Dow Jones futures tilted higher Friday morning, while S&P 500 futures and Nasdaq futures fell slightly. Treasury yields retreated Friday, while crude oil spiked as the U.S. tightened sanctions on Russian crude sales.
The stock market rally retreated Thursday after Treasury yields rebounded. Blame a CPI inflation report that was hotter than expected in some areas, followed by a poorly received 30-year Treasury auction. The major indexes did come well off afternoon lows, but overall breath was overwhelmingly bleak.
Investors should be paying close attention with the Nasdaq and S&P 500 at key levels, ready to expand or reduce exposure.
Among megacap stocks, Apple (AAPL) edged higher Thursday while Microsoft (MSFT), both around possible buy points. Google parent Alphabet (GOOGL), Meta Platforms (META) fell, but from 52-week highs. Nvidia (NVDA) nudged higher after paring gains. Amazon.com (AMZN) hit key resistance while Tesla (TSLA) fell modestly.
All were down a fraction Friday morning.
UnitedHealth earnings and revenue slightly beat views. UNH stock rose slightly before the open, near a six-month high within an 11-month consolidation. Shares have risen solidly over the past few weeks.
JPMorgan, Citigroup and Wells Fargo beat views. JPM stock climbed slightly while Wells Fargo and Citigroup rose modestly.
Superregional PNC Financial topped on EPS while revenue missed. PNC stock edged higher.
Blackrock earnings beat while revenue was in line. Shares fell slightly. BLK stock has been under pressure in a tough time for many asset managers.
The bank stocks look bad to terrible, though JPM stock is the closest to looking interesting.
Dow Jones Futures Today
Dow Jones futures rose a fraction vs. fair value, with UNH stock and JPMorgan offering a slight lift. Boeing (BA) weighed on blue chips on the latest 737 production woes.
S&P 500 futures fell 0.1% and Nasdaq 100 futures retreated 0.35%.
The 10-year Treasury bond yield tumbled to 4.62%, erasing most of Thursday’s big gain.
Crude oil futures jumped more than 4%. The U.S. stepped up restrictions on Russian crude, adding to supply concerns. Israel is poised to begin a major ground offensive in Gaza.
Hong Kong’s Hang Seng index fell 2.3% on the latest signs of a weak economy there. China’s September consumer prices were flat vs. a year earlier, lower than views for a 0.2% gain. Producer prices sank 2.5%, a little more than views, but up from August’s 3% decline.
Stock Market Rally
The stock market rally started off slightly higher on the major indexes, reversed sharply lower as Treasury yields kept surging, but then pared losses. Volume rose, especially on the Nasdaq.
The Dow Jones Industrial Average fell 0.5% in Thursday’s stock market trading. The S&P 500 index land Nasdaq composite sank 0.6%.
Thursday’s declines followed four straight gains. But the indexes are struggling at key levels.
The Nasdaq fell back below its 50-day line. The Dow Jones once again hit resistance at the 200-day. The S&P 500 fell below its 21-day moving average intraday, but closed just above that level.
Meanwhile, the underlying action was even worse. Losers trumped winners 3-to-1 on the Nasdaq and 5-to-1 on the NYSE.
The small-cap Russell 2000 and Invesco S&P 500 Equal Weight ETF (RSP), which had been hitting resistance at its fast-falling 21-day line, tumbled 2.23% and 1.25% respectively. Both are close to recent and even 2023 lows.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) sank 0.9%, falling back 50-day line. The Nasdaq 100 slipped just 0.35% still above its 50-day.
U.S. crude oil prices fell 0.7% to $82.91 a barrel. Gasoline futures sank 2% to a 2023 closing low.
The 10-year Treasury yield surged more than 11 basis points to 4.7%, also fueling a big gain in the U.S. dollar. The 10-year Treasury yield bounced on the CPI inflation, then pushed higher on a 30-year Treasury bond auction. The auction saw weak demand and surging yields.
The stock market rally had benefited greatly from the retreat in Treasury yields and the dollar. So those sharp gains are worrisome. If the 10-year Treasury bond yield moves back up to recent 16-year highs, the uptrend could face real challenges.
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) slumped 1.7%. The iShares Expanded Tech-Software Sector ETF (IGV) declined 0.4%, with MSFT stock a major holding. The VanEck Vectors Semiconductor ETF (SMH) rose 0.5%. NVDA stock is the No. 1 SMH component.
SPDR S&P Metals & Mining ETF (XME) skidded 3.2%. U.S. Global Jets ETF (JETS) descended 2.3%. SPDR S&P Homebuilders ETF (XHB) stepped down 3.8%. The Energy Select SPDR ETF (XLE) edged up 0.1%. The Health Care Select Sector SPDR Fund (XLV) gave up 0.9%, with UNH stock a major holding.
The Industrial Select Sector SPDR Fund (XLI) declined 0.9%
The Financial Select SPDR ETF (XLF) fell 0.6%. JPM stock, Citigroup, Wells Fargo, BlackRock and PNC Financial are all XLF members.
Apple stock rose 0.5% to 180.71, moving a little further above its 50-day line. Shares have a 189.98 double-bottom buy point, but are flirting with downward-sloping trendline entry.
Microsoft stock dipped 0.4% to 331.16, but still above the 50-day line and just above a downward-sloping trendline. Investors could use 340.86 as another early entry, with 366.78 the official buy point. Microsoft earnings for fiscal Q1 2024 are due Oct. 24.
Google stock reversed from a 52-week high to fall 1.1% to 138.97. Arguably, GOOGL stock is still in range from its 50-day line. Google earnings are set for Oct. 24.
Meta stock sank 1.1% to 324.16, falling from a 52-week high after a big four-day run. The Facebook and Instagram parent is still in range from a 312.87 entry. Meta earnings are on Oct. 25.
Nvidia stock edged up 0.3% to 469.45, after hitting 476.05 intraday. Shares are still in range from the 50-day line. The official cup-base buy point is 502.66.
Amazon stock for a fifth straight session, up 0.4% to 132.33, but pared gains after hitting resistance at the 50-day line. A decisive move above the 50-day line could offer an early entry. The e-commerce and cloud-computing giant has earnings on Oct. 26.
Tesla stock fell 1.6% to 258.87, finding support at the 21-day line. The EV giant has a 278.98 cup-with-handle buy point. But a move above Tuesday’s high of 268.94 would break a trendline from the start of the consolidation. Tesla earnings are due Oct. 18.
All of these Magnificent Seven stocks were down less than 1% earlyFriday.
What To Do Now
Thursday’s downside reversal is why it’s a good idea to add exposure gradually vs. in a big flurry.
Aside from some big techs, the market seems to be hitting resistance, at least in the short run. Investors, especially those who were aggressive in recent days, need to be ready to pare or exit positions if they falter. The S&P 500 and Nasdaq falling below their 21-day lines would be a negative sign.
Still, stocks could easily rebound. The Nasdaq decisively clearing the 50-day line — and the S&P 500 following suit — would likely offer a number of buying opportunities. So have your watchlists ready.
Earnings season is about to kick in, adding a huge amount of uncertainty. Know the earnings dates for your holdings and potential buys, but also for key rivals, customers or suppliers.
Chip-equipment makers Applied Materials (AMAT), KLA Corp. (KLAC) and Lam Research (LRCX) all made bullish moves Wednesday morning. But Lam Research and ASML (ASML) reports next Wednesday, with huge customer Taiwan Semiconductor (TSM) due a day later. So while AMAT stock doesn’t have earnings due in the next month, it still has plenty of near-term earnings risk.
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