Dow Jones Futures: Netflix jumps on subscribers, Google cuts 12,000 jobs after market rally breaks key levels

Dow Jones futures fell slightly early Friday, while S&P 500 futures rose and Nasdaq futures rose modestly. Netflix ( NFLX ) jumped on strong subscriber growth, with the energy giant SLB (SLB) in print. Google Parent Alphabet (GOOGL) to cut 12,000 jobs as major tech layoffs continue.

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The stock market rally retreated on Thursday for the second day in a row, with the major indexes testing or undercutting further key levels. Dow Jones turned negative for 2023.

Recent economic reports pointed to weaker economic activity, with one major exception: Initial jobless claims were at their lowest level since last April. The overall picture points to increasing recession risks, but tight labor markets keep the Federal Reserve on the lookout.

Leading stocks retreat to varying degrees. Investors should wait to see if this pullback is temporary or something more serious.

MELI stores, Medpace Holdings (MEDP), Axon Enterprise (AXON), Vertex Pharmaceuticals (VRTX) and Exxon Mobil (XOM) is a name that is holding up relatively well so far.

The MEDP share and Axon Enterprise are on the IBD Leaderboard. MercadoLibre and XOM stock are on the IBD 50. VRTX and SLB stock are on the IBD Big Cap 20. GOOGL stock is on the IBD Long-Term Leaders list.

Free market (MELI) was Thursday’s IBD Stock Of The Day. VRTX stock was Wednesday’s.

Dow Jones Futures today

Dow Jones futures lost 0.1% against real value. S&P 500 futures rose 0.1 percent. Nasdaq 100 futures rose 0.5 percent. NFLX stock gives a boost to Nasdaq futures.

The 10-year government yield rose 4 basis points to 3.44%.

Crude oil futures rose around 1% to around $81 a barrel.

Keep in mind that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular session.

Netflix subscriber growth strong

Netflix revenue fell well below Q4 views, while 2% revenue growth was in line. But Netflix subscribers increased by 7.66 million, far more than the 4.57 million expected. The streaming giant launched a cheaper, ad-supported subscription option on November 3. Netflix no longer provides subscriber guidance.

Meanwhile, co-founder Reed Hastings stepped down as co-CEO to become executive chairman. Ted Sarandos will remain co-CEO, along with Greg Peters, currently CEO.

NFLX stock jumped in after-hours trading. Shares fell 3.2% to 315.78 in Thursday’s regular session.

The Netflix subscriber growth is a positive sign for many other streaming games, including Walt Disney (HAZE), Paramount Global (TO), Warner Bros Discovery (WBD) and Year (ROKU). But DIS stock, Roku and the others had small gains in extended action.

Google Job Cuts

Google parent Alphabet will lay off 12,000 workers, or 6% of its workforce. This appears from a company memorandum. It follows Microsoft’s plans to cut 10,000 jobs, or 4.5% of its workforce, earlier this week, with Amazon.com (AMZN), Salesforce.com (CRM) and many other tech giants that are downsizing.

Late Thursday, Google said it would delay 20% of bonus payouts until at least March.

GOOGL shares rose solidly in pre-market trading.

Google shares rose 2.1% to 93.05 on Thursday, moving above the 50-day mark for the first time since early December. The 50-day line has been an area of ​​resistance for the internet giant since late 2021. Still, GOOGL stock is a long way off its 200-day line.

Eli Lilly Falls on FDA Alzheimer’s Rejection

The FDA rejected Eli Lilly’s accelerated approval submission for its Alzheimer’s treatment donanemab, seeking more data. Eli Lilly (LLY) fell modestly overnight. Biogenic ( BIIB ), which recently produced positive results on a similar Alzheimer’s drug, rose modestly.

SLB income

The SLB income is due early Friday. SLB, formerly known as Schlumberger, will provide insight into the oilfield services market. Oil&Gas-Field Services is ranked No. 1 out of IBD’s 197 industry groups.

SLB shares were up 0.4% at 57.38 on Thursday, after coming down to the top of a recent base. But it is slightly extended from a buy point of 53.97.

Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live

Stock market rally

The stock rally extended Wednesday’s losses on Thursday morning, and recovered somewhat in the afternoon, but faded again towards the end.

The Dow Jones Industrial Average fell 0.8 percent. in Thursday’s trading, along with the S&P 500 index. The Nasdaq composite fell nearly 1%. The small-cap Russell 2000 fell 1%.

Solar stocks were big losers amid growing concerns about the residential solar market.

US crude oil prices rose 1.1% to $80.33 a barrel, continuing to trade around the $80 level. Gasoline futures climbed 2.9% to a two-month high.

The 10-year government yield increased 3 basis points to 3.4%.

ETFs

Among growth ETFs, the Innovator IBD 50 ETF ( FFTY ) fell nearly 2%, while the Innovator IBD Breakout Opportunities ETF ( BOUT ) fell 1.2%. The iShares Expanded Tech-Software Sector ETF (IGV) returned 0.8%. VanEck Vectors Semiconductor ETF (SMH) decreased 2.45%.

The ARK Innovation ETF ( ARKK ) reflected more speculative stock stocks, falling 3.2% and the ARK Genomics ETF ( ARKG ) losing 3.3%.

The SPDR S&P Metals & Mining ETF (XME) fell 0.2%, along with the US Global Jets ETF (JETS). SPDR S&P Homebuilders ETF (XHB) sold 3% of. The Energy Select SPDR ETF (XLE) rose 1.2%, with XOM stock No. 1 and SLB also a major component. The Financial Select SPDR ETF ( XLF ) fell 1.2%. The Health Care Select Sector SPDR Fund ( XLV ) rose 0.2%.

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Stocks to watch

MELI shares rose 0.4% to 1,072.74, stopping this week after a big rally to start 2023. The Latin American e-commerce and payments giant is just below a buy point of 1,095.44, but really needs a handle to let the grand averages catch up. MercadoLibre stock has held up very well, but use some depth on any handle to shake out weak holders.

MEDP shares fell 1.5% to 228.84, near an official buy point of 235, according to MarketSmith analysis. Shares exploded above the 50-day mark on January 10, making for an early entry. Now Medpace stock could use a handle.

XOM stock tested its 50-day line, but closed up 0.6% at 111.32. Shares are not far from a buy point at 114.76 from a flat base.

VRTX stock was down 0.6% at 307.94, still holding above its 50-day line. Shares bounced above the 50-day mark on Tuesday, making an early entry at the time. Investors should wait to see if the biotech can move past Tuesday’s high of 312.35. The official flat buy point is 324.85.

AXON shares climbed 1% to 184.06, continuing to work with a handle on a cup base that would lower the buy point slightly from today’s 193.95. Axon, which makes Tasers, body cameras and digital storage for law enforcement, cleared an early entry on Jan. 9 when it moved above the 50-day line.

Market rally analysis

After Wednesday’s sharp downward turn, the stock market recovery showed further weakness. While the major indexes recovered from their late-morning lows, they faded toward the end.

The S&P 500 index, after falling back below its 200-day line in the previous session, broke below its 50-day on Thursday. The Nasdaq also broke below its 50-day line but bounced off its 21-day line. The Russell 2000, which nearly hit its late 2022 highs on Wednesday morning, tested its 200-day on Thursday but closed above that line.

The Dow Jones had its third consecutive significant decline, testing the lowest of the follow-up day on January 6. Closing below the FTD low would be a bearish sign of a market rally, although the S&P 500 and Nasdaq are well above their Jan. 6 lows for now.

The indexes closing down are giving hope that the current pullback is just a healthy pause, allowing leading stocks to forge handles and other new buying opportunities. But this can be more serious. A break below Thursday’s lows would be worrisome.

Some leading stocks, such as Axon, MercadoLibre and MEDP stocks are holding up quite well. But others suffer greater losses. Deere (DE), which flashed early Tuesday morning, undercut the lowest part of the flat base on Thursday.

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What to do now

With the market rally retreating, many leading stocks are in the process of paring recent gains or even falling below their entries.

Investors should hold off on new purchases until further notice. If anything, they want to cut modest exposure, if only because of the action of individual companies.

Despite some recent losses, a large number of shares have been put up. One or two good days can improve the technical picture of the market rally considerably and offer many new buying opportunities. So have the watch lists ready.

But just because a stock sets up doesn’t mean it will break out or flash a buy signal, or that such a move will work.

Earnings season looks set to hit the market with individual stocks and the overall uptrend at a weak time. Tread carefully.

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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