The stock market tried to rebound on Wednesday with the Dow Jones giants Microsoft (MSFT) and Visa (V) jump on profits while being top notch Boeing (BA) dropped. But the Nasdaq wiped out a big intraday gain to close flat while the Dow Jones and S&P 500 made slim gains.
Tesla stock rose slightly, but recovered only part of Tuesday’s drop. Meanwhile, TWTR stock fell for a second straight day amid fears that Tesla CEO Elon Musk could walk out of the Twitter deal.
Facebook reported earnings after the close, along with other tech companies PayPal (PYPL), ServiceNow (NOW) and Qualcomm (COMQ), as well as Ford engine (F). But all of these former leaders are experiencing significant downturns.
Meanwhile, the pandemic stock winner Teladoc Health (TDOC) also reported. TDOC stock had already made the round trip from its huge 2020 gains.
Early Thursday, Eli Lily (THERE IS) and Merck (M.K.R.) signaled, both close to the points of purchase. caterpillar (CAT) also posted views. McDonald’s (MCD) is also due before opening, along with Twitter.
Dow Jones Futures Today
Dow Jones futures are up 0.75% from fair value. S&P 500 futures jumped 1.35%. Nasdaq 100 futures jumped 1.9%, led by FB stocks and other tech earnings gainers.
The Commerce Department will give its first estimate of first-quarter economic growth at 8:30 a.m. ET. Economists see economic growth slowing to an annual rate of 1.1% from the 6.9% pace in the fourth quarter. This was partly due to low inventories, as consumer spending rose 3.4%.
Facebook Earnings and daily active views exceeded forecasts while revenue emerged. FB stock jumped 15% in premarket trading. Shares fell 3.3% to 174.95 on Wednesday, a two-year low, after Google’s parent company Alphabet (GOOGL) missed out on revenue, in a bad sign for online advertising.
PayPal revenue was in line while revenue was slightly above target. Digital payments have reduced revenue forecasts. PYPL stock rose 3% in long stock. Shares fell 1.3% to 82.61 on Wednesday, just above the March 2020 coronavirus low.
ServiceNow revenue easily topped views while revenue also topped. NOW stock jumped 7% early Thursday. ServiceNow stock rose 2.3% on Wednesday to 466.29, after hitting a 23-month low on Tuesday.
Qualcomm earnings beat expectations and the company trended higher for the current quarter, easing fears of lower smartphone demand. QCOM stock jumped 6% in extended trading. Qualcomm stock soared 1.2% to 135.10 on Wednesday, after falling intraday to its worst level since October. Qualcomm’s earnings and guidance are also encouraging signs for Apple’s earnings on Thursday night.
Ford Earnings narrowly topped views as the automaker reaffirmed its full-year targets. Ford stock rose 2% in premarket stock. Shares edged up 0.5% to 14.78 on Wednesday after General Motors (GM) said it expects solid production growth in 2022.
Teladoc reported a bigger-than-expected loss and a surprise $6.6 billion impairment charge. The telehealth specialist also cut its forecast for 2022. TDOC stock slumped more than 40%, on target for a four-year low. Teladoc stock fell 3.1% on Wednesday to 55.99, from its peak of 308 in February 2021.
Eli Lilly topped first-quarter views, although it cut EPS guidance for the full year. Lilly also said a weight-loss drug met the goals of a trial. LLY stock rose 3% before the open, rising into a buy zone. The shares edged up 0.8% to 285.09 on Wednesday, back into a buy zone after finding support at its 50-day line.
Merck beat first-quarter estimates. MRK stock climbed 2% early Thursday. Merck stock has a buy point of 89.58 cups with a handle, but could offer earlier entries into this handle.
Caterpillar has exceeded the consensus. CAT stock fell almost 2%. Caterpillar stock rose 1.7% to 213.96 on Wednesday. Stocks briefly flared up earlier this month. But CAT stock has a new entry at 238.
McDonald’s profits and sales soared, buoyed by price increases. MCD stock rose 2%. Shares fell 0.6% on Wednesday to 247.14, working a buy point of 259.71.
Stock market wednesday
The stock market saw some ups and downs on Wednesday, ultimately closing little changed. The Dow Jones Industrial Average rose 0.2% on Wednesday stock market trading. The S&P 500 index also climbed 0.2%. The Nasdaq composite closed less than 2 points. The small cap Russell 2000 fell 0.4% to the lowest since December 2020.
US crude oil prices edged up 0.3% to $102.02 a barrel. The 10-year Treasury yield rose 4 basis points to 2.82%.
From best ETFsthe Innovator IBD 50 ETF (FFTY) edged up 0.3%, while the Innovator IBD Breakout Opportunities ETF (FIGHT) gained 0.1%. The iShares Expanded Tech-Software Sector ETF (VIG) closed just above break-even, with MSFT and ServiceNow stocks both significant. The VanEck Vectors Semiconductor ETF (SMH) fell 0.5%, with QCOM stock in SMH.
Reflecting more speculative history stocks, ARK Innovation ETF (ARKK) fell 2.2% and ARK Genomics ETF (ARKG) 0.65%. Both hit 23-month lows intraday. Tesla stock remains Ark Invest’s No. 1 ETF. TDOC stock is also a major Ark Invest holding, as fund manager Cathie Wood recently added to the position. ARKK and ARKG fell solidly overnight.
SPDR S&P Metals & Mining ETF (XME) climbed 1.8% and the Global X US Infrastructure Development ETF (PAVE) increased by 0.8%. US Global Jets ETF (JETS) increased by 0.9%. ETF SPDR S&P Home Builders (XHB) fell 0.2%. The SPDR Energy Select ETF (XLE) rebounded 1.5% and the Financial Select SPDR ETF (XLF) fell slightly by 0.1%. SPDR Healthcare Sector Fund (XLV) lost 0.2%.
TSLA stock rose 2% early Thursday, signaling another attempt to regain its 200-day line. Shares edged up 0.6% on Wednesday to 881.51 after plunging 12.1% on Tuesday, undercutting the 50- and 200-day lines. Shares hit 918 intraday but fell sharply, unable to close above their 200-day line on Wednesday.
Tuesday’s selloff may have been sparked by concerns that CEO Elon Musk might sell TSLA stock to fund his takeover of Twitter. But in the context of growth stocks, Tesla stock hasn’t fallen particularly sharply in recent weeks.
Meanwhile, Twitter missed revenue targets slightly early on Thursday. EPS beat, but it’s unclear if it was comparable. TWTR stock rose slightly ahead of the open.
Twitter stock fell 2.1% to 48.64 on Wednesday, falling further from the repurchase price of $54.20. The market sees a small but not miniscule risk of Musk walking away from the deal, triggering a sell-off in TWTR stock. Musk has continued to make disparaging comments on Twitter, his staff and his policies, since announcing the deal on Monday.
The stock market tried to rebound on Microsoft and Visa earnings on Wednesday, but gains faltered. The Dow Jones and S&P 500 technically launched stock rally attempts, but not the Nasdaq, which closed slightly lower.
Even at session highs, the major indices were still well below their 10-day moving averages, let alone their 21- or 50-day lines. If the Dow Jones and S&P 500 can hold Wednesday’s lows, a follow-up day could intervene as early as next week to confirm a new stock market rally.
But until then, it’s a market correction, with the Nasdaq in a full-fledged bear market.
Earnings season will remain furious for the next couple of weeks, with Apple shares headlining on a massive Thursday. Next week, the Federal Reserve is expected to raise interest rates by 50 basis points and agree to start shrinking its balance sheet.
What to do now
Wednesday’s action was certainly not inspiring. Even if the market had closed at the highs of the session, this would not have been significant in itself.
For now, investors should remain on the sidelines, with little to no exposure. But stay engaged and create those watchlists.
Defense companies still look solid, while energy stocks generally hold their ground. The Steel and Fertilizer games remain at key levels. Travel stocks and REITs are trying to hold on or form new buy points.
But as mining stocks have recently shown, even major sectors can quickly tumble in a weak market.
Lily The big picture every day to stay in tune with market direction and key stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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