Dow Jones futures down on weak Microsoft guidance; Tesla earnings on tap

Dow Jones futures fell overnight, along with S&P 500 futures and Nasdaq futures. Microsoft (MSFT) guidance beat earnings better than feared. asml (asml), boeing (BA) and Tesla (TSLA) are up on Wednesday.


The stock market rally on Tuesday was trading in a relatively narrow range after big gains in the last two sessions. Major indices closed mixed. Nasdaq retreats as Justice Department files second antitrust suit versus Google parent Alphabet (Google).

Microsoft’s earnings surpassed previous views on strong cloud-computing growth. But the software giant gave weak guidance. MSFT stock, initially up strongly, reversed course.

seamless surgical (ISRG) and Texas Instruments (TXN) also reported. ISRG earnings missed out on in-line revenue. Texas Instruments slightly green, but directedly low. ISRG stock fell while TXN stock declined slightly.

Earlier Wednesday, chip equipment giant ASML along with fellow semiconductor equipment makers reported Lam Research (LRX), teradine (TER) and wolfspeed (Wolf) due to closure.

Boeing and freeport-mcmorran (FCX) also reports early on Wednesday.

Tesla will headline Wednesday night’s earnings. Tesla’s earnings will be important but investors will focus on 2023 guidance, especially after a big worldwide price cut to start the year. Those price cuts have boosted demand for Tesla — at the cost of margins — but will this increase last?

Following the closure, Tesla said it would spend $3.6 billion on or near its original “Gigafactory” outside Reno, Nevada. It will be used to make the Tesla Semi line and mass 4680 battery cells.

Tesla stock fell 2% overnight. The stock rose 0.1% on Tuesday to 143.89, which is close to the 50-day line. TSLA stock is up about 17% so far in 2023.

dow jones futures today

Dow Jones futures fell 0.2% versus fair value. S&P 500 futures fell 0.45%. Nasdaq 100 futures sank 0.7%, reversing modest gains early on. MSFT stock is a Dow Jones, S&P 500 and Nasdaq constituent.

Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.

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stock market rally

After NYSE glitches disrupted nearly 100 tickers at the open, the stock market rally waned modestly in the morning before gradually turning mixed.

The Dow Jones Industrial Average rose 0.3% in Tuesday’s stock market trading. The S&P 500 index dropped 0.1%. The Nasdaq Composite declined 0.3%. Small-cap Russell 2000 gave a gain of 0.25%.

US crude oil prices fell 1.8% to $80.13 per barrel. Natural gas fell 5.5% after rising more than 6% on Monday.

The 10-year Treasury yield fell a basis point to 3.47% amid a mix of weak manufacturing data.

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DOJ sues Google again

The DOJ sued Google over its online advertising dominance, seeking to force the company to divest some assets. In October 2020, the Department of Justice filed an antitrust suit over alleged abuse of online search power. Groups of states have three antitrust suits against Google, one of which involves advertising.

Google stock fell 2.1% to 97.70 on Tuesday, though that’s after a massive 10% run higher over the past three sessions.

Google reports Q4 earnings on February 2.


Among growth ETFs, Innovator IBD 50 ETF (FFTY) and Innovator IBD Breakout Opportunities ETF (BOUT) advanced. The iShares Extended Tech-Software Sector ETF (IGV) declined 0.6%. Microsoft stock is a major IGV component.

VanEck Vectors Semiconductor ETF (SMH) fell 0.7% ASML stock is a big holding, with TXN, LRCX and TER also in SMH.

Reflecting stocks with more speculative stories, the ARK Innovations ETF (ARKK) sank 1.6% and ARK Genomics (ARKG) fell 1.4%. Tesla stock is a major holding in Arc Invest’s ETF. The Cathy Woods arch has been increasing its TSLA position in recent weeks, with shares up as recently as Monday.

The SPDR S&P Metals & Mining ETF (XME) climbed 0.2% and the Global X US Infrastructure Development ETF (PAVE) climbed 0.4%. US Global Jets (JETS) declined. The SPDR S&P Homebuilders ETF (XHB) rose 0.4%. The Energy Select SPDR ETF (XLE) rose 0.4% and the Financials Select SPDR ETF (XLF) rose 0.1%. The Health Care Select Sector SPDR Fund (XLV) fell 0.7%.

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microsoft earnings

Excluding various items, Microsoft’s earnings fell 6% from a year earlier, seen only in the fiscal Q2 bar. Revenue rose 1.9%, the smallest increase in more than six years and missing forecasts. Revenue from Azure and other cloud-computing services jumped 31% — excluding 38% currency swings — slightly exceeding consensus views. Analysts were concerned about Azure growth.

Investors got relief from Dow Jones Tech Titan’s strong results. But Microsoft gave weak guidance, warning about a decline in activities.

MSFT stock fell 1% after initially jumping 5% or more after hours.

Last week, Microsoft announced plans to cut 10,000 jobs, roughly 4.5% of the workforce.

Shares fell 0.2% to 242.04 on Tuesday, holding the 50-day line after regaining that key level on Monday. Arguably, Microsoft stock has a bottom base with a 264.02 buy point. It formed below the 200-day line, but a breakout would involve clearing that level and breaking a long downtrend.

Microsoft’s earnings and guidance are critical of other software makers, PC-related stocks and cloud-computing plays such as Google and Amazon.Com (amzn). Microsoft’s recent large stake in and alliance with ChatGPT maker OpenAI could be another threat to Google and Amazon.

Amazon and many cloud software companies fell overnight after Microsoft’s earnings surged initially.

Market Rally Analysis

The rally in the stock market stopped on Tuesday and the major indices had a mixed trend. But it was normal action after big gains on Friday and Monday, especially in a massive flood of earnings.

The S&P 500, which hit last week’s high and passed the 4,000 mark on Monday, held those key levels.

The Nasdaq Composite dipped and is still below the 200-day line and December highs.

The Dow Jones extended its gains from the 50-day line after reclaiming that key level on Monday

The small-cap Russell 200 bottomed out but is nearing its late-2022 peaks.

The market rally is looking strong but all the major indices are facing resistance levels. Tech is leading the market in 2023, but now we’re about to get a shower of tech earnings. Even if the macroeconomic picture remains stable and a Fed rate hike looms large, companies could reduce guidance over the next few weeks.

Microsoft may be starting now.

In addition to Tesla, ASML and Boeing on Wednesday, apple (AAPL), Facebook Parent meta platform (Meta), Amazon, amd (AMD), Google and many more reports coming next week

If the market rally surpasses the late 2022 highs by the end of next week, it would be a strong sign that a sustained uptrend is underway.

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What should we do now

The stock market rally is showing more strength and is presenting many buying opportunities.

Investors should add exposure gradually and should not become too concentrated in any specific stock or sector. Earnings season can move the market, but especially individual stocks. One option for investors is to buy market or sector ETFs with different names.

Definitely look into building your watchlist. Stay informed about the market and earnings important to your holdings, including those from competitors, customers and suppliers of companies in which you have positions.

Read The Big Picture every day to stay in sync with market direction and key stocks and sectors.

Please follow Ed Carson on Twitter @IBD_ECarson For stock market updates and much more.

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