% at 224.64, off session highs as the market faded from late morning highs.
Meanwhile, Tesla CEO Elon Musk passed Twitter (TWTR) and changed his Twitter bio to “Chief Twit” with all the signs that his $44 billion takeover would close Friday night. TWTR stock rose 1.2% on Wednesday to 53.42, up 7% so far this week and just below the $54.20 price.
It’s unclear if Musk still has to sell more Tesla shares to fund the Twitter takeover.
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Dow Jones Futures Today
Dow Jones futures were up 0.5% from fair value. S&P 500 futures rose 0.4%. Nasdaq 100 futures advanced 0.3% as Meta plunged while NOW soared.
Remember that overnight action on futures contracts on Dow and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Join the experts at IBD as they analyze actionable stocks in the stock market rally on IBD Live
Stock market rally
The stock market rally saw big swings on Wednesday, closing mixed.
The Dow Jones Industrial Average closed 2 points higher in Wednesday’s trading, even with MSFT stock down 7% and Boeing (BA) of 9%. The S&P 500 index fell 0.7%. The Nasdaq composite slipped 2%. The small cap Russell 2000 rose 0.5%.
The 10-year Treasury yield fell 10 basis points to 4.01%, continuing its steep retreat from last Friday’s intraday highs. The 10-year Treasury yield is lower than the 3-month yield, which fell to 4.03% on Wednesday. The 3-month/10-year inversion is considered a stronger recession signal than the 2-year/10-year inversion.
The Bank of Canada raised rates by 50 basis points from the expected 75 basis points as more central banks begin to become less aggressive. The Federal Reserve is on virtual lock to raise rates by 75 basis points for a fourth consecutive meeting next week. But the markets are leaning towards a 50 basis point move in December.
The US dollar fell solidly for a second session.
U.S. crude oil prices rose 3% to $87.91 a barrel.
Among the top ETFs, the Innovator IBD 50 (FFTY) ETF edged up 0.2%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 1.75%, with Microsoft shares a huge component and ServiceNow also a notable holding. ETF VanEck Vectors Semiconductor (SMH) fell 1%.
The SPDR S&P Metals & Mining ETF (XME) gained 1.1%. The SPDR Energy Select ETF (XLE) rose 1.4%. The SPDR health care sector fund (XLV) climbed 1.1%.
Reflecting more speculative stocks, ARK Innovation ETF (ARKK) edged up 0.2% and ARK Genomics ETF (ARKG) climbed 2.8%. Tesla stock remains a major holding in Ark Invest’s ETFs.
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Meta-platform revenue was significantly lower than third-quarter views, although revenue topped. The Facebook parent also gave weak advice.
The meta-stock fell nearly 20% in action overnight, signaling a drop to the worst levels since late 2016. Shares have already slipped 5.6% to 129.82 on Wednesday following the loss of Google revenue on weak online ad revenue. This followed the Snapchat parent’s low income Instantaneous (SNAP) earlier this month.
Wolfspeed reported a quarterly loss and sales that slightly exceeded views. The chipmaker exposed to electric vehicles gave disappointing advice.
WOLF stock slumped more than 25% in extended trade, signaling a drop below recent lows and the 200-day moving average. Shares rose 1.3% on Wednesday to 106.44, touching resistance at the 50-day line. The WOLF stock is about to have a proper base.
Impinj’s revenue crushed views, with the follow-on chipmaker also beating sales estimates.
PI stock jumped more than 15% overnight, signaling a gap above a consolidation buy point of 99.10. Impinj shares rose 1.3% to 89.23 on Wednesday, holding above its 50-day line.
Ford’s profits and revenue were broadly in line with falling sentiment after the automaker warned last month of supply chain issues and costs.
Ford’s stock fell slightly in extended action. Shares fell 0.1% to 12.82 on Wednesday. Ford stock is working at a buy point of 16.78 from a low, according to MarketSmith analysis, but remains below the 50- and 200-day moving averages.
Molina Health’s revenue slightly exceeded views. Shares of the Department of Health rose solidly in overnight trading. The shares edged up 0.8% on Wednesday to 369.23, rising into a buy zone from a flat base. The flat base, part of a base-to-base formation, has a buy point of 361.35. Molina stock is expected to open past the 5% buy zone, which closes at 379.42.
Aspen Technology’s earnings crushed the views, with earnings also leading the way. AZPN stock was not yet trading in extended stock. Shares of the supply chain and engineering software maker fell 1.7% to 248.40 on Wednesday but found support at its rising 21-day moving average. AZPN stock has been consolidating for a few weeks after a strong run, but needs more time to forge a proper base.
ServiceNow’s earnings topped but revenue was lower and the enterprise software giant slashed its fourth-quarter subscription revenue targets. However, NOW stock surged after hours, signaling at least one test of a 50-day down line. ServiceNow shares fell 2.7% to 366.41 on Wednesday on Microsoft earnings and guidance.
Market rally analysis
Wednesday was a strange day for the stock market rally. The Nasdaq fell at the open on Microsoft and Google earnings. The tech-heavy index erased losses late in the morning, but stocks then rallied back to session lows. The S&P 500, which moved above its 50-day intraday line, fell.
The Nasdaq, after pulling back near its 50-day line, now needs support near the 21-day line.
The Russell 2000, although it closed well off the highs, moved its 50-day line, reflecting how much market weakness was concentrated in the megacaps. Parent Microsoft and Google Alphabet (GOOGL) were the main offenders, but Meta, Amazon and Apple were also significant losers.
The Invesco S&P 500 Equal Weight (RSP) ETF rose 0.2%, although it closed near session lows.
Wednesday’s pullback from key technical areas on bad news is not so surprising. What matters is how the market rally responds from here.
A huge amount of revenue, including Apple and Vertex stock, is still due this week, with a heavy load next week. Also next week: another Fed meeting and rate hike, as well as the October jobs report and other key economic data.
On the positive side, major stocks across various sectors are giving off blinking buy signals and extending gains, including ENPH stocks.
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What to do now
Wednesday’s rollercoaster session, closing near lows, underscores the need for caution.
Investors should have gradually increased their exposure in recent days as the market rally intensified and more stocks issued buy signals. But rushing into new positions risks charging just to intraday highs, or before a bigger pullback.
Although there are reasons for hope, many technical obstacles and macroeconomic challenges remain.
Look for new opportunities by working on your watchlists. But be prepared to backtrack if the uptrend or your stocks run into trouble.
Read The Big Picture every day to stay in tune with market direction and top stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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