Dow Jones futures will open on Sunday evening, along with S&P 500 futures and Nasdaq futures. A huge week of earnings is on the horizon, including those for Microsoft, Meta Platforms, and Googleparent the alphabet (Google).
The stock market suffered heavy losses last week amid rising Treasury yields and generally weak reactions to earnings. The Nasdaq just avoided undermining its Sept. 27 low, while small stocks hit a new 52-week low. Blue chip stocks showed further weakness, with several falling on Friday.
Investors must have largely cash, but still be involved.
Shares of Microsoft, Meta Platforms, ServiceNow, Vertiv, and Cadence Design Systems are near buy points. Google stock is arguably close to the various entries. Amazon stock is lagging, but a strong earnings reaction may be doable.
Not only are these profits important, but they will have a significant impact on key sectors and the market in general. Amazon, Google, and Microsoft are cloud computing giants. Microsoft, Google, Meta, and Amazon are big players in the AI space, with ServiceNow also touting its AI efforts and Vertiv touting a big AI-related play. Microsoft and ServiceNow will provide insight into business software. Cadence Design will have a major impact on competing electronics design software summary (Snaps).
Meta platforms are running IBD Leaderboard, with NOW stock on the leaderboard watchlist. Inventory, rhythm design is on Bahraini dinar 50. Google and ServiceNow shares are on IBD Big Cap 20. Microsoft and CDNS stocks are on IBD’s list of long-term leaders.
The video embedded in the article discusses the weekly stock market movement while analyzing Microsoft, Meta, and Google stocks.
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.
The stock market tried to hold or move higher at the beginning of the week, but faced resistance and declined significantly over the past three sessions. It is likely that some of the movements witnessed in stocks and bonds on Friday reflect investor caution as another weekend of fighting between Israel and Hamas approaches.
The Dow Jones Industrial Average fell 1.6% in stock market trading last week. The Standard & Poor’s 500 index fell 2.4%. The Nasdaq Composite Index fell 3.2%.
On Monday, the Nasdaq came within a few points of breaking the September 27 low. The tech-heavy index hit its lowest closing level in four months on Friday and closed below its follow-day low on October 6, an extremely bearish signal.
The S&P 500 fell just below its 200-day line and was also close to surpassing its recent lows. The Dow Jones also fell below the 200-day mark.
Market breadth remains weak, with losers outpacing winners and new lows crushing new highs.
The small-cap Russell 2000 index fell 2.3%, hitting a 52-week low. Invesco S&P 500 Equal Weight Fund (RSPIt fell 2.3%, recording the lowest level in seven months. The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) fell by 3% to a four-month low, undermining the 200-day line.
Leading stocks were under severe pressure. Some of the more resilient names started to crack on Friday.
The last few days may have been a jolt ahead of the year-end rally, but the real jolt may come after a breakout below the recent lows — and perhaps not immediately.
It is difficult to see the market continuing as long as the 10-year Treasury yield moves higher. Despite Friday’s pullback, the 10-year yield gave no real indication that it was ready to flatten or decline meaningfully.
The 10-year Treasury yield rose about 30 basis points during the week to 4.93%. The 10-year bond yield rose to 4.996% during the day on Thursday, the highest level since 2007. At the same time, the two-year Treasury yield rose.
US crude oil futures rose 1.2% to $88.75 a barrel last week, as tensions in the Middle East raised concerns about supplies. Crude oil has pulled back from its Friday morning move above $90. Copper prices fell 1.1% to the lowest closing level in nearly a year.
Among the growth ETFs is the Innovator IBD 50 ETF (FFTY) fell 4% last week. iShares Extended Technology Software Fund (ETF)IGV) was down 3%, but it looked good until it stumbled 2.5% on Friday. Microsoft stock and ServiceNow are major members. VanEck Vectors Semiconductor ETF (Trait) sold at 4.2%. CDNS stock is part of IGV and SMH.
SPDR S&P Metals and Mining Fund (XME) fell 3.1% last week. SPDR S&P Homebuilders ETF (XHB) decreased by 4.5%. Energy Select SPDR ETF (XLE) by 0.75%. Healthcare Select Sector SPDR Fund (Forty-fifth) decreased by 1.6%. Selected Industrial Sector SPDR Fund (forty-first) slid 3%.
Financial Select SPDR ETF (XLF) by 3%, with CME shares being part of the ETF.
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Microsoft is scheduled to report earnings on Tuesday evening. Analysts expect Microsoft’s earnings per share to rise 13% to $2.65 in the fiscal first quarter. Revenue is expected to rise 9% to $54.5 billion. The growth of Azure cloud computing will be key. Investors will also need some indication of when AI will drive revenue growth. MSFT stock fell 0.3% to 326.67 during the week, falling just above the 50-day line on Friday. Microsoft has a buy point of 366.78, but investors can use 336.88 or 340.86 as early entries.
Google’s earnings were also up late Tuesday. Earnings rebound, helped by easier comparisons. Artificial intelligence will also be in focus. Google stock held up well, rising 1.3% to 135.60 last week. GOOGL stock now has a three-week tight pattern and potential 50-day/10-week support. But those would be strong entries into a weak market.
Definition profits are available after the close on Wednesday. Cost constraints and revived advertising have fueled the way. META stock fell 1.9% to 308.65, backing off a buy point of 362.20 and heading toward the 50-day line.
Amazon’s earnings loom Thursday night. Earnings should rise as Amazon rebounds from a previous difficult year. AMZN stock fell 3.6% to 125.17 last week, falling below its 50-day line. Amazon has a buy point of 145.86, but a decisive move above the 50-day line would provide an early entry.
These earnings reports will have major implications for artificial intelligence, cloud computing, software, e-commerce, and more.
Other major profits
Cadence Design’s earnings are scheduled to be due Monday night. CDNS stock fell 4.6% to 238.64 last week, falling below a cup-with-handle buy point of 247.50.
ServiceNow’s earnings are scheduled Tuesday night. The stock is now down 1.3% to 542.51. Shares rose above the 50-day line on Tuesday, but not for long, as they fell 3.1% on Friday. ServiceNow stock has a buy point of 607.90 from a double bottom base. A move above Tuesday’s high of 574.25 would represent an early entry.
Vertiv’s earnings were scheduled early Wednesday. VRT stock fell 6% last week to 36.74, well below its steady buy point of 40.41 and narrowing its 50-day line, according to a MarketSmith analysis.
CME earnings Wednesday morning. CME stock fell 3% to 212.81, but remains in a buy zone of a flat base pattern.
WFRD earnings Wednesday morning. WFRD stock fell 2.7% to 92.97 and drifted back toward its 50-day line. Stocks are working on a short consolidation. A move above 97.88 would be an early entry.
Weatherford is just one of many oil-related names reporting next week, with Oceaneering International (OII), Baker Hughes (BKR), Halliburton (Hull) on tap, as well Exxon Mobil (XOM) And Chevron (CVX) Friday.
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What are you doing now
The S&P 500 and Nasdaq are teetering on the edge of recent lows, with blue-chip stocks stumbling. Yes, some stocks are holding up reasonably well, like Meta and Google, but even those have been losing ground amid the sell-off.
Investors should pay close attention to stocks with strong relative strength. But this is not the time to buy. Instead, it has been a week to expand the range of positions.
Remember that in times of market decline, the relative winners are often the absolute losers.
Earnings could be a catalyst for Microsoft, Vertiv and the entire market, but in which direction? So far, stocks have generally been sold on earnings or guidance.
If the market rebounds at the beginning of next week, don’t get excited. Major indices need strong gains before signaling the end of the recent decline. The earnings wave adds to the uncertainty.
Read The Big Picture every day to stay on top of the market trend and leading stocks and sectors.
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