Dow Jones futures rose Friday morning, while S&P 500 futures and Nasdaq futures fell slightly. Treasury yields retreated on Friday as the United States tightened sanctions on crude oil sales to Russian crude.
The stock market rally retreated on Thursday as Treasury yields rose again. Blame the warmer-than-expected CPI inflation report in some quarters, followed by the poorly received 30-year Treasury bid. Vital indices rebounded from midday lows, but the overall outlook was very bleak.
Investors should pay close attention to the Nasdaq and S&P 500 at key levels and be prepared to expand or reduce exposure.
In Megacap shares, Apple (APL) Jupiter is exalted at the same time Microsoft (MSFT), both around potential buy points. Google Parents letters (Google), Meta platforms (Meta) fell, but from the 52-week high. Nvidia (NVDA) moved higher after paring gains. Amazon.com (AMZN) hit key resistance when Tesla (D.S.L.A) fell modestly.
Friday morning everything was down to a fraction.
UnitedHealth’s revenue and earnings slightly beat views. UNH stock rose slightly before the open, nearing a six-month high within an 11-month consolidation. The stock has continued to rise over the past few weeks.
JP Morgan, Citigroup and Wells Fargo beat views. Shares of JPM rose slightly, while Wells Fargo and Citigroup rose modestly.
Super Regional PNC Financial tops EPS, revenue misses. PNC shares soared.
BlackRock earnings beat while earnings are in line. Stocks fell slightly. BLK stock is under pressure at a difficult time for many asset managers.
Bank stocks look bleak, though JPM stock looks interesting.
Dow Jones Futures Today
Dow Jones futures rose a fraction and fair value, while UNH stock and JP Morgan gave slight gains. Boeing (B.A) weighed in on the blue chips in recent 737 production woes.
S&P 500 futures fell 0.1% and Nasdaq 100 futures retreated 0.35%.
The 10-year Treasury yield fell to 4.62%, erasing Thursday’s big gains.
Crude oil futures rose more than 4%. The US increased restrictions on Russian crude oil, adding to supply concerns. Israel is preparing to launch a major ground offensive in Gaza.
Hong Kong’s Hang Seng index fell 2.3% on the latest signs of a weakening economy there. China’s September consumer prices fell short of views for a 0.2% gain. Producer prices fell 2.5%, slightly more than views, but down from a 3% decline in August.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
Stock market rally
The stock market’s rally started slightly higher in the major indices, then pared losses as Treasury yields continued to rise. The Nasdaq was particularly bullish.
The Dow Jones industrial average fell 0.5% in stock market trading Thursday. The S&P 500 index and the Nasdaq composite fell 0.6%.
Thursday’s declines followed four straight gains. But indices are struggling at key levels.
The Nasdaq fell below its 50-day line. The Dow Jones hit resistance again on the 200-day. The S&P 500 fell below its 21-day moving average, but closed just above that level.
Meanwhile, the underlying action was even worse. Losers beat winners 3-to-1 on the Nasdaq and 5-to-1 on the NYSE.
Small-cap Russell 2000 and Invesco S&P 500 Equal Weight ETF (RSP), were hitting resistance in a rapidly falling 21-day streak, falling 2.23% and 1.25%, respectively. Both are the latest and even the 2023 minimum.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) fell 0.9%, retracing the 50-day line. The Nasdaq 100 is down just 0.35% from its 50-day high.
U.S. crude oil prices were down 0.7% at $82.91 a barrel. Gasoline futures fell 2% to 2023 closing lows.
The 10-year Treasury yield rose more than 11 basis points to 4.7%, fueling a big gain in the US dollar. The 10-year Treasury yield rose on CPI inflation, followed by the 30-year Treasury bond bid. Low demand and increased yields at auctions.
Stock market gains benefited largely from a retreat in Treasury yields and the dollar. So those sharp gains are worrying. If the 10-year Treasury yield moves back to a recent 16-year high, the bullishness could face real challenges.
Among growth ETFs, the innovator IBD 50 ETF (FFTYfell 1.7%. iShares Expanded Technology-Software Sector ETF (VAT) fell 0.4%, with MSFT shares playing a leading role. VanEck Vectors Semiconductor ETF (SMHUp 0.5%. NVDA Stock no. 1 is the SMH component.
SPDR S&P Metals & Mining ETF (XME) slipped 3.2%. US Global Jets ETF (JETS) decreased by 2.3%. SPDR S&P Homebuilders ETF (XHBdecreased by 3.8%. Energy Select SPDR ETF (XLEUp 0.1%. Health Care Select Sector SPDR Fund (XLV) dropped 0.9%, with UNH stock a major contributor.
Industrial Select Sector SPDR Fund (XLIdecreased by 0.9%
Fund Selection SPDR ETF (45fell 0.6%. JPMorgan Chase, Citigroup, Wells Fargo, BlackRock and PNC Financial are all XLF members.
Time the market with IBD’s ETF Market Strategy
Apple shares rose 0.5% to 180.71, moving just above its 50-day line. Shares have a double-bottom buy point at 189.98, but are straddling a downward sloping trendline entry.
Microsoft shares were down 0.4% at 331.16, but still above the 50-day line and slightly above a downtrend. Investors can use 340.86 as another initial entry, with 366.78 an official buy point. Microsoft’s earnings for the first quarter of fiscal 2024 are due on October 24.
Google shares fell 1.1% to 138.97 from a 52-week high. Arguably, GOOGL stock is still in range from its 50-day line. Google earnings are set for October 24.
Meta stock fell 1.1% to 324.16, falling from a 52-week high after a big four-day run. Facebook and Instagram parents are still in range from the 312.87 entry. Meta earnings on October 25.
Nvidia shares rose 0.3% to 469.45, having touched 476.05 intraday. The stock is still in a 50-day range. The official cup-base buy point is 502.66.
Amazon shares rose 0.4% to 132.33, for the fifth straight session, but pared gains after hitting resistance at the 50-day line. A decisive move above the 50-day line could provide an early entry. The e-commerce and cloud-computing company reported earnings on Oct. 26.
Tesla shares fell 1.6% to 258.87, finding support in a 21-day streak. The EV firm has a cup-with-handle buy point of 278.98. But a move above Tuesday’s high of 268.94 would break a trendline from the start of the consolidation. Tesla earnings are due on October 18th.
All seven of these amazing stocks were down less than 1% at Friday’s opening.
What to do now
Jupiter’s negative retrograde is why it’s better to gradually add exposure to a bigger fanfare.
With the exception of a few big techs, the market seems to be hitting resistance, at least in the short term. Investors, especially those who have been aggressive in recent days, should be prepared to exit if their position falters. A bearish sign would be for the S&P 500 and Nasdaq to fall below their 21-day lines.
However, stocks could easily bounce back. The Nasdaq decisively clearing the 50-day line — and the S&P 500 following suit — could present several buying opportunities. So keep your watch lists ready.
Adding a huge amount of uncertainty, earnings season is about to begin. Know the earnings dates for your stocks and potential purchases, but also for key competitors, customers or suppliers.
Chip equipment makers Utility items (Big), KLA Corporation (Clutch) and Lam Research (LRCX) all made neat moves on Wednesday morning. But Lam’s research and ASML (ASML) reports next Wednesday, with big customers Taiwan Semiconductor (TSM) after a day. So, even though AMAT stock may not have returns in the next month, it still has period-to-period return risk.
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