Dow Jones futures rose slightly overnight, with S&P 500 futures and Nasdaq futures even Meta Platforms (META) fell on earnings. Apple stock and Amazon.com are on deck Thursday night.
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The stock market rally had large intraday swings on Wednesday, but the major indexes ultimately closed near session lows. The Nasdaq fell sharply Microsoft (MSFT) and Google earnings.
Several other stocks have flashed buy signals, including Enphase Energy (ENPH), Wing stop (WING) and Rollins (ROL).
separately, Tesla (TSLA) is reportedly facing a criminal investigation into its own driving.
Incomes
Facebook’s parent Meta Platforms, Wolfspeed (WOLF), Ford Motor (F), Imp (PI), Molina Health (MOH), Aspen Technology (AZPN) and Service Today (NOW) reported after the close.
Meta stocks fell on weak earnings and guidance. WOLF stock fell short of its guidance. Aspen Technology, ServiceNow and PI stocks were big gainers. Ford fell slightly. Molina Health has risen while AZPN stock has been inactive.
Merck (MRK), Shopify (SHOP), MasterCard (MA), McDonald’s (MCD) and Caterpillar (CAT) report on Thursday.
But then all eyes will turn to Thursday night, with Apple (AAPL) on tap, along with Amazon.com (AMZN) and biotech giant Vertex Pharmaceuticals (VRTX).
Apple stock and Amazon fell from near their 50-day lines on Wednesday. VRTX stock is in a buy zone.
Vertex and Wingstop stock are on the IBD Leaderboard. WOLF stock is on the Leaderboard watchlist. MUSA stock is in the IBD 50. Vertex, Molina Health and ENPH stock are in the IBD Big Cap 20. Enphase Energy was Wednesday’s IBD Stock Of The Day.
The video embedded in this article discusses volatile market action and examines the stock of WING, Enphase and Clean surroundings (CLFD).
Tesla Criminal Probe
Tesla is facing a criminal investigation into its self-driving claims, Reuters reported on Wednesday. The Justice Department’s investigation began last year and is nowhere near reaching any conclusions, according to the report. The criminal investigation comes amid an ongoing, expanding Autopilot probe by the National Highway Traffic Safety Administration.
The new criminal investigation doesn’t seem to be affecting TSLA stock. Shares closed up 1% to 224.64, off session highs as the market faded from late-morning peaks.
Meanwhile, Tesla CEO Elon Musk stepped down Twitter (TWTR) and changed his Twitter bio to “Chief Twit” with all signs pointing to his $44 billion takeover closing on Friday night. TWTR stock was up 1.2% on Wednesday at 53.42, up 7% so far this week and just below the $54.20 price tag.
It’s unclear whether Musk will need to sell more Tesla stock to finance the Twitter acquisition.
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Dow Jones Futures Today
Dow Jones futures rose 0.45% versus fair value. S&P 500 futures climbed 0.3%. Nasdaq 100 futures advanced 0.2%, while the Meta fell and NOW rose.
Note that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally
The stock market rally had big swings Wednesday, closing mixed.
The Dow Jones Industrial Average closed down 2 points in stock market trading on Wednesday, though MSFT stock fell 7% and Boeing (BA) minus 9%. The S&P 500 index fell 0.7%. The Nasdaq composite fell 2%. The small-cap Russell 2000 rose 0.5%.
The 10-year Treasury yield fell 10 basis points to 4.01%, continuing a sharp retreat from last Friday’s intraday highs. The 10-year Treasury yield was lower than the 3-month yield, which fell to 4.03% on Wednesday. The 3-month/10-year inversion is seen as a stronger recession signal than the 2-year/10-year inversion.
The Bank of Canada raised rates by 50 basis points compared to an expected 75 basis points as more central banks start to become more aggressive. The Federal Reserve is a virtual lock to raise rates by 75 basis points for a fourth straight meeting next week. But markets are leaning toward a 50-basis-point move in December.
The US dollar fell sharply for the second session.
US crude oil prices rose 3% to $87.91 a barrel.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.2%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 1.75%, with Microsoft stock a large component and ServiceNow also a notable holding. VanEck Vectors Semiconductor ETF (SMH) yielded 1%.
The SPDR S&P Metals & Mining ETF (XME) advanced 1.1%. The Energy Select SPDR ETF (XLE) rose 1.4%. The Health Care Select Sector SPDR Fund (XLV) climbed 1.1%.
Reflecting the more speculative stock story, the ARK Innovation ETF (ARKK) rose 0.2% and the ARK Genomics ETF (ARKG) climbed 2.8%. Tesla stock remains a key holding in Ark Invest’s ETFs.
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Basic Incomes
Meta Platforms revenues were notably lower than the Q3 view, though revenue was ahead. The parent also provided weak guidance on Facebook.
Meta’s stock fell more than 10% in overnight action, marking a fall to its worst level since late 2016. Shares had already fallen 5.6% to 129.82 on Wednesday following the earnings miss. of Google on poor online ad revenue. That follows weak earnings from Snapchat’s parent Snap (SNAP) earlier this month.
Wolfspeed reported a quarterly loss and sales that were slightly ahead of views. The EV-exposed chipmaker gave disappointing guidance.
WOLF stock fell in extended trading, indicating a move below recent lows and the 200-day moving average. Shares rose 1.3% on Wednesday to 106.44, hitting resistance at the 50-day line. WOLF stock is close to having a proper base, but a decisive move above the 50-day line could offer an early entry.
Impinj’s earnings crushed views, with the tracking-chip maker also topping sales estimates.
PI stock jumped overnight, indicating a gap-up at or above a 99.10 consolidation buy point. Impinj stock rose 1.3% to 89.23 on Wednesday, holding above its 50-day line.
Ford’s earnings and profits were largely in line with lowered views after the automaker warned last month of supply-chain problems and costs.
Ford stock drops in extended action. Shares were down 0.1% at 12.82 on Wednesday. Ford stock is working on a 16.78 buy point from a bottoming base, according to MarketSmith analysis, but is still below the 50-day and 200-day moving averages.
Molina Health’s earnings lead views. MOH stock rose in overnight trade. The shares were up 0.8% on Wednesday at 369.23, rising into a buy zone from a flat base. The flat base, part of a base-on-base formation, has a 361.35 buy point.
Aspen Technology’s earnings crushed views, which also topped revenue. AZPN stock has yet to trade in extended action. 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 several weeks after a strong run, but needs more time to build a proper base.
ServiceNow led the way but revenue fell and the business software giant cut its Q4 subscription revenue targets. However, NOW stock bounced after hours, signaling at least a test of a falling 50-day line. ServiceNow stock fell 2.7% to 366.41 on Wednesday on Microsoft’s results and guidance.
Market Rally Analysis
Wednesday was a strange day for the stock market rally. The Nasdaq fell in the open on Microsoft and Google earnings. The tech-heavy index erased losses late in the morning, but then stocks faded back to session lows. The S&P 500, which had moved above its 50-day line intraday, fell.
The Nasdaq, after falling from near its 50-day line, now needs support near the 21-day line.
The Russell 2000, although it closed sharply higher, moved past its 50-day line, reflecting how the market’s weakness is heavily concentrated in megacaps. Microsoft and parent Google Alphabet (GOOGL) were the main offenders, but Meta, Amazon and Apple were also significant losers.
The Invesco S&P 500 Equal Weight ETF (RSP) rose 0.2%, though closing near session lows.
Wednesday’s reversal from major technical areas to bad news is not surprising. What matters is how the market rally responds from here.
A large amount of earnings, including Apple stock and Vertex, are still due this week, with a heavy load next week. Also next week: Another Fed meeting and a rate hike, along with the October jobs report and other key economic data.
On the plus side, top stocks from various sectors are flashing buy signals and extending gains, including ENPH stock.
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What should be done now?
Wednesday’s roller-coaster session, which closed near the low, underscored the need for caution.
Investors should be gradually increasing exposure in recent days as the market rally strengthens and more stocks flash buy signals. But rushing into new positions risks loading up on intraday highs themselves, or before a more significant pullback.
While there are reasons for optimism, many technical hurdles and macroeconomic challenges remain.
Find new opportunities by working on your watchlists. But be prepared to scale back out if the uptrend or your stocks run into trouble.
Read The Big Picture daily to stay in sync 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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