Dow futures rose Wednesday morning, along with S&P 500 futures and especially Nasdaq futures. Both Google and Microsoft topped profits overnight, with the announcement of the Federal Reserve’s meeting looming on the horizon on Wednesday. The stock market rally continued to decline on Tuesday Walmart (WMT) down on earnings warning during Shopify SHOP has announced massive layoffs with growth disappointment.
Google Parent the alphabet (GOOGL) missed second-quarter earnings while giant Dow Jones Microsoft (MSFT) failed to top and bottom earnings, but it gave solid guidance, starting a big week for the tech giants. meta pads (META) scheduled for Wednesday night and apple (AAPL) and Amazon.com (AMZN) on Thursday.
Google and Microsoft shares rose modestly, after both slipped into earnings.
Energy Enphase (ENPH), going forward, reported stronger-than-expected second-quarter results. ENPH jumped in extended trading, indicating a move beyond the main resistance.
Chipotle Mexican Grill (CMG) and Texas Instruments TXN stock rose overnight on earnings, but both were higher.
early Wednesday Boeing (BA) posted a larger-than-expected loss while second-quarter revenue also lost, but BA stock rose slightly as giant Dow Jones said it still expects cash flow to be positive in 2022. Bristol-Myers Squibb (BMY) and humana (HUM) topped views ahead of the opening, although Bristol lowered its full-year targets. BMY and Humana stock fell modestly ahead of the opening.
Shopify reported a small, unexpectedly adjusted loss of revenue, a day after it abruptly cut 10% of its staff. SHOP stock is down sharply after dropping 14% on Tuesday.
In other news, activist investor Elliott Management has acquired an unknown stake in PayPal (PYPL), Dow Jones reported late Tuesday. PYPL stock is up nearly 7% early Wednesday.
The video included in this article highlights and analyzes Tuesday’s market action BJ’s sentence (BJ), Cheniere Energy (liquefied natural gas) and fortinet (FTNT). The video also took a quick look at Google, Microsoft and Enphase Energy stocks.
All eyes turn to the Federal Reserve on Wednesday afternoon as it concludes the Fed’s two-day meeting with an Eastern Time Policy Announcement at 2pm. Markets are anticipating a further 75 basis point hike in the Federal Reserve. The big question is what Fed Chair Jerome Powell is referring to for the September Fed meeting and beyond. Markets are somewhat divided between a half-point move in September or 75 basis points. In November, investors bet another 25-50 basis points, but that’s it.
General inflation is almost certain to have peaked, given the drop in gasoline prices, but price pressures remain high. However, investors are expecting the Fed to finish raising interest rates within a few months, in large part because they see a recession that may already be in progress.
On Wednesday, the Commerce Department said new home sales in June fell from downwardly revised May, the latest bleak economic report. On Thursday morning, trade is likely to report a second consecutive quarter of lower GDP. Although it is not an official recession, there is a strong possibility that the NBER will eventually declare a recession in the United States.
Ahead of the Federal Reserve’s September meeting, investors and policymakers will get CPI readings for July and August and jobs reports.
Dow jones futures contracts today
Dow Jones index futures rose 0.4% against stocks. fair value. S&P 500 futures rose 0.8%. Nasdaq 100 futures jumped 1.4%. Microsoft is a component of the Dow Jones, S&P 500 and Nasdaq 100, Boeing is the Dow Jones and S&P 500, while Google and ENPH are the S&P 500 and Nasdaq 100 shares.
Crude oil futures are up 1%.
Remember that overnight action in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
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stock market rise
The stock market rally took further losses, especially among technology companies.
The Dow Jones Industrial Average lost 0.7% in stock market trading on Tuesday. The S&P 500 fell 1.15%, with Fortinet and WMT being the biggest losers. The Nasdaq Composite Index fell 1.9%. Small cap Russell 2000 lost only 0.6%.
US crude oil prices fell 1.8% to $94.98 a barrel, as recession fears over demand intensified. President Biden plans to release another 20 million barrels from the Strategic Petroleum Reserves. This was also negative for crude oil prices.
Natural gas prices rose 3.1%. Russia’s curbing of natural gas flows to Europe has pushed up prices there, boosting demand for US LNG.
The 10-year Treasury yield fell 3 basis points to 2.79% after falling to 2.71% on the day, matching its lowest level in May. The two-year yield rose slightly to 3.06%, with a widening yield curve inversion highlighting inflation risks.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) and the Innovator IBD Breakout Opportunities ETF (BOUT) rose 0.2%, with Medicaid. The ETF (IGV) in the iShares Expanded Tech-Software Sector (IGV) fell 3.1%, with Fortinet and other security stocks falling. MSFT stock is a major component of the IGV. VanEck Vectors Semiconductor Index (SMH) fell 1.5%.
The SPDR S&P Metals & Mining ETF (XME) was down 0.15% and the US ETF Global X Infrastructure Development (PAVE) was down 0.35%. And Global Gates Corporation (JETS) fell by 2%. The SPDR S&P Homebuilders ETF (XHB) has given up 1%. The Energy Select SPDR ETF (XLE) is down 0.9% and the Financial Select SPDR ETF (XLF) is down 1.4%. The SPDR Healthcare Sector Choice Fund (XLV) rose 0.5%.
Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) is down 4.8% and the ARK Genomics ETF (ARKG) is down 1%.
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Microsoft’s earnings and revenue came in below lower views in the fiscal fourth quarter, with EPS increasing 3% and revenue up 12%.
The Dow tech giant was guided by Q1 2023 revenue growth, but cloud revenue should be strong, with Azure sales up 43%. Microsoft sees double-digit sales growth in the new fiscal year 2023.
Microsoft stock jumped 3% in overnight trading after initially slipping slightly ahead of upbeat guidance. Shares fell 2.7% Tuesday to 251.90, retreating significantly from the 50-day streak on a rough day for software.
Google’s earnings fell 11%, missing a bit, while total revenue rose 16%, which is even higher. Digital advertising has fared well, even with the loss of cloud computing and YouTube revenue.
Google stock is up nearly 4% in overnight trading. Shares fell 2.3 percent on Tuesday to 105.02. That didn’t cut an intraday low on May 24 but was the worst close since April 2021. GOOGL stock fell 8.2% over three days in the aftermath. Explode, Explode (SNAP) and Twitter (TWTR) earnings reports highlight the problems of online advertising.
Enphase’s revenue doubled as revenue jumped 68%, both easily outperforming views. The solar inverter maker was guided by third-quarter revenue.
ENPH stock jumped more than 9% in pre-market trading. Shares fell 1.1 percent to 216.10 in Tuesday’s session. Enphase stock is set to break the early April high of 220.99. This could be a strong entry or an additional buying point. But ENPH stock actually closed 13% above the 50-day line.
Market Rise Analysis
The stock market rally turned back on Tuesday, as earnings warnings fueled the sell-off once again, especially with big earnings, economic data and the Fed meeting decision on tap.
The S&P 500 fell back to its 50-day moving average, with the Dow and Nasdaq moving towards that level.
Perhaps the latest move is just a short term constructive pullback, paving the way for bullish gains. But the major indices may be sold off more after the Fed and Apple earnings meeting.
The blue chip’s work hasn’t been inspiring. There weren’t many blinking buy signals when the market was moving higher. Those who did were often prone to tremors or blackmail. Now there is a return towards energy names, especially natural gas and liquefied natural gas. But this can change quickly.
Health insurance companies and some doctors are still showing their strength.
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What are you doing now
Except for the possibility of biting into the energy game, there is little reason to make new purchases until after the Fed meeting and other important news over the next couple of days. Investors should cut back on modest exposure, taking at least partial profits and minimizing losses.
But stay connected. The market could improve rapidly in the next few days, providing many buying opportunities. So work on those watchlists.
Read the big picture every day to stay in sync with market trend, stocks and leading sectors.
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