Dow Jones Futures: Amazon reverses lower late on easing cloud; Cloudflare, Snap Plunge
Dow Jones futures fell slightly overnight, while S&P 500 futures and Nasdaq futures edged lower. Amazon.com[ticker symb=AMZN] was the last overnight megacap income gainer.
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The stock market recovery progressed strongly on Thursday. Meta platforms (META) missed, med Microsoft (MSFT) stock, apple (AAPL), Google parent Alphabet (GOOGL) and AMZN also solid.
There were strong gains outside of these tech megacaps. However, market breadth remains a concern. Meanwhile, Mobileye (MBLY) and Crocs (CROX) plunged on weak guidance.
amazon, Cloudflare (NET), Skechers (SKX), First Solar (FSLR), Dexcom (DXCM) and Snap (SNAP) were notable earnings reports on Thursday evening.
Amazon stock reversed solidly lower late after initially rising on results. But NET stock crashed with mixed results and guidance. SNAP also dived into weak earnings and guidance. FSLR stock and Dexcom fell. The SKX share went higher.
Exxon Mobil (XOM) and the Dow Jones giant Chevron (CVX) should be delivered on Friday morning.
META stock is on the IBD Leaderboard, with DXCM stocks and earnings options. MSFT stock is on the IBD Long-Term Leaders.
Dow Jones Futures today
Dow Jones futures retreated 0.2% against real value. S&P 500 futures edged lower. Nasdaq 100 futures fell 0.1 percent. AMZN stock is an S&P 500 and Nasdaq giant.
The Commerce Department will release the PCE price index for March at 8:30 a.m. ET. PCE and core PCE are the Fed’s favorite inflation gauges, but Thursday’s first-quarter GDP report gave some strong signals about what it will be.
Keep in mind that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular session.
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Amazon revenue
Amazon earnings easily beat first-quarter views, and earnings are topping as well. The e-commerce and cloud giant led in line with revenues in the 2nd quarter, but somewhat lower on operating profit. On the Amazon earnings call, management said the Amazon Web Services cloud unit is seeing slower growth in April compared to Q1.
AMZN shares, which initially rose more than 10% after hours, fell 2% on the cloud comments.
Shares fell 4.6% to 109.82 in Thursday’s regular session, reclaiming the 200-day line and topping last week’s high. If it weren’t for the earnings report, investors could have used it as an early entry for Amazon shares in a bottom base back to February 2.
Other key revenues
Cloudflare revenue peaked, but revenue fell just short. The cloud and security software company led on Q2 and full-year EPS, but down on revenue. NET shares plunged 25% in extended action. Shares rose 0.1% to 59.58 on Thursday, closing near bottom levels and below the 50-day mark. Cloudflare stock has had a 66.30 cup-with-handle buy point.
Skechers’ earnings topped views, but guidance for the second quarter was weak. SKX edged higher in overnight action. Shares fell 0.3% to 49.87 on Thursday, but after plunging to 47 just after the open in sympathy with CROX stock. It briefly fell short of a buy point of 47.80.
At first, Solar’s revenue and earnings fell far short of views, but the company provided positive guidance. FSLR stock fell 8% in overnight action, signaling a drop below the 50-day mark. Shares rose 0.7% to 208.83 on Thursday. First Solar shares slipped 5.2% on Wednesday on weak guidance from Enphase Energy (ENPH). Investors can use a strong bounce off the 50-day line as a buying opportunity, or view the recent consolidation as a quasi-flat base with an entry around 219-221.
Dexcom revenue modestly beat views with full-year revenue guidance in line. DXCM stock fell 3% in late trading. The maker of continuous glucose monitors fell 1.1% to 123.58 on Thursday. Intraday, Dexcom stock briefly topped a buy point at 125.65.
SNAP stock crashed overnight. The Snapchat parent earned 1 cent per share in Q1 versus the expected loss of 1 cent. But revenue, users and revenue per user came into the light. Snap also guided low on revenue for the second quarter. SNAP stock had risen 6.3% on Thursday in sympathy with Meta Platforms, but closed just below the 50-day and 200-day lines.
In addition to these names, Intel (INTC) bounced overnight on earnings, while Gilead Sciences (VALID) and Amgen (AMGN) was little changed. Alteryx (AYX) and Pinterest (PINS) sold out.
XOM shares rose 1.2% to 116.87 on Thursday, slightly below a 117.28 cup handle buy point, according to MarketSmith analysis.
CVX shares rose 0.6% to 166.95 on Thursday, finding support at the 200-day line. Chevron stock has a consolidation buy point at 189.78, but looks much weaker than Exxon right now.
Stock market rally
The stock market rally opened higher and gained momentum during the day.
The Dow Jones Industrial Average jumped 1.6% in Thursday’s trading. The S&P 500 index jumped nearly 2%. The Nasdaq composite rose 2.4 percent. The small-cap Russell 2000 rose 1.3%.
The US crude oil price rose 0.6 percent to 74.76 dollars a barrel.
The 10-year government yield jumped 10 basis points to 3.53%. The 2-year yield rose 17 basis points to 4.1%. With economic data on Thursday showing weaker growth, stronger inflation and tighter-than-expected labor markets, the odds of another Fed rate hike next Wednesday are back to a virtual lock.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF ( FFTY ) fell 0.9%, hit by some big losers like MBLY shares and Crocs. Innovator IBD Breakout Opportunities ETF (BOUT) rose 0.4%. The iShares Expanded Tech-Software Sector ETF ( IGV ) rose 1.6%, boosted by MSFT shares. The VanEck Vectors Semiconductor ETF ( SMH ) rose 1%, led by chip equipment giants as some early 2023 chip winners crumbled.
Reflecting more speculative stock stocks, the ARK Innovation ETF ( ARKK ) rose 1.4% and the ARK Genomics ETF ( ARKG ) rose 0.5%.
The SPDR S&P Metals & Mining ETF (XME) rose 1.85% and the Global X US Infrastructure Development ETF (PAVE) rose 2.4%. The US Global Jets ETF (JETS) rose 0.5%. The SPDR S&P Homebuilders ETF (XHB) rose 3.4%. The Energy Select SPDR ETF (XLE) rose 0.4%. XOM shares and Chevron are huge holdings in XLE. The Health Care Select Sector SPDR Fund ( XLV ) rose 0.5%. The DXCM stock is in XLV.
The Financial Select SPDR ETF ( XLF ) rose 1.6%. The SPDR S&P Regional Banking ETF (KRE) jumped 1.9%.
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Market rally analysis
The stock rally continues to be heavily reliant on megacap technology.
The Meta stock rose 14% to a 52-week earnings high. Microsoft rose 3.2%, adding to Wednesday’s 7.2% gain. GOOGL shares fell 3.7%, back in a buy zone. Apple shares rose 2.8% and Amazon cleared key levels into earnings.
In contrast to Wednesday, however, all the major indices rose on Thursday.
The Nasdaq Composite bounced back above the 12,000 level and reclaimed the 21-day moving average, a day after rebounding from the 50-day line. The S&P 500 and Dow Jones are also back above their 21-day lines.
More importantly, market gains were robust outside of megacaps.
The First Trust Nasdaq-100 Equal Weighted Index ETF (QQEW) got off to a slow start, but eventually rose 1.65%, back above its 50-day line. The Invesco S&P 500 Equal Weight ETF ( RSP ) rose 1.6%, running above its 200-day, with the 50-day line just above it. But both of those ETFs are still down 1% or more for the week.
The winners topped the losers solidly on Thursday, but market breadth remains a concern. New lows easily beat new highs, especially on the Nasdaq.
Some leading stocks flashed buy signals on Thursday, but many are extended or moving back into position. More generally, market leadership is narrow and quick to change.
The major indexes still need to get above the April highs and clear the 2023 highs. Getting RSP above the 50-day line would also signal broader participation beyond Meta, Microsoft and other tech megacaps. More buying opportunities will also be a positive sign.
For now, the stock market rise is still an upward trend under pressure.
Beware of the income season
Net stocks and Snap look like the latest big losers on earnings.
Several leading stocks saw massive income selling on Thursday. Imp (PI) crashed 39% while Mobileye and CROX shares plunged 19% and 16%, respectively, after all closing around buy points. Even with a decent cushion, say a 10% gain heading into earnings, investors suffered painful losses.
The amount of massive earnings moves in recent days should remind investors to be aware of upcoming report dates for their positions and set rules for holding or selling ahead of results.
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What to do now
The market recovery had a solid session, but not as strong as the large company indices indicate. Not many stocks flashed buy signals on Thursday, although many found key support during the day. Many shares that are established have continued earnings for the next couple of weeks.
If the market recovery continues to recover, buying opportunities will increase. Investors should have their watchlists ready with potential leaders across various sectors. But also be ready to exit if the broad market deteriorates.
Read The Big Picture every day to stay in sync with market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock exchange updates and more.
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