Dow Jones futures were little changed early Friday, while S&P 500 futures and especially Nasdaq futures rose, as apple (AAPL) and Amazon.com (AMZN) led another wave of gains overnight.
Stocks rallied Thursday, shrugging off a post-Fed decline and weak earnings to move modestly higher.
Key earnings overnight
In addition to Apple and Amazon, First Solar (FSLR), Intel (INTC) and Year (ROKU) were notable reports.
Apple shares rose modestly overnight on better-than-expected fiscal Q3 earnings and positive comments.
Amazon shares rose in extended trading. The e-commerce and cloud giant topped the revenue views.
FSLR stock rose modestly overnight after First Solar easily beat EPS views and also topped sales. Shares rose 15% Thursday as Congress advanced legislation that includes incentives for solar and green power.
Intel shares plunged in prolonged action after the ailing chip giant missed second-quarter showings and cut full-year estimates.
Roku stock crashed late after the streaming platform reported a bigger-than-expected loss and came up short in trading, citing a “significant decline” in advertising. Streaming hours seen edged lower compared to Q1. Roku also guided sharply down in Q3. Roku stock is set to plummet to its worst levels since the March 2020 corona meltdown.
early friday, Exxon Mobil (XOM), Chevron (CVX), AstraZeneca (AZN) and AbbVie (ABBV) is in print. The AZN share and AbbVie are not far from peaks. XOM shares and Dow Jones giant Chevron are starting to recover after a retreat.
Dow Jones Futures today
Dow Jones futures were reduced relative to fair value. S&P 500 futures rose 0.5 percent. Nasdaq 100 futures rose 1.2 percent. The Apple share and Intel are components of the Dow Jones, S&P 500 and Nasdaq.
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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Stock market rally
The share rally fell just after the open, but quickly strengthened, with the major indices rising solidly.
US GDP fell at a 0.9% annual rate, the second straight quarter of modestly declining economic activity. However, consumer spending remained positive. The data further eases the Fed’s rate hike forecasts without signaling a massive slowdown.
A new push for a tax and spending bill that includes green provisions that boosted solar stocks and other green energy plays.
The Dow Jones Industrial Average fell 1% in Thursday’s trading. The S&P 500 index rose 1.2 percent. The Nasdaq composite rose 1.1 percent. The small-cap Russell 2000 rose 1.4%.
US crude oil prices turned lower, falling 0.9% to $96.42 a barrel.
The 10-year Treasury yield fell 5 basis points to 2.68%, hitting its lowest levels since April.
The odds of a 50 basis point Fed rate hike on September 21 rose to 76% from 60.5% on Wednesday and 40% on Tuesday. Markets are betting on a quarter point move in November and then maybe a quarter point in December.
Among the top ETFs, the Innovator IBD 50 ETF ( FFTY ) rose 1.8%, while the Innovator IBD Breakout Opportunities ETF ( BOUT ) jumped 1.75%. The iShares Expanded Tech-Software Sector ETF ( IGV ) rose 1.9%. The VanEck Vectors Semiconductor ETF ( SMH ) rose 1.2%, with Intel stock a notable holding.
The SPDR S&P Metals & Mining ETF (XME) rose 0.75% and the Global X US Infrastructure Development ETF (PAVE) rose 2.7%. The US Global Jets ETF (JETS) rose 0.5 percent. The SPDR S&P Homebuilders ETF (XHB) rose 2.1%. The Energy Select SPDR ETF (XLE) rose 0.6%, with Exxon and CVX stocks both huge components. The Financial Select SPDR ETF (XLF) rose 0.7 percent. The Health Care Select Sector SPDR Fund ( XLV ) rose 0.6% higher.
ARK Innovation ETF ( ARKK ) reflected more speculative stock stocks, falling 0.4% and ARK Genomics ETF ( ARKG ) 1.3%. Roku stock is a notable ARKK holding.
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Apple revenue fell 8%, but views topped modestly. Sales rose 2% to $82.96 billion, beating third-quarter views. The iPhone giant expects revenue growth to accelerate despite “pockets of softness.”
Apple shares rose 3% overnight, signaling a possible move above the 200-day mark.
Shares rose 0.4% to 157.35 in regular trading on Wednesday. AAPL stock has made strong progress since hitting a 52-week low on June 16. The relative strength line is right at new highs. The RS line, the blue line in the accompanying charts, tracks a stock’s performance against the S&P 500 index.
Amazon earnings were a bit confusing, with a net loss of $2 billion overshadowed by various special factors. But revenue rose 7% to $121.2 billion, which was the top as Amazon Web Services revenue growth accelerated to 33%.
Amazon also posted bullish Q3 earnings.
AMZN shares rose 14% in extended action, signaling a move toward the 200-day line. The stock rose 1.1% to 122.28 on Thursday. Amazon stock recently regained its 50-day line.
Market rally analysis
Stocks retreated Thursday morning, with the Nasdaq down more than 1% intraday. But the major indexes quickly shook it off and moved higher. The Nasdaq moved above last week’s highs, after the Dow and S&P did so on Wednesday.
A pullback would not have been a surprise as a day two reaction to the Fed meeting after Wednesday’s big rally, and with the major indexes at some key technical levels. Weak earnings or guidance from Meta platforms (META), Qualcomm (QCOM) and others also offered a reason for a retreat.
So the market action on Thursday definitely showed strength.
The early June highs are the next market hurdle. A market break of a few days or even weeks would not be bad. That would allow some stocks to form handles and allow moving averages to catch up.
Hershey (HSY) flirted with an early buy point on earnings while Rollins (ROL) broke out sharply on a day two reaction to earnings. Carlisle (CSL) gapped from a base on earnings while Quanta services (PWR) broke out as part of the green power wave, but both are somewhat extended from their 50-day lines.
Pfizer (PFE) fell after earnings, but bounced back from lows, not far from a trendline. Vertex Pharmaceuticals (VRTX), within a buy zone, bounced off its 50-day line.
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What to do now
The stock rally is clearly showing more strength, while a massive week of news is almost over. Investors should benefit from adding exposure. But do it carefully. There is still a risk of individual shakeouts or the market hitting resistance.
Market and sector ETFs remain an attractive way to add exposure with a limited number of quality stocks in position.
Work with these watchlists.
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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