Dow Jones futures rose slightly Sunday night, along with S&P 500 futures and Nasdaq futures, with Treasury yields moving toward 5% once again. A huge week of earnings loom, including Microsoft, Meta Platforms and Google parent Alphabet (GOOGL).
The stock market suffered heavy losses in the past week amid surging Treasury yields and generally poor reactions to earnings. The Nasdaq just avoided undercutting its Sept. 27 low while small caps set a 52-week low. Leading stocks showed more weakness, with several more buckling on Friday.
Investors should be largely in cash, but staying engaged.
Microsoft stock, Meta Platforms, ServiceNow, Vertiv and Cadence Design Systems are near buy points. Google stock arguably is close to various entries. Amazon stock is lagging, but a strong earnings reaction could be actionable.
Not only are these earnings important, but they will have a huge impact on key sectors and the overall market. Amazon, Google and Microsoft are cloud-computing giants. Microsoft, Google, Meta and Amazon are big artificial intelligence players, with ServiceNow also touting its AI efforts and Vertiv a big AI-related play. Microsoft and ServiceNow will provide insight into business software. Cadence Design will have a big impact on rival electronics design software play Synopsys (SNPS).
Meta Platforms is on IBD Leaderboard, with NOW stock on the Leaderboard watchlist. Meta stock, Cadence Design is on the IBD 50. Google stock and ServiceNow are on the IBD BigCap 20. Microsoft and CDNS stock are on the IBD Long-Term Leaders list.
The video embedded in the article discussed the weekly stock market action while analyzing Microsoft, Meta and Google stock.
Dow Jones Futures Today
Dow Jones futures rose 0.1% vs. fair value. S&P 500 futures advanced 0.1% and Nasdaq 100 futures climbed 0.1%.
The 10-year Treasury yield climbed several basis points to 4.98%.
The stock market tried to hang on or move higher early in the week, but hit resistance and fell significantly over the last three sessions. Some of Friday’s action in stocks and bonds likely reflected investor caution heading into another weekend of Israel-Hamas fighting.
The Dow Jones Industrial Average fell 1.6% in last week’s stock market trading. The S&P 500 index tumbled 2.4%. The Nasdaq composite sold off 3.2%.
On Monday, the Nasdaq came within a few points of undercutting the Sept. 27 low. The tech-heavy index hit a four-month closing low Friday and finished below the low of its Oct. 6 follow-through day, a highly bearish sign.
The S&P 500 fell just below its 200-day line and also came very close to undercutting recent lows. The Dow Jones also tumbled back below its 200-day.
Market breadth remains anemic, with losers outpacing winners and new lows crushing new highs.
The small-cap Russell 2000 shed 2.3%, hitting a 52-week low. The Invesco S&P 500 Equal Weight ETF (RSP) sank 2.3%, hitting a seven-month low. The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) retreated 3%% to a four-month low, undercutting the 200-day line.
Leading stocks came under heavy pressure. Some of the most-resilient names started to crack Friday.
Perhaps the past few days was the a shakeout before a year-end rally, but perhaps the real shakeout will come after breaking below recent lows — and perhaps not right away.
It’s hard to see the market having a sustained run as long as the 10-year Treasury yield is moving higher. Despite Friday’s retreat, the 10-year bond yield hasn’t given any real indication that it’s ready to level off or pull back meaningfully.
The 10-year Treasury yield skyrocketed nearly 30 basis points for the week to 4.93%. The 10-year bond yield came up to 4.996% intraday Thursday, the highest since 2007. Meanwhile, the two-year Treasury yield.
U.S. crude oil futures rose 1.2% to $88.75 a barrel last week, as Mideast tensions raised supply fears. Crude backed off a Friday morning move above $90. Copper prices sank 1.1% to the lowest close in nearly a year.
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) tumbled 4% last week. The iShares Expanded Tech-Software Sector ETF (IGV) shed 3%, but looked OK until Friday’s 2.5% tumble. Microsoft stock and ServiceNow are major members. The VanEck Vectors Semiconductor ETF (SMH) sold off 4.2%. CDNS stock is part of IGV and SMH.
SPDR S&P Metals & Mining ETF (XME) fell 3.1% last week. SPDR S&P Homebuilders ETF (XHB) plunged 4.5%. The Energy Select SPDR ETF (XLE) edged up 0.75%. The Health Care Select Sector SPDR Fund (XLV) fell 1.6%. The Industrial Select Sector SPDR Fund (XLI) skidded 3%.
The Financial Select SPDR ETF (XLF) sank 3%, with CME stock part of the ETF.
Megacap Stocks To Watch
Microsoft earnings are due Tuesday night. Analysts expect Microsoft earnings per share to rise 13% to $2.65 in fiscal Q1. Revenue is seen climbing 9% to $54.5 billion. Azure cloud-computing growth will be key. Investors also will want some indication on when AI will spur a revenue boost. MSFT stock fell 0.3% to 326.67 for the week, retreating Friday to just above the 50-day line. Microsoft has a 366.78 buy point, but investors could use 336.88 or 340.86 as early entries.
Google earnings also are late Tuesday. Earnings are rebounding, helped by easier comparisons. AI also will be in focus. Google stock has held up well, 1.3% to 135.60 last week. GOOGL stock now has a three-weeks-tight pattern and possible 50-day/10-week support. But those would be aggressive entries in a weak market.
Meta earnings are on tap after Wednesday’s close. Cost curbs and revived advertising has fueled the way. META stock fell 1.9% to 308.65, backing off a 362.20 buy point and moving back toward the 50-day line.
Amazon earnings loom Thursday night. Earnings should surge as Amazon rebounds from a tough year earlier. AMZN stock sank 3.6% to 125.17 last week, backing away from the 50-day line. Amazon has a 145.86 buy point, but a decisive move above the 50-day line would offer an early entry.
These earnings reports will have huge implications for AI, cloud-computing, software, e-commerce and more.
Other Key Earnings
Cadence Design earnings are due Monday night. CDNS stock fell 4.6% to 238.64 ast week, back below a 247.50 cup-with-handle buy point.
ServiceNow earnings are scheduled for Tuesday night. NOW stock sank 1.3% to 542.51. Shares got above the 50-day line Tuesday, but not for long, sliding 3.1% on Friday. ServiceNow stock has a 607.90 buy point from a double-bottom base. A move above Tuesday’s high of 574.25 would present an early entry.
Vertiv earnings are set for early Wednesday. VRT stock tumbled 6% last week to 36.74, falling well below a 40.41 flat-base buy point and undercutting the 50-day line, according to MarketSmith analysis.
CME earnings Wednesday morning. CME stock fell 3% to 212.81, but is still in a buy zone from a flat base, base-on-base pattern.
WFRD earnings Wednesday morning. WFRD stock fell gave up 2.7% to 92.97 drifting back toward the 50-day line. Shares are working on a short consolidation. A move above 97.88 would act as an early entry.
Weatherford is just of many oil-related names reporting in the coming week, with Oceaneering International (OII), Baker Hughes (BKR), Halliburton (HAL) on tap, as well as Exxon Mobil (XOM) and Chevron (CVX) on Friday.
What To Do Now
The S&P 500 and Nasdaq are teetering on the edge of recent lows, with leading stocks ailing. Yes, some stocks are holding up reasonably well, such as Meta and Google, but even those were losing ground amid the heavy selling.
Investors should pay close attention to stocks with strong relative strength. But it’s not a time to be buying. Instead, it’s been a week to scale out of positions.
Remember, in a market downturn, relative winners are often absolute losers.
Earnings could be a catalyst for Microsoft, Vertiv and the whole market, but which direction? So far stocks have generally been selling off on earnings or guidance.
If the market rebounds early next week, don’t get excited. The major indexes need strong gains before signaling an end to the recent downturn. The earnings wave adds to the uncertainty.
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