Dow Jones futures, S&P 500 Futures, and Nasdaq Futures will all open on Sunday evening. Microsoft, Meta Platforms, and Alphabet parent Alphabet are all set to report earnings this week.
Stocks have suffered heavy losses over the last week due to rising Treasury yields, and a general lack of enthusiasm for earnings. The Nasdaq narrowly avoided undercutting the low of Sept. 27, while small caps hit a new 52-week low. The leading stocks continued to show weakness with many more stock falling on Friday.
Investors are advised to keep a large amount of cash on hand, while remaining active.
Microsoft (MSFT), Google (AMZN), Amazon.com (AMZN), and Meta Platforms(META) are the Magnificent Seven stocks that lead a week filled with earnings reports.
Other notable reports include ServiceNow (NOW), Vertiv, Cadence Design Systems, CME Group and Weatherford.
Microsoft stock, Meta Platforms (also known as Meta Platforms), ServiceNow, Vertiv, and Cadence Design Systems, are all nearing their buy points. Google stock is arguably close to different entries. Amazon stock has been lagging but could become more attractive if earnings were to rise.
These earnings are not only important but will also have a major impact on the market and key sectors. Amazon, Google, and Microsoft are all cloud computing giants. Microsoft, Google Meta, Amazon and Amazon are all major artificial intelligence players. ServiceNow is also promoting its AI efforts, and Vertiv is a major AI-related player. Microsoft and ServiceNow are expected to provide insights into business software. Cadence Design is going to have a major impact on Synopsys, a rival electronic design software company.
Meta Platforms stock is now on the Leaderboard Watchlist. IBD 50 includes Cadence Design and Meta. Google and ServiceNow stock are listed on the IBD BigCap 20. IBD's Long-Term Leaders List includes Microsoft and CDNS.
The article included a video that discussed the stock market's weekly action, analyzing Microsoft Meta and Google stocks.
Dow Jones Futures Today
Dow Jones futures will open at 6 pm ET on Sunday, along with S&P 500 and Nasdaq 100 futures. S&P 500 and Nasdaq futures will open at 6 p.m. ET on Sunday.
Dow futures session.
Stocks tried to hold on or rise early in the week but then hit resistance, and dropped significantly over the past three sessions. Investor caution is likely to have played a role in some of the Friday's stock and bond market action.
Last week, the Dow Jones Industrial Average dropped 1.6%. S&P 500 index fell 2.4%. The Nasdaq composite fell 3.2%.
The Nasdaq was just a few points away from undercutting its low of Sept. 27 on Monday. The index, which is heavily weighted in technology, hit a low for the last four months on Friday. It also finished below its low from Oct. 6, a sign of extreme bearishness.
S&P 500 also fell very close to recent lows. Dow Jones fell below 200-day line as well.
The market breadth is anemic with losers beating winners and new lows destroying new highs.
Russell 2000, a small-cap index, fell 2.3% and hit a 52-week-low. Invesco's S&P Equal Weight ETF, (RSP), fell 2.3% to a new seven-month low. First Trust Nasdaq 100 Equal Weighted Index ETF QQEW sank 3% to a 4-month low and undercut the 200-day line.
Stocks that were considered to be leaders came under intense pressure. The most resilient names began to crack on Friday.
The past few days may have been a shakeout ahead of a rally at year's end, but the real shakeout could come only after the recent lows are broken -- and maybe not immediately.
As long as the 10-year Treasury rate is rising, it's difficult to imagine the market continuing its upward trend. The 10-year bond yield is not showing any signs of a leveling off or a meaningful pullback despite Friday's decline.
The 10-year Treasury rate soared nearly 30 basis points in a week, to 4.93%. Thursday's intraday bond yield for the 10-year bond reached 4.996%, its highest level since 2007. The two-year Treasury rate is also rising.
Last week, U.S. crude futures increased 1.2% to $88,75 per barrel as tensions in the Middle East raised supply concerns. Crude oil retreated from a move over $90 on Friday morning. Copper prices fell 1.1%, to their lowest close in almost a year.
Innovator IBD50 ETF (FFTY), a growth ETF, fell 4% in the past week. The iShares Expanded Tech Software Sector ETF(IGV) lost 3% but appeared OK until Friday’s 2.5% drop. Microsoft stock and ServiceNow make up the majority of its members. VanEck Vectors Semiconductor ETF(SMH) has lost 4.2%. CDNS is a part of IGV, SMH and CDNS.
Energy Select SPDR (XLE) gained 0.75%. The Health Care Select Sector SPDR Fund XLV fell 1.6%. The Industrial Select Sector SPDR Fund XLI fell 3%.
The Financial Select SPDR ETF sank 3%. CME stocks are included in the ETF.
ARKK (ARKK) fell 4.6% and ARK Genomics ETF ARKG (ARKG) dropped 5.45% last week.
Megacap Stocks to Watch
Microsoft's earnings will be released Tuesday evening. Analysts predict that Microsoft's earnings per share will rise by 13% in the first quarter of fiscal year 2019 to $2.65. Analysts expect revenue to increase 9%, reaching $54,5 billion. The growth of Azure cloud computing will be crucial. Investors will also want to know when AI is likely to boost revenue. MSFT's stock dropped 0.3% for the week to 326.67, and retreated Friday just above the 50 day line. Microsoft's 366.78 purchase point is a good place to start, but investors can also use 336.88 and 340.86 for early entry.
Google's earnings will also be late on Tuesday. The earnings are on the rise, thanks to easier comparisons. AI will also be a focus. Google's stock held up very well last week, with a 1.3% increase to 135.60. GOOGL has now a tight pattern of three weeks and a possible support level 50 days/10 weeks. These would be aggressive trades in a weaker market.
Meta earnings will be available after the close of Wednesday. The way has been paved by cost curbs and a renewed advertising campaign. META stock dropped 1.9% to 308,65, back off a 362.20 purchase point and moving toward the 50-day level.
Amazon earnings are expected to be released Thursday night. Amazon's rebound from a difficult year should boost earnings. AMZN's stock fell 3.6% last week to 125.17, moving away from the 50 day line. Amazon's buy point is 145.86, but an immediate entry would be possible if the stock made a significant move above its 50-day line.
These earnings reports have major implications for AI and cloud computing, software, ecommerce, and more.
Other Key Earnings
Cadence Design's earnings will be announced Monday evening. CDNS shares fell 4.6% last week to 238.64, below the 247.50 cup with handle buy point.
ServiceNow's earnings will be announced on Tuesday evening. NOW shares fell 1.3% to 542.51. The shares briefly surpassed the 50-day line on Tuesday, but they did not last long. They fell 3.1% Friday. ServiceNow has a buy point of 607.90 from a double bottom base. An early entry would be a move above the Tuesday high of 574.25.
Vertiv's earnings will be announced early on Wednesday. VRT's stock fell 6% to 36.74 last week, well below the 40.41 buy-point and undercutting a 50-day line. This is according to MarketSmith.
CME earnings were released Wednesday morning. CME stock dropped 3% to 212.81 but remains in a buying zone after a base-on base pattern with a flat bottom.
Earnings for WFRD were released on Wednesday morning. WFRD shares fell 2.7% to 92.97, drifting towards the 50-day line. The shares are undergoing a short consolidation. A move above 97.88 will act as an early entry.
Weatherford is one of many oil companies reporting this week. Baker Hughes (BKR), Oceaneering International(OII), Halliburton(HAL), Exxon Mobil(XOM), and Chevron CVX are also on the agenda.
What to Do Now
Leading stocks are in trouble, and the S&P 500 is teetering at recent lows. Some stocks, like Meta and Google, are doing well. But even they were losing ground in the midst of heavy selling.
Investors need to pay attention to stocks that have a strong relative strength. It's not the time to buy. It's a week of reducing positions.
In a downturn in the market, it is common for relative winners to be absolute losers.
Microsoft, Vertiv, and the entire market could benefit from earnings, but in which direction? Stocks have been falling on the basis of earnings and guidance.
Do not get too excited if the market recovers early next week. Before the recent decline can be halted, major indexes must show strong gains. The earnings surge adds to uncertainty.
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