Dow Jones futures fell modestly late Thursday, along with S&P 500 futures and Nasdaq futures, as Amazon stock, Twitter (TWTR), Tesla (TSLA) rival Nio (NIO) and Apple supplier Skyworks Solutions (SWKS) led another busy after-hours earnings session. The stock market rally showed gains Thursday on the major indexes, but the whipsaw action and breakout reversals were disappointing.
Wall Street opened strong with the S&P 500 and Nasdaq composite both hitting all-time highs. But almost immediately stocks gave up gains with the Nasdaq turning solidly lower before rebounding for a slim gain. Facebook (FB) gapped higher on earnings, closing strong. Century Communities (CCS) and energy stocks also had big gains on results.
Key Earnings Late
Amazon.com (AMZN), Nio, KLA Corp. (KLAC), Twitter, Fortinet (FTNT), Atlassian (TEAM) and Five9 (FIVN) reported earnings. So did Omnicell (OMCL) Dexcom (DXCM) and Apple (AAPL) suppliers Skyworks and Cirrus Logic (CRUS).
Meanwhile, Digital Turbine (APPS) reported preliminary fiscal Q4 revenue above consensus. APPS stock rose 6% overnight, but that would likely be below its 50-day line.
Amazon stock rose late on blowout earnings, moving to a record high and flashing a buy signal. Software makers Five9 and Atlassian also are triggering buy signs, while FTNT stock also rallied. Nio stock was about flat. But Twitter, Skyworks and Cirrus Logic sold off, while Dexcom and KLA also retreated. OMCL stock was not yet active.
Dow Jones Futures Today
Dow Jones futures fell 0.2% vs. fair value. S&P 500 futures declined 0.3%. Nasdaq 100 futures retreated 0.45%.
Coronavirus cases worldwide reached 151.12 million. Covid-19 deaths topped 3.17 million.
Coronavirus cases in the U.S. have hit 33.04 million, with deaths above 589,000.
Stock Market Rally
The stock market rally closed higher on the major indexes but showed some weakness as well.
The Dow Jones Industrial Average rose 0.7% in Thursday’s stock market trading, along with the S&P 500 index. The Nasdaq composite edged up 0.2%, erasing intraday losses but well off opening highs of more than 1%.
Apple stock popped to 137.07 at the open, moving above a 135.63 cup-with-handle base. But shares quickly faded, closing down 0.1% to 133.48. Late Wednesday, Apple reported blowout earnings on hot iPhone sales while announcing a divided hike and a $90 billion stock buyback. But guidance was conservative.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) lost 0.7%, while the Innovator IBD Breakout Opportunities ETF (BOUT) edged up 0.1%. The iShares Expanded Tech-Software Sector ETF (IGV) sank 1.4%, with ServiceNow (NOW) tumbling, weighing on other software names. The VanEck Vectors Semiconductor ETF (SMH) rose 0.9%. QCOM stock is a notable component, with Qualcomm earnings, along with booming Apple results, helping support other iPhone suppliers, including Skyworks.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) slumped 2.9% and ARK Genomics ETF (ARKG) 2.1%, both hitting resistance at the declining 50-day line. Tesla stock is the top overall holding for ARK Investments’ ETFs.
Amazon earnings shot up 215%, racing past views, while the e-commerce and cloud computing giant also guided higher. AMZN stock climbed 2.35% to 3,553 in extended trade, but definitely faded from initial after-hours gains. Shares edged up 0.4% to 3,471.31 on Thursday, in range from a 3,346.03 handle buy point. That handle coincided with an early February peak for Amazon stock. Investors also could use 3,552.35, just above the consolidation high, as another entry.
Nio earnings were mixed in Q1 amid a wider-than-expected loss but skyrocketing sales that topped views. The China EV maker also guided slightly higher for Q2 revenue. In overnight action, Nio stock was up and down, little changed. Shares fell 5.3% to 38.99 on Thursday, again hitting resistance at their 50-day line, as Ford (F) said it would have to curtail Q2 production due to the industry chip shortage.
Tesla stock slid 2.5% to 677 on Thursday, undercutting its 50-day line and its March short-term highs. Shares edged lower overnight. TSLA stock still has a 780.89 cup-with-handle buy point but has lost 8.3% in three sessions.
Skyworks earnings slightly beat views while the iPhone supplier’s guidance nudged above analyst targets. But SWKS stock tumbled 7.5% in extended trade. Shares rose 0.7% to 197.86 on Thursday after hitting a record 204 intraday. Skyworks stock has a 194.59 handle buy point.
Cirrus Logic Earnings
Cirrus Logic earnings and revenue fell short. CRUS stock plunged 11% in overnight action. The Apple supplier edged up 0.2% to 86.24 on Thursday. Cirrus Logic stock has a 103.35 buy point. Shares have formed a handle that’s too low in the base to be proper. But investors could use 89.44 as an early entry.
KLA earnings were better than expected. KLAC stock dipped 2% in extended trade. The chip-equipment giant rose 0.5% on Thursday to 326.36, finding support at the 50-day line. KLAC stock broke out in early April but quickly fizzled. Shares could be forming a new consolidation. Investors could use a move above last week’s high of 340 as an early entry.
Dexcom earnings were better than expected. The diabetes products maker gave in-line full-year revenue guidance, but that came after solidly topping Q1 sales views. DXCM stock fell 6% late. Shares lost 1% on Thursday to 421.70. Dexcom stock has a 456.33 buy point for a consolidation going back to early August. Investors could use 423.50 as an early entry.
Fortinet earnings topped forecasts with guidance strong. FTNT stock rose 4% in overnight trade. Shares of the cybersecurity leader dipped 1.3% to 195.47. on Thursday. Fortinet stock has pulled back modestly from an April 16 peak but isn’t offering a new entry.
Atlassian earnings beat Q3 views with guidance also strong. TEAM stock jumped nearly 6% to 241 in extended action. Shares fell 3.3% to 228.12. TEAM stock has a 241.14 buy point from a double-bottom base, but 245.03 may serve as a better entry now.
Five 9 earnings easily beat. FIVN stock popped 7% to 186 overnight. Shares fell 2.9% to 174.26. Five9 stock has a 201.85 buy point from a cup base. But aggressive investors could use 181.98 as an early entry from a handle that’s just barely too low to be proper.
Omnicell earnings topped views, while the drug distribution automation firm signed up Scripps Health as a customer. OMCL stock was not yet active late. Shares rose 1% on Thursday to 143.86. Omnicell stock is working on a 146.10 buy point from a flat base that’s part of a base-on-base-on-base formation.
Twitter earnings beat forecasts, but user growth missed while revenue guidance came in light. TWTR stock tumbled 11.5% overnight, signaling a move to the bottom of its consolidation. Shares dipped 0.9% to 65.09 on Thursday.
Market Rally Analysis
The stock market rally closed higher Thursday but it many ways it was a disappointing session. Several early breakouts fizzled, while overall breadth was weak.
How meaningful was Thursday’s action? If the major indexes and leading stocks dust themselves off and soon hit new highs, then Thursday’s morning sell-off will be quickly forgotten. But if selling continues or stocks hit resistance near current levels, Thursday’s action will loom larger.
What drove Thursday’s morning retreat from opening highs? There are several possible factors.
- President Joe Biden late Tuesday laid out his proposed tax hikes on business and capital gains for the wealthy, though those were already largely known.
- Ford’s chip-related output cuts rattled the industry. Ford plunged nearly 10%, while GM (GM), Volkswagen (VWAGY) and Tesla stock also retreated.
- ServiceNow (NOW) tumbled as some key metrics disappointed, hitting software.
- The Biden administration aims to classify gig economy workers as employees, roiling the business models of Uber (UBER), Lyft (LYFT), DoorDash (DASH) and more.
- The 10-year Treasury yield jumped, rising as high as 1.688% before backing off to just 1.64%. That continues a rebound over the past week. A higher 10-year yield weighs on the market rally, especially highly valued growth names, though many financials rose.
But ultimately it doesn’t matter why stocks are moving. What matters is if they are rising or falling.
In any case, Thursday was a great example of why investors should wait at least five minutes after the open before buying a stock, especially after big news. Investors doing that would have avoided jumping into soon-to-fizzle breakouts such as Apple and Align Technology (ALGN).
With Friday trading on tap, investors may have decisions to make. It’s often a good idea to wait to see if a struggling stock can regain key support by the end of the week before selling your remaining shares. So make sure your exit strategy is ready to go.
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