Dow Jones futures fell a little after hours. S&P 500 and Nasdaq Futures also dipped. Amazon.com [ ticker symbol=AMZN] is the latest megacap to have posted a positive overnight earnings report.
The stock market rallied strongly on Thursday. Meta Platforms (META), Apple (AAPL), Alphabet parent Alphabet, Google (GOOGL), and AMZN were all on the rise.
Outside of these megacap tech stocks, there were also strong gains. Market breadth is still a concern. Mobileye's (MBLY) stock and Crocs' (CROX), meanwhile, fell on the back of weak guidance.
Amazon, Cloudflare(NET), Skechers(SKX), First Solar(FSLR), DexcomDXCM and Snap (SNAP), were among the notable companies that reported earnings Thursday night.
Amazon's stock fell after an initial surge on the back of results. NET's stock fell on mixed results and a lack of guidance. SNAP's stock also fell on the back of weaker revenue and guidance. FSLR and Dexcom stocks fell. Stocks of SKX edged up.
Exxon Mobil and Dow Jones giant Chevron are expected to report Friday morning.
DXCM is a stock that offers a good option for earning. IBD's Long-Term Leaders list includes MSFT.
AMZN is a Nasdaq and S&P 500 giant.
The Fed's preferred inflation gauges are PCE and core-PCE, but the Q1 GDP report on Thursday gave strong signals as to what it will be.
Keep in mind the overnight Dow Futures session.
Amazon's Q1 earnings and revenue were both higher than expected. The cloud computing and e-commerce giant forecast Q2 revenue in line with expectations, but operating profit was slightly lower. Amazon's management stated that the Amazon Web Services cloud division is experiencing slower growth than Q1 in the earnings call.
AMZN's stock, which had initially surged by more than 10% in the after-hours, has now retreated modestly due to cloud comments.
Stocks rose 4.6% in the regular session on Thursday, topping last week’s high and reclaiming 200-day line. Investors could have taken advantage of the earnings report to buy Amazon stock at a discount, going back as far as February 2.
Other Key Earnings
Cloudflare's earnings were surpassed, but its revenue was just a little short. Cloud and security software company Cloudflare guided up for Q2 and full year EPS, but down on revenue. NET's stock plunged during extended trading. Stocks rose 0.1% on Thursday to 59.58, closing at session lows below the 50-day line. Cloudflare's stock had a base buy point of 66.30 cups with handles.
Skechers' earnings exceeded expectations, but Q2 guidance is weak. SKX rose in overnight trading. The shares fell 0.3% on Thursday to 49.87, after plummeting to 47 shortly after the opening in sympathy with CROX. This briefly undercut the 47.80 buy point.
First Solar's earnings and revenue were far below expectations, but the company provided a positive outlook. FSLR fell dramatically overnight, signaling a fall below the 50-day level. Stocks rose 0.7% on Thursday to 208.83. First Solar's stock fell 5.2% on Tuesday on the back of Enphase Energy's (ENPH) weak guidance. Investors can use the strong bounce off the 50-day level as an opportunity to buy, or they can view the recent consolidation with an entry at 219-221.
Dexcom's earnings were modestly better than expected, and the revenue forecast for the full year was in line. DXCM's stock dropped sharply in the late trading. On Thursday, the maker of continuous glucose meters fell by 1.1% to reach 123.58. Dexcom briefly reached a handle buy-point of 125.65 intraday.
SNAP's stock price crashed overnight. Snapchat's parent company earned 1 cent per share in Q1 as opposed to the expected loss of 1 cent. Revenue, users, and revenue per person were all in the black. Snap's Q2 revenue was also lowered. SNAP's stock rose 6.3% on Thursday, in sympathy with Meta Platforms. However, it closed below its 50-day line and 200-day line.
Intel (INTC), Gilead Sciences, (GILD), and Amgen, (AMGN), were also up on overnight earnings. Alteryx and Pinterest (PINS), both of which have been sold, also fell.
According to MarketSmith, XOM's stock rose by 1.2% on Thursday to 116.87, just below a 117.28 "cup-with-handle" buy point.
CVX shares rose 0.6% on Thursday to 166.95, with support found at the 200-day level. Chevron's stock is at 189.78, but it looks weaker right now than Exxon.
Stock Market Rally
The rally in the stock market began higher and gained momentum throughout the day.
In Thursday's stock trading, the Dow Jones Industrial Average rose 1.6%. S&P 500 index rose nearly 2%. The Nasdaq composite jumped 2.4%. The Russell 2000 small-cap index rose 1.3%.
The U.S. crude prices increased 0.6%, to $74.76 per barrel.
The yield on the 10-year Treasury increased by 10 basis points, to 3.53%. The yield on the 2-year note jumped 17 basis points, to 4.1%. The Fed is almost certain to raise rates next Wednesday, as the economic data released on Thursday showed weaker growth and higher inflation than expected.
The Innovator IBD Breakout Opportunities ETF (BOUT) rose 0.4%. It was impacted by the big losers in earnings, such as MBLY and Crocs. The Innovator IBD Breakout Opportunity ETF (BOUT), which tracks the performance of growth ETFs, rose by 0.4%. The iShares Expanded Tech Software Sector ETF gained 1.6% on the back of MSFT. VanEck Vectors Semiconductor ETF SMH grew 1% led by chip equipment giants, while early 2023 chip winners fell.
ARK Innovation ETFs (ARKK) and ARK Genomics ETFs (ARKG), which reflect more speculative stocks, have both risen by 1.4%.
Global Jets (JETS) rose 0.5%. SPDR S&P homebuilders ETF XHB grew by 3.4%. Energy Select SPDR (XLE) rose 0.4%. XLE is heavily invested in XOM and Chevron. The Health Care Select Sector SPDR Fund XLV rose by 0.5%. DXCM is in XLV.
The Financial Select SPDR ETF gained 1.6%. The SPDR S&P Regional Banking ETF KRE gained 1.6%.
Market Rally Analysis
The stock market continues to be heavily dependent on the megacap techs.
Meta stock soared by 14%, reaching a new 52-week high. Apple's stock rose 2.8%, and Amazon reached key earnings levels.
All major indices, however, rose on Thursday, contrary to Wednesday.
A day after rebounding off the 50-day line, the Nasdaq composite has risen above the 12,000 mark and reclaimed its 21-day moving median. S&P 500, Dow Jones and other major indices are also back above their respective 21-day lines.
The market has been gaining strength outside the megacaps.
First Trust Nasdaq 100 Equal Weighted Index ETF QQEW started slowly but eventually rose 1,65% to return above its 50-day-line. Invesco's S&P Equal Weight ETF gained 1.6% and is now above its 200-day. The 50-day line is just above it. Both of these ETFs, however, are down at least 1% for the week.
The market breadth is still a concern. New lows beat out new highs with ease, particularly on the Nasdaq.
Several leading stocks showed buy signals on Thursday, however many have extended or moved back into their positions. Market leadership is narrower and more volatile.
Major indexes need to surpass their April highs, and then clear the 2023 peak. RSP crossing the 50-day line will also indicate broader participation than Meta, Microsoft and tech megacaps. A positive sign would also be more buying opportunities.
The stock market is currently in an upward trend under pressure.
Beware of Earnings Season
Snap and Net stock are the latest losers in terms of earnings.
Thursday, several leading stocks saw massive losses in earnings. Impinj's (PI) stock plunged 39%, while Mobileye, CROX, and CROX stock fell 19%, and 16% respectively, all after closing around the buy point. Investors suffered even if they had a cushion of 10% heading into earnings.
Investors should be reminded of the upcoming dates of their reports and set rules to hold or sell before results.
What to Do Now
The market rallied, but not as strongly as the large-cap indexes might suggest. The market didn't show many buy signals on Thursday, but some stocks found support intraday. Stocks that are setting up will still be reporting earnings within the next two weeks.
If the market continues to recover, there will be more opportunities for buying. Investors need to have their watchlists prepared with leaders in various sectors. Be prepared to leave the market if it deteriorates.
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