Dow Jones futures will open on Sunday evening, along with S&P 500 futures and Nasdaq futures. apple (Camel), the Fed and October jobs report will headline another busy week of news.
The stock market correction intensified over the past week, with all major indexes falling to multi-month lows amid mixed earnings. The Nasdaq posted gains on Friday, supported Amazon.com (Amzn). But it was another weak session overall.
Investors should be very careful and keep cash largely intact.
amazon stock, Meta platforms (dead), Microsoft (MSFT) And Service now (now) are four big tech companies worth watching. They are all close to buying points. Notably, all of them have generated profits out of the way and boast multiple quarters of accelerating growth.
Early Monday, an electric vehicle chip maker On semiconductors (on) will announce third quarter earnings. Arista Networks (network), which fell on Thursday due to Meta’s reduced capital spending plans, is due Monday evening. Apple reported earnings on Thursday night, but will unveil new Mac computers on Monday evening. Apple shares trimmed 200-day value amid iPhone 15 demand concerns, especially in China.
The Federal Reserve meets this week, and markets see no chance of a rate hike on Wednesday. Many policymakers signaled that no further action was needed as long-term Treasury yields rose. Fed Chairman Jerome Powell is likely to reinforce this message on Wednesday after the meeting is announced.
The October jobs report will culminate the week on Friday.
Meta stock is running IBD Leaderboard, with NOW stock on the leaderboard watchlist. MSFT stock is on IBD Long-Term Leaders. Microsoft Stock and Meta are on Bahraini dinar 50. Microsoft and ServiceNow inventory is located at IBD Big Cap 20.
Dow jones futures today
Dow Jones futures open at 6pm EST on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
Remember, an overnight move in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
Stock market correction
The stock market correction continues to worsen. Indices tried to rebound early in the week, but fell sharply again.
Concerns between Israel and Hamas are likely to be a factor for the third Friday in a row heading into the weekend as Israeli forces intensify their efforts in Gaza.
The Dow Jones Industrial Average fell 2.1% in stock market trading last week. The Standard & Poor’s 500 index fell 2.5%. The Nasdaq Composite Index fell 2.6%.
The Nasdaq rose modestly on Friday, although it is far from session highs near the 200-day line. So a new attempt to rally in the stock market is underway. But it would take much more than that to indicate a convincing uptrend.
Friday wasn’t a particularly convincing start, with Amazon and other major companies like Microsoft, Meta, and ServiceNow largely making gains.
Not only did the Dow Jones fall to a seven-month low on Friday, but the Russell 2000 fell to its lowest level since November 2020. The small-cap Russell 2000 index gave up 2.5% during the week.
Invesco S&P 500 Equal Weight Fund (RSP) fell 2.45% over the week, hitting a 52-week low.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) fell 0.5% on Friday versus a 0.5% gain for the Nasdaq 100, supported by giants like Amazon and Microsoft. QQEW stock fell 3.15% during the week.
While the tech giants may remain leaders, improving market breadth is crucial.
The Nasdaq needs to reclaim the 200-day line and reclaim the 21-day line only to break the short-term downtrend. A decisive move above the 50-day line could break the downtrend that began in late July.
The yield on the 10-year Treasury note fell 8 basis points to 4.85%, after briefly exceeding 5% on Monday morning.
U.S. crude oil futures fell 2.9% to $85.54 a barrel, even with Friday’s 2.8% gain.
SPDR S&P Metals and Mining Fund (XME) rose 1% last week. SPDR S&P Homebuilders ETF (XHB) decreased by 1.5%. Energy Select SPDR ETF (XLE(Down by 6.2% and Healthcare Sector SPDR Fund)Forty-fifth) fell 3.8% to a 52-week low. Selected Industrial Sector SPDR Fund (forty-first) and the Financial Select SPDR ETF (XLF) decreased by 2.3%.
The top five Chinese stocks to watch now
Microsoft stock rose 1% last week to 329.81, though it has retreated significantly from its Oct. 25 high of 346.20. It’s the only Magnificent Seven stock currently above its 50-day line. Microsoft stock’s relative strength line has already reached a new high. Shares have a consolidated buy point of 366.78, but the Oct. 25 high could serve as an early entry.
Microsoft’s earnings for the first quarter of fiscal 2024 rose 27% from a year earlier, while revenue grew 13% to $56.5 billion. It was the third straight quarter of accelerating growth for both, with tech giant Dow also heading for second-quarter revenue. Unlike Amazon and Google parents the alphabet (Google), Microsoft outperforms views of growth of cloud computing services.
Meta’s profits rose 168% in the third quarter, thanks to cost cuts and a rebound in ad sales. Revenues swelled 23% to $34.1 billion. This was the third consecutive quarter of fastest growth. But shares fell as Meta pointed to some weak advertising trends in the fourth quarter. Meta stock fell 3.9% to 296.73 over the week, though on Friday it rebounded to just below the 50-day moving average.
Meta stock remains in consolidation with a buy point of 326.20 or 330.54. Investors can use a decisive move above the 50-day line as an early entry, but market conditions increase the risks.
Amazon’s profits rose 236%, easily outperforming. Revenues rose 13% to $143.1 billion, the second straight quarter of accelerated growth. Earnings per share have increased significantly sequentially over the past three quarters. Amazon Web Services revenue lost a bit, but the tech giant sees momentum in the fourth quarter, and the potential for AI-powered gains for AWS.
Amazon stock jumped 6.8% to 127.74 on Friday, rebounding from its 40-week line. Shares rose just over 2% for the week. AMZN stock has a short consolidation that investors can view as a double-bottom base with a buy point of 134.48. This will include a decisive recovery of the 50-day line.
Service stock now
ServiceNow stock rose 2.1% to 554.01 last week, just below its 50-day line after briefly regaining that level on Thursday. NOW stock has a buy point of 607.90 from a double bottom base. Investors can use Thursday’s high of 507.90 as an early entry. The RS line for NOW stock has already reached a new high, which is a bullish sign.
ServiceNow’s profits jumped 49% as revenue rose 25%, marking the second straight quarter of faster growth for both. The software giant is also guided by subscription revenue.
Time the market with IBD’s ETF market strategy
What are you doing now
The stock market is correcting. All major indices are below the 200-day line. The internal market looks worse.
It’s time to be largely, if not entirely, critical. If you have long-term winners, you can keep them. But at some point, investors have to have a line in the sand to cut or exit a winning position.
Don’t be in a rush to come back again. The market needs several days of strong performance to indicate that the downturn may be over. A morning bounce, like Amazon’s narrow gains on Friday, is hardly enough.
There are very few stocks in their positions, with a relatively low number of names close to their positions. So focus on stocks that show relative strength. Right now, that should include names like Microsoft and ServiceNow stock, as well as some energy stocks like WFRD stock. But it is unclear which stocks and sectors will lead the market in the next uptrend.
So keep your screens on and stay engaged.
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