Dow Jones futures rose early Friday, as did S&P 500 futures and especially Nasdaq futures. Microsoft (MSFT) jumped and Google parent alphabet (GOOGL) posted a surge in earnings, leading to another big night of quarterly results.
X
The stock market rally attempt suffered heavy losses on Thursday morning Metaplatforms (META) plunged on forecasts and a GDP report that showed slower-than-expected growth and high inflation. But the major indices were able to significantly reduce their losses.
Nvidia (NVDA), Broadcom (AVGO) and other AI chip and hardware companies rallied on the back of Meta’s large investment plans.
Meanwhile, numerous non-tech sectors and leading stocks posted gains. Above all Chipotle Mexican Grill (CMG) broke out on earnings while several other restaurant stocks made gains.
The market’s attempt to rally showed some resilience on Thursday, but it hasn’t proven anything yet. Investors need patience.
Microsoft and Google’s profit, guidance and spending plans will have a huge impact on so many sectors.
Dexcom (DXCM) and Western Digital (WDC) were among hundreds of other companies that reported Thursday evening.
Early Friday, Exxon Mobil (XOM) and Dow giant Chevron (CVX) are available.
Investors will also get the March reading for the core PCE price index, the Fed’s most popular inflation report, on Friday. Given Thursday’s first-quarter PCE data in the GDP report, this data may have less of an impact on the market.
Nvidia stock is on the IBD leaderboard. Microsoft stock is on the IBD Long-Term Leaders list. Google stock is in 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% from fair value. S&P 500 futures gained 0.9%. Nasdaq 100 futures rose 1.15%. Microsoft is a component of Dow Jones, S&P 500 and Nasdaq, while Google stock is a giant of S&P 500 and Nasdaq.
The yield on 10-year government bonds fell slightly to 4.7%.
Keep in mind that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Join IBD experts as they analyze leading stocks and the market on IBD Live
Attempting a stock market rally
After a bounce Monday through Tuesday and a stall on Wednesday, Thursday morning saw a sell-off in the stock market rally attempt on Meta Platforms and the high inflation reading in the GDP report. The major indices have weathered their early lows well, but it has been a downward trend.
The Dow Jones Industrial Average fell 1% in Thursday trading IBM (IBM) and Caterpillar (CAT) crashes due to weak sales. The S&P 500 index fell 0.5%. The Nasdaq Composite fell 0.6% after plunging 2.35% shortly after trading began. The small-cap Russell 2000 lost 0.7%
Meta shares fell 10.6% to 441.38 despite hitting a low of 414.50. Nvidia shares rose 3.7% to 826.32, but are still below their 50-day line. Broadcom shares 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 subsequent day could come at any time to confirm the new attempt at a market recovery. Microsoft and Google could provide that catalyst. However, it is also possible that the market will trend downwards and a longer correction will occur.
U.S. crude oil prices rose 0.9% to $83.57 a barrel.
The 10-year Treasury yield rose 5 basis points to 4.71%, the highest since November 1. The two-year Treasury yield, a good indicator of the Fed’s interest rate outlook, is back at 5%.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) fell 0.9%. Microsoft is a large IGV member. The VanEck Vectors Semiconductor ETF (SMH) rose 2%, with NVDA shares the largest holding and Broadcom a key holding.
The SPDR S&P Metals & Mining ETF (XME) rallied 1.7%. The SPDR S&P Homebuilders ETF (XHB) fell 0.2%. The Energy Select SPDR ETF (XLE) gained 0.5%, with Exxon and Chevron accounting for 40% of the ETF’s holdings. The Health Care Select Sector SPDR Fund (XLV) fell 0.6%, with Dexcom shares in the portfolio.
The Industrial Select Sector SPDR Fund (XLI) gained 0.3%. The Financial Select SPDR ETF (XLF) fell 0.5%.
Plan the market with IBD’s ETF market strategy
Microsoft results
Microsoft’s profit and revenue growth slightly exceeded expectations. Revenue from Azure and other cloud services grew 31%, outpacing views and up from 30% in the fiscal second quarter.
The Dow tech giant was optimistic about AI demand in the conference call. Microsoft predicted strong cloud growth going forward, but was somewhat conservative on overall profit and revenue. Investments are expected to increase “significantly” in the current fourth quarter.
Microsoft shares rose sharply in extended trading, suggesting 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 slightly overnight on Big Tech’s continued spending boom, pointing to a possible 50-day test. Arista, which counts Microsoft among its major customers alongside Meta Platforms, also made progress.
Several software stocks fell on Thursday service now (NOW) rallied overnight on Microsoft.
Google earnings
Google revenue increased by 61%, significantly exceeding views. Google Cloud, YouTube Ads and Online Search Ads revenue growth exceeded all expectations.
Google announced its first quarterly dividend of 20 cents per share and a $70 billion buyback.
Google shares shot up more than 10% overnight. Shares fell as low as 150.87 on Thursday morning, then recovered to close down 2% at 138.01. GOOGL stock closed in the range of buy points at 152.15 and 153.78.
Other Income
Dexcom’s earnings beat expectations. The diabetes products giant raised its full-year sales forecast, but the forecast was a bit poor in the middle. Shares plunged in after-hours trading, suggesting they are falling below the buy point. Dexcom shares rose 0.1% to 138.01 on Thursday, staying within a flat-base buy point of 132.03. Stocks have been consolidating in recent weeks and found support at the 50-day line.
Western Digital’s earnings beat expectations, but its revenue forecast for the fiscal fourth quarter was a bit thin. WDC shares fell slightly in overnight trading. Shares of Memory Play 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), Year (YEAR), UCK (KLAC) and Atlassian (TEAM) were among the many other earnings reports late Thursday.
Exxon, Chevron on tap
Earnings from Exxon and Chevron are expected 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 tight entry of 123.75, which could also serve as a high buy point.
Chevron shares rose 1% to 165.27 on Thursday, surpassing a buy point for cups with handles of 163.87. It was the seventh straight rise for CVX stock, with Thursday seeing above-average volume for the first time.
Chipotle Stock Leads Restaurant Rally
Chipotle’s earnings beat expectations and growth accelerated for the second straight quarter. CMG shares rose 6.3% to 3,111.97, clearing a 3,023.98 buy point from a three-week squeeze.
Wing stop (WING) climbed 2% to 369.90, rebounding from the 10-week line to near the top of a range that dates back to early March. However, earnings are due on May 1st.
Cava group (CAVA) reversed higher and rose 3.6% to 62.59, reclaiming the 50-day line and entering a steep downtrend that provided an entry. Cava receipts are not due for several weeks.
What now
The market is in a correction. An attempted market recovery began this week, but it has not yet signaled any real change in character.
Waiting does not mean sitting idle. It’s important to be prepared for the next market turn, be it Friday, next week, or months later.
Some energy, infrastructure, financial, medical and restaurant stocks continue to perform well. But most technicians require some or a lot of repair work.
So cast a wide net for your watchlists and stay in touch with the market. Look for stocks that are holding or regaining support and showing relative strength in a weak market.
Read The Big Picture every day to stay up to date with market direction and leading stocks and sectors.
Please follow Ed Carson in threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
YOU MAY ALSO LIKE:
Do you want to make quick profits and avoid big losses? Try SwingTrader
The best growth stocks to buy and watch
IBD Digital: Unlock IBD’s premium stock lists, tools and analysis today
Tesla has collapsed in 2024, but it won’t get cheaper