Dow Jones futures rose overnight, while S&P 500 and Nasdaq futures fell slightly. Microsoft (MSFT) and Google Original the alphabet (GOOGL) posted big gains late.
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The stock market’s bull run gained steam on Tuesday amid flat yields on Treasury bonds, and earnings reactions were generally positive. This time the major indices closed with good gains as the S&P 500 returned above its 200-day line.
Investors must be careful. The rally attempt is barely underway and has proven nothing.
Microsoft shares jumped on earnings, but pared gains on guidance. Google shares fell.
Microsoft’s earnings and guidance, along with Google’s, are of great importance to the technology sector, especially artificial intelligence and cloud computing. Meta platforms (dead) and Amazon.com (AMZN) follows later this week. Meta stock fell and Amazon shares rose overnight.
visa (V) fell on earnings Tuesday night.
Fellow Dow Jones giant Boeing (BA) Available Wednesday morning with Vertif (VRT) and cm group (poison).
Meta Stock is on the IBD Leaderboard. Microsoft stock is on the IBD Long-Term Leaders list. META is IBD 50 listed.
Dow jones futures today
Dow Jones futures rose 0.25% versus fair value, supported by MSFT shares while Visa was a slight pullback. Standard & Poor’s 500 futures fell 0.1%. Nasdaq 100 futures fell 0.2%, with Microsoft and Google shares offsetting each other. Meta and Amazon shares also fell.
The 10-year Treasury yield fell slightly to 4.82%.
Remember, an overnight move in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
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Trying to go up the stock market
The stock market rally attempt saw some good gains on Tuesday. For the second session in a row, major indices rebounded and then declined. But unlike Monday, prices rebounded to close in the upper third of their daily ranges.
Earnings feedback on Tuesday was generally positive, after mostly negative feedback last week. Many of those earnings gains were in declining stocks, such as components of the Dow Jones Index Verizon (win), 3M (Mmm) And coca cola (ku).
The Dow Jones Industrial Average rose 0.6% in stock market trading Tuesday. The S&P 500 rose 0.7%, moving above its 200-day line. The Nasdaq Composite Index advanced 0.9%.
Tuesday marked the second day of an attempted rally for the Nasdaq stock market and only the first day for the Dow Jones and S&P 500. A day or two of a modest rally doesn’t mean much in a market correction. But if the rally attempt succeeds in building momentum — amid huge gains — investors could look for a follow-up day later this week to confirm the new uptrend.
The S&P 500 is facing resistance at its 200-day line.
The market breadth was positive, but it was bad for weeks or months. New lows keep crushing new highs.
The Russell 2000 small-cap index rose 0.8%, but only after hitting a 52-week low on Monday.
The First Trust Nasdaq 100 ETF (QQEW) is up 0.96% versus 0.97% for the Nasdaq 100. But the QQEW is just under 200 days old. The Nasdaq 100, with Meta, Microsoft, and Google above the 50-day line, has never gotten close to the 200-day line.
The 10-year Treasury yield was essentially flat at 4.84%. The yield on the 10-year bond reached 4.89%, but this after falling from 5% on Monday.
US crude oil prices fell by 2.1% to $83.74 per barrel.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) jumped 1.9% in stock market trading Tuesday. The iShares Expanded Tech-Software Sector ETF (IGV) rose 0.91%, with MSFT stock a key IGV holding. VanEck Vectors Semiconductor ETF (SMH) rose 1.2%.
Reflecting more speculative stocks, the ARK Innovation ETF (ARKK) rose nearly 3% and the ARK Genomics ETF (ARKG) advanced 2.9%.
The SPDR S&P Metals and Mining Fund (XME) rose 1.5% and the Global X US Infrastructure Development Fund (PAVE) rose 0.5%. The US Global Jets ETF (JETS) fell 0.33%. SPDR S&P Homebuilders ETF (XHB) fell 0.2%. The Energy Select SPDR ETF (XLE) fell 1.4% and the Healthcare Select SPDR ETF (XLV) gained 0.3%.
Meanwhile, the Industrial Sector SPDR Fund (XLI) rose 0.75%.
The Financial Select SPDR ETF (XLF) rose 0.7%. Visa stock is a major component, with CME also present in the ETF.
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Microsoft profits
Microsoft’s earnings easily beat financial estimates for the first quarter of 2024, while also beating revenue. Azure cloud computing revenues rose 28%, which is just over the number of views.
On the conference call, the administration repeatedly referenced artificial intelligence while also noting cybersecurity gains. Overall, Microsoft’s revenue rose modestly in the second quarter, although that includes newly acquired Activision. It is seeing growth in Azure of 26.5%, with nearly flat growth in the second half.
MSFT stock pared after-hours gains somewhat after Microsoft issued guidance, but rose 4%, signaling potential buying opportunities on Wednesday. Shares have an official buy point of 366.78, but investors can use the October 19 high of 336.88 or the September 14 high of 340.86 as early entries.
Microsoft stock rose 0.4% to 330.53 on Tuesday, after crossing its 50-day line on Monday.
Google earnings
Google’s profits and revenues modestly exceed the number of views. Advertising revenue was strong but Google Cloud revenue fell slightly short of expectations.
Google is also making a big push into artificial intelligence, so its feedback is important, too.
Google stock fell 6% overnight. Shares rose 1.7% to 138.81 on Tuesday, extending Monday’s rebound from the 50-day line. The relative strength line is at its highest levels.
In the wake of Google and Microsoft’s earnings, Meta stock lost a small portion in extended trading. Shares fell on Tuesday as 42 states filed a lawsuit against the social media giant, alleging that Facebook and Instagram features are addictive and target children. Meta has slowly pulled back from the buy point it set nearly two weeks ago.
AMZN stock fell slightly overnight, holding but below the 50-day mark. Amazon stock rose 1.6% on Tuesday.
Visa earnings
Visa’s earnings and revenue modestly beat fourth-quarter views, with the Dow card giant also offering upbeat guidance for fiscal 2024. But Visa also announced a $25 billion stock buyback and a 16% dividend increase. Visa stock fell in late trading. Shares rose 1.35% to 234.65 on Tuesday, between the 50-day and 200-day lines. Visa stock has a flat base with a buy point of 250.06, according to a MarketSmith analysis. MasterCard Credit Card (MA), which announces Thursday, rose 0.6% in extended trading. Shares rose on Tuesday, moving from a 200-day level with a flat base as well.
Main profits on tap
Meanwhile, VRT stock reclaimed its 50-day line on Tuesday on strong volume, near its record highs. CME stock holds within a buy zone while BA stock is up slightly on Tuesday, but is close to 2023 lows.
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What are you doing now
Some stocks triggered buy signals on Tuesday, but the market’s bullish attempt has been tepid at best so far.
Earnings from Microsoft, Google, Meta, Vertiv, Amazon and many others may be positive catalysts. But they could send the market sharply lower. Or stocks and sectors may fluctuate with mixed results.
This is not the time to be bold on the long or short side. But pay close attention and keep your watchlists updated. If the market gains momentum, you want to be ready.
Read The Big Picture every day to stay on top of the market trend and leading stocks and sectors.
Please follow Ed Carson on X/Twitter at @IBD_ECarsonthreads at @edcarson1971 and Bluesky at @edcarson.bsky.social for stock market updates and more.
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