Dow Jones futures rose modestly Thursday night, along with S&P 500 futures and Nasdaq futures, as Snap stock and Twitter leapt on earnings, lifting social rivals such as Facebook (FB). U.S.-listed Chinese stocks came under pressure again, with for-profit education firms hammered.
XThe stock market rally was mixed Thursday, with Apple (AAPL), Microsoft (MSFT) and other megacap techs and software leading the way while small caps and many sectors retreated.
Snapchat parent Snap (SNAP), Twitter (TWTR) and Intel (INTC) reported earnings after the close.
Snap and Twitter earnings crashed views amid booming revenue growth. Snap and TWTR stock surged in overnight trade, signaling possible breakouts. That also gave a lift to Facebook stock and Pinterest (PINS), as well as Google stock, all of which report next week. Facebook and Pinterest stock had flashed bullish reversals from their 50-day lines earlier this week.
Intel beat views but gave mixed guidance. Intel stock fell modestly in extended trade.
Apple, Microsoft Lead Market Rally
The stock market rally edged higher Thursday on the major indexes. Apple stock rose 1% on Thursday while Microsoft, Amazon.com (AMZN) and Facebook stock climbed more than 1%. Google parent Alphabet (GOOGL) climbed 0.7%.
Leading stocks generally did well, with XPEL (XPEL), CrowdStrike (CRWD) among those flashing buy signals.
On the downside, small caps pulled back. So did many real economy sectors, though they pared losses.
Microsoft and Google stock are on IBD Leaderboard and IBD Long-Term Leaders. PINS stock is on SwingTrader. Snap stock, Pinterest and Google are on the IBD 50.
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U.S.-Listed China Stocks Hammered
U.S.-listed China stocks tumbled before the open. Didi Global (DIDI) continued to sell off amid a continued Chinese government crackdown vs. internet or consumer data heavy companies. Alibaba (BABA), JD.com (JD) and several others fell modestly.
For-profit school operators, including New Oriental Education (EDU), TAL Education (TAL) and Gaotu Education (GOTU), crashed roughly 50% as Beijing mulled whether to make after-schooling tutoring firms nonprofit. These stocks had fallen sharply in 2021 as regulators and leaders signaled new restrictions.
Dow Jones Futures Today
Dow Jones futures rose 0.5% vs. fair value. S&P 500 futures climbed 0.5%. Nasdaq 100 futures gained 0.5%, helped by Facebook and Google stock.
The 10-year Treasury yield rose 3 basis points to 1.30% early Friday after dipping Thursday.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Coronavirus News
Coronavirus cases worldwide reached 193.53 million. Covid-19 deaths topped 4.15 million.
Coronavirus cases in the U.S. have hit 35.21 million, with deaths above 626,000.
Stock Market Rally
The stock market rally saw slim gains on the major indexes, some solid gains for leading stocks but weakness elsewhere.
The Dow Jones Industrial Average edged up 0.1% in Thursday's stock market trading. The S&P 500 index climbed 0.2%. The Nasdaq composite advanced 0.4%, with the big-cap Nasdaq 100 up nearly 0.7%. The small-cap Russell 2000 slumped 1.6%.
Apple stock and Microsoft are part of the Dow Jones, S&P 500 and Nasdaq composite, so these $2 trillion-plus market-cap giants sway markets. Amazon, Google and Facebook stock, the next biggest companies by market cap, are S&P 500 and Nasdaq members. All five tech titans report earnings next week.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) climbed 0.7%, while the Innovator IBD Breakout Opportunities ETF (BOUT) was just above breakeven. The iShares Expanded Tech-Software Sector ETF (IGV) gained 1.3%. Microsoft stock is a major IGV component. The VanEck Vectors Semiconductor ETF (SMH) retreated 0.6% after strong gains in the prior two days. Intel stock is a key SMH component.
SPDR S&P Metals & Mining ETF (XME) sank 0.8% and Global X U.S. Infrastructure Development ETF (PAVE) 0.7%. U.S. Global Jets ETF (JETS) slumped 1.2%. SPDR S&P Homebuilders ETF (XHB) retreated 0.8%. The Energy Select SPDR ETF (XLE) and the Financial Select SPDR ETF (XLF) both fell 1.1%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) dipped 0.8% and ARK Genomics ETF (ARKG) 1.1%. That snapped four-day win streaks for both.
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Intel Earnings
Intel earnings topped views, along with overall revenue and data-center chip sales. But the chipmaker guided slightly lower on Q3 sales.
Intel stock fell nearly 3% overnight after shares dipped 0.5% to 55.96 on Thursday. The Dow Jones tech giant has been a longtime laggard. However, Intel earnings, guidance and capital spending plans are still relevant for rivals such as AMD (AMD) as well as chip-equipment makers.
Snap Earnings
Snap earnings easily beat as revenue soared 116% and user growth topped.
Snap stock leapt 17% to 73.75 before Friday's open, signaling a move above a new buy point of 70.34. Shares edged down 0.7% to 62.97 on Thursday, finding support around the 50-day line. Snap stock broke out just below 66 in late June, but that move fizzled earlier this month. At this point, investors should focus on 70.34.
Twitter Earnings
Twitter earnings blew out views as revenue grew 74%, the best gain in seven years.
Twitter stock popped 6% to 73.95 in overnight trade. TWTR stock has a 72.17 buy point from a handle. though the relative strength line has lagged during its consolidation. Shares had edged up 3 cents to 69.57 on Thursday.
With Snap and Twitter results so strong, PINS stock rose 4% and Facebook climbed nearly 3% in extended action.
PINS stock rebounded from its 50-day line on Monday, offering an aggressive entry. Investors could peg 81.87 as another early entry, or use a downward-sloping trend line from the top of the consolidation that would offer a buy signal around 80.
Facebook stock rebounded from its 50-day line on Tuesday and has kept climbing.
Google, with some social media exposure, advanced 1% overnight. GOOGL stock rebounded from just above its 10-week line earlier this week.
Market Rally Analysis
The stock market rally is creeping toward all-time highs, at least on the major indexes. Much of that reflected Apple, Microsoft and Amazon stock, along with Google and Facebook.
But leading stocks continued to do well. XPEL stock, CrowdStrike, Twilio (TWLO), ServiceNow (NOW), Horizon Therapeutics (HZNP) and Datadog (DDOG) all flashed buy signals of varying quality.
Snap and TWTR stock suggest more leaders will flash buy signals on Friday.
Still, Thursday's weakness in small caps and many key sectors points to a narrow market rally. Yes, it's just one day, but the Nasdaq advance-decline line was at six-month lows before rising on Tuesday and Wednesday. So that bears watching, even though new highs outpaced new lows.
The generally lackluster trading volume this week also has not been inspiring.
With Apple, Microsoft, Amazon, Google and Facebook all reporting next week, along with Twilio, ServiceNow and dozens of other top stocks, the coast is not clear.
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Investing Vs. Pokémon
The tag line for Pokémon is "Gotta catch 'em all." But as an investor, you can't buy them all. With the stock market rally still under pressure and earnings season about to hit full force, you don't want to buy them all.
Yes, a large number of stocks have flashed buy signals this week. They've generally been working. So there's a temptation to grab as many as you can. But be selective. Look for stocks with strong fundamentals breaking out or triggering other buy signals, ideally in strong volume. Favor stocks with relative strength lines at or near highs. Don't get too concentrated in a particular field, such software, data center chips or IPOs.
The past few months have been challenging for many growth investors, with choppy markets and sector rotation. Don't trade like it's 2020.
Pick your spots and define your exit strategy going in.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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