Dow Jones Futures and Big Week of Earnings
Dow Jones futures will open on Sunday evening, along with S&P 500 futures and Nasdaq futures. This upcoming week is filled with anticipation as many big earnings reports are expected, including Microsoft, Meta Platforms, and Google parent Alphabet (GOOGL).
The stock market had a rough week due to surging Treasury yields and poor reactions to earnings. Although the Nasdaq narrowly avoided undercutting its Sept. 27 low, small caps hit a 52-week low. Leading stocks also showed weakness, with several buckling on Friday. While it is recommended that investors hold cash, they should also remain engaged.
A massive week of earnings reports is on the horizon, with Microsoft (MSFT), Google, Amazon.com (AMZN), and Meta Platforms (META) taking center stage. Notable reports from ServiceNow (NOW), Vertiv (VRT), Cadence Design Systems (CDNS), CME Group (CME), and Weatherford (WFRD) are also expected. Microsoft stock, Meta Platforms, ServiceNow, Vertiv, and Cadence Design Systems are near buy points, and Google stock is close to various entry points. Although Amazon stock is lagging, a strong earnings reaction could make it actionable. These earnings reports not only impact specific companies but also have a significant influence on key sectors and the overall market. Amazon, Google, and Microsoft are major players in cloud computing, while Microsoft, Google, Meta, Amazon, and ServiceNow are involved in artificial intelligence. In addition, Microsoft and ServiceNow offer insights into the business software industry, while Cadence Design will impact rival electronics design software company Synopsys (SNPS).
Within the Investment Business Daily (IBD) ecosystem, Meta Platforms is on the IBD Leaderboard, with ServiceNow on the Leaderboard watchlist. Meta stock and Cadence Design are on the IBD 50, Google stock and ServiceNow are on the IBD BigCap 20, and Microsoft and CDNS stock are on the IBD Long-Term Leaders list.
For more information on the weekly stock market action and analysis of Microsoft, Meta, and Google stock, please refer to the embedded video in this article.
Dow Jones Futures Today
Dow Jones futures will open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures. It is important to note that overnight action in Dow futures and other markets may not necessarily translate to actual trading in the next regular stock market session.
For a deeper understanding of leading stocks and the market, join IBD experts as they analyze the market on the IBD Live Stock Market show.
Market Recap
The stock market initially tried to hold on or move higher early in the week but faced resistance and significantly fell over the last three sessions. Friday’s stock and bond actions were likely influenced by investor caution amid ongoing Israel-Hamas fighting. In last week’s stock market trading, the Dow Jones Industrial Average fell 1.6%, the S&P 500 index tumbled 2.4%, and the Nasdaq composite sold off 3.2%. The Nasdaq came close to undercutting the Sept. 27 low on Monday, while the S&P 500 fell just below its 200-day line. The Dow Jones also tumbled back below its 200-day line. With losers outpacing winners and new lows surpassing new highs, market breadth remains weak. The small-cap Russell 2000 hit a 52-week low, and the Invesco S&P 500 Equal Weight ETF (RSP) and the First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) both reached multi-month lows. Leading stocks experienced heavy pressure, and even resilient names started to crack. While there is a possibility of a year-end rally after the recent shakeout, it is uncertain when the real shakeout will occur. It is unlikely that the market will sustain a run as long as the 10-year Treasury yield continues to rise. Despite a retreat on Friday, the 10-year bond yield has not shown any signs of leveling off or pulling back significantly. The 10-year Treasury yield soared nearly 30 basis points last week to 4.93%, reaching its highest level since 2007. Furthermore, tensions in the Middle East raised supply fears, causing U.S. crude oil futures to rise 1.2% to $88.75 a barrel last week. Copper prices also sank 1.1% to their lowest close in nearly a year.
ETFs and Sector Performance
Last week, among growth ETFs, the Innovator IBD 50 ETF (FFTY) tumbled 4%, the iShares Expanded Tech-Software Sector ETF (IGV) shed 3%, and the VanEck Vectors Semiconductor ETF (SMH) sold off 4.2%. Other notable ETFs that declined include SPDR S&P Metals & Mining ETF (XME) with a 3.1% decrease, SPDR S&P Homebuilders ETF (XHB) with a 4.5% decrease, and the Financial Select SPDR ETF (XLF), which sank 3%. On the other hand, the Energy Select SPDR ETF (XLE) saw a modest increase of 0.75%, while the Health Care Select Sector SPDR Fund (XLV) fell 1.6%, and the Industrial Select Sector SPDR Fund (XLI) skidded 3%. The ARK Innovation ETF (ARKK) plunged 4.6%, and the ARK Genomics ETF (ARKG) dived 5.45% among more speculative story stocks.
Key Earnings to Watch
Microsoft earnings are set to be released on Tuesday night, with analysts expecting a 13% rise in earnings per share to $2.65 in fiscal Q1 and a 9% increase in revenue to $54.5 billion. The growth of Azure cloud computing will be a significant factor, and investors will also be looking for indications of when artificial intelligence will boost revenue. Google earnings are also due on Tuesday, with a focus on rebounding earnings and the impact of AI. Despite the overall market weakness, Google stock has held up well with a 1.3% increase. Meta earnings will be announced after the market close on Wednesday, and the company’s cost-cutting efforts and revived advertising will be in the spotlight. As for Amazon, earnings are expected on Thursday night, and a significant surge in earnings is anticipated following a challenging year. Among other key earnings reports, Cadence Design will report on Monday night, ServiceNow on Tuesday night, Vertiv on Wednesday, and CME Group and Weatherford on Wednesday morning. These earnings reports will greatly affect AI, cloud computing, software, e-commerce, and other industries.
Market Advice
The S&P 500 and Nasdaq are currently on the brink of recent lows, with leading stocks struggling. While some stocks are holding up relatively well, such as Meta and Google, they have still been affected by the heavy selling. Investors should pay close attention to stocks with strong relative strength. However, this is not the time to buy, but rather a week to scale out of positions. It is important to remember that in a market downturn, relative winners often become absolute losers.
