Dow Jones futures, S&P 500 and Nasdaq Futures all rose overnight. Amazon.com's (AMZN), the company that led earnings, reported after the close.
Stock market corrections intensified on Thursday as the Nasdaq fell below its 200 day moving average. Indexes recovered from intraday lows but this bounce did not last.
The decline was led by tech titans. Meta Platforms (META), a company that signals concerns about advertising, led the decline. This also affected Alphabet's (GOOGL) stock, Wednesday's biggest loser, and AMZN heading into the results. Meta's lower than expected capital expenditure plans affected Nvidia (NVDA) as well as other big techs like Arista Networks(ANET). Apple (AAPL), along with Tesla (TSLA), closed further below the 200-day line. Microsoft (MSFT), which had a strong earnings report on Wednesday, lost all its gains on Thursday.
Amazon's stock rose by 5% during extended trading. The ecommerce and cloud giant posted better-than expected earnings and sales. However, its Q4 guidance was not as strong. Amazon Web Services' revenue increased 12% in Q4, just missing expectations for the third quarter. The tech giant believes that generative AI will be a boon to AWS. Microsoft reported strong Azure cloud computing revenue earlier this week, while Google Cloud disappointed. Amazon's stock dropped to a two-month low on Thursday.
Enphase Energy, Deckers Outdoor and Dexcom Outdoor reported earnings on Thursday night. Intel, Chipotle Dexcom, and Decker were all solid to strong winners in the overnight earnings. Ford's stock fell, while ENPH plunged.
Exxon Mobil and Chevron both report on Friday morning. Recent share prices of oil majors fell on the back of large takeovers and falling crude oil and gasoline futures.
Nvidia and Meta are both on IBD Leaderboard. Meta's ranking has been trimmed. IBD's Long-Term Leaders list includes MSFT. Microsoft, Google, and Nvidia stocks are all on the IBD 50. Microsoft and Google stocks are listed on the IBD Big Cap 20.
Dow Jones Futures Today
Dow Jones futures rose 0.4% against fair value. INTC shares also saw a modest increase. Amazon and Intel stocks boosted S&P 500 futures and Nasdaq, while Microsoft, Google Meta, Nvidia and Meta all rose slightly.
The yield on the 10-year Treasury Bond increased to 4.85%.
Crude Oil Futures rose by 1%.
Keep in mind the overnight Dow Futures session.
Stock Market Correction
Stocks were once again smashed by tech stocks, while Treasury yields continued to fall. Stocks bounced off their lows in the mid-afternoon, but by close they had mostly wilted.
In Thursday's stock exchange trading, the Dow Jones Industrial Average dropped 0.8%. S&P 500 index fell 1.2%. The Nasdaq composite fell 1.8%.
Nasdaq Composite plunged below 200-day line joining other major indices. The Dow Jones fell to its lowest level in almost five months and ended its anemic recovery attempt.
The market breadth was not that bad on Thursday. Winners and losers were almost the same. Overall, the market has been in a bleak state.
The Russell 2000 small-cap index rose 0.3%. Intraday it rose more than 1% and then fell to a new 52-week low, before the afternoon rebound. It is almost at its lowest levels since late 2020.
Invesco's S&P Equal Weight ETF, (RSP), dropped by 0.2%. RSP, while easily outperforming S&P 500 is trading at the lowest levels it has seen in over a year.
First Trust Nasdaq 100 Equal Weighted Index ETF QQEW fell by 1.1% to a new five-month low. This was better than Nasdaq 100 which fell 1.9%, but still remains above its 200-day.
Investors held onto stocks, particularly tech giants, in spite of the correction hoping earnings season would bring the market back. Earnings have actually been a negative factor so far.
On a number of measures, it is argued that the market was "due" a bounce after Thursday's lows. The bounce lasted only about 90 minutes.
On Thursday, the 10-year Treasury yield fell 11 basis points to 4.84%. This is a reversal from an initial high of 4.98%. The tame inflation numbers offset strong GDP growth in Q3. The strong upward trend in Treasury bond rates remains.
The price of U.S. crude dropped by 2.55%, to $83.21 per barrel.
Among growth ETFs the iShares Expanded Tech Software Sector ETF(IGV) fell 0.9%. Microsoft is a major component of IGV. VanEck Vectors Semiconductor ETF SMH has lost 0.9%. Nvidia is SMH's No. 1 holding. SMH's No. 1 stock is Nvidia.
ARK Innovation ETF ARKK fell by 1.3%, while ARK Genomics ETF ARKG grew 0.1%. Tesla stock remains a top holding across Ark Invest ETFs but is no longer the number one. 1.
SPDR S&P Metals & Mining ETF XME grew by 0.1%. SPDR S&P homebuilders ETF XHB grew by 0.9%. Energy Select SPDR ETF(XLE) fell 0.8%. CVX and Exxon are both huge holdings.
The Industrial Select Sector SPDR Fund XLI and Health Care Select Sector SPDR Fund XLV both fell 0.4%.
XLF) fell 0.2%. The SPDR S&P Regional Banking ETF KRE jumped 3% on Thursday after reaching a five-month high Wednesday.
Tech Titans Slump
Meta stock dropped 3.7% on Thursday and 6.6% in the last week.
GOOGL's stock price has fallen 9.8% in the past week and 2.65% on Friday.
Apple shares have fallen 3.7% in the past week, falling below their 200-day line on Thursday and hitting new lows.
Nvidia's stock price is down only 2.6% this week but it has been falling steadily for two days to reach a new five-month low on Thursday.
Amazon's stock fell 4.3% on Thursday, approaching its 200-day line.
TSLA shares have retreated by 2.9% in the past week after a 16% drop last week. The shares are a little below the 200-day but above Monday's low.
MSFT is up 0.4% this week despite a 3.75% drop on Thursday. This is the only Magnificent Seven company stock that has risen above its 50-day line.
What to Do Now
This is a correction in the market. Investors should wait until this changes.
The market will eventually have a positive day, or even a large rebound. The best days of history have been in times of corrections or bear market. Watch for signs of clear market strength.
Meta, Google and Tesla are among the many stocks that have suffered heavy damage. It could take weeks, months or even several days to repair.
Investors should review their watchlists and look for stocks that still hold key levels or have strong relative strength in the next few days.
Instead of fighting the odds, follow the market and prepare for the next real trend.
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