In this article, we will discuss the recent performance of Dow Jones futures, S&P 500 futures, and Nasdaq futures. We will also highlight the earnings reports of Meta Platforms and ServiceNow, as well as the ongoing labor negotiations between Ford Motor and the United Auto Workers. Additionally, we will analyze the stock market’s losses on Wednesday, the rise in the 10-year Treasury yield, and the reactions to earnings announcements. We will provide updates on the performance of Microsoft, Google parent Alphabet, and other tech companies. Lastly, we will share information on various ETFs and key economic data releases.
Dow Jones Futures Fall Overnight
Dow Jones futures saw a slight decline of 0.1% compared to fair value. S&P 500 futures sank 0.4%, while Nasdaq 100 futures declined 0.8%. Notably, Meta stock, ServiceNow, and KLA are components of the S&P 500 and Nasdaq 100. Google and Amazon extended their losses, while Microsoft saw a slight decrease in stock value. It is important to note that the overnight performance of Dow futures and other futures may not accurately reflect actual trading during the next regular stock market session.
Economic Data and Earnings Reports
At 8:30 a.m. ET, the Commerce Department is expected to release its first estimate of third-quarter GDP growth, which will include a quarterly version of the PCE price index. The September PCE price index will be released on Friday. The Commerce Department will also announce September durable goods orders at 8:30 a.m. ET on Thursday, while the Labor Department will disclose weekly jobless claims. Additionally, earnings reports from various companies, including Meta, ServiceNow, and KLA, have been released.
Stock Market Performance
The stock market experienced a significant sell-off due to disappointing earnings and a spike in the 10-year Treasury yield. Microsoft saw a 3.1% increase in stock value, while Google’s stock price fell by 9.5% to a three-month low. Most other earnings reactions were negative, especially in the tech sector. Amazon’s stock price plummeted 5.6% due to concerns about Google’s cloud business. In Wednesday’s stock market trading, the Dow Jones Industrial Average dipped by 0.3%, the S&P 500 index sank by 1.4%, and the Nasdaq composite tumbled by 2.4%. The Nasdaq and S&P 500 fell below their recent lows, indicating the end of their short-lived rally attempts. The S&P 500 is currently below its 200-day line, and the Nasdaq is approaching a long-term support level. The small-cap Russell 2000 also experienced a decline, reaching its lowest point since October 2022. The 10-year Treasury yield rose by 11 basis points to 4.95%. U.S. crude oil prices rose by 2% to $85.39 a barrel.
ETF Performance
Among growth ETFs, the Innovator IBD 50 ETF fell by 2.25%. The iShares Expanded Tech-Software Sector ETF declined by 2.7%, while the VanEck Vectors Semiconductor ETF saw a 3.9% drop. The ARK Innovation ETF and the ARK Genomics ETF both experienced substantial decreases of 5.25% and 5.4%, respectively. The SPDR S&P Metals & Mining ETF slipped by 0.7%, the SPDR S&P Homebuilders ETF fell by 2.2%, and the Energy Select SPDR ETF dipped by 0.2%. The Health Care Select Sector SPDR Fund, the Industrial Select Sector SPDR Fund, and the Financial Select SPDR ETF also saw declines of 0.9%, 1.3%, and 0.4% respectively.
Meta Earnings
Meta reported a 168% surge in earnings compared to the previous year. Revenue rose by 23%, slightly surpassing expectations, while costs fell by 7%. The parent company of Facebook and Instagram slightly reduced its capital spending forecast for 2023. However, its estimated capex increase in 2024 was lower than anticipated. This news may negatively impact suppliers such as Arista Networks. After an initial rise in after-hours trading, Meta’s stock price reversed and fell over 3% due to the CFO’s warning about weaker advertising trends in Q4. On Wednesday, shares of Meta fell by 4.2% to 299.53, breaking through their 50-day line. Investors can consider using 326.50 as a buy point, while aggressive traders may choose an early entry above Tuesday’s high of 318.35.
ServiceNow Earnings
ServiceNow reported a 49% increase in earnings and a 25% rise in revenue, surpassing expectations. The business software giant also provided increased guidance on subscription revenue. In overnight trading, ServiceNow’s stock price rose by nearly 5%. However, on Wednesday, shares declined by 4.4% to 530.17, falling below the 21-day line and hitting a four-month low. ServiceNow’s stock price also fell below the low of its flat base, reinforcing the importance of the 607.90 buy point from the squished double-bottom pattern. Early entries may be possible above the 50-day line, although current market conditions are not favorable.
KLA Earnings
KLA announced better-than-expected earnings, while sales slightly exceeded expectations for fiscal Q1, despite a year-on-year decrease. The chip equipment giant also provided higher guidance for Q2. KLA’s stock price remained relatively unchanged during extended trading. However, on Wednesday, shares fell by 3.3% to 454.84, retracing from resistance at the 21-day line. KLA’s stock price is currently in a cup-with-handle base, with a 506.92 buy point.
Market Outlook
Given the market correction, it is crucial for investors to exercise caution and hold a significant portion, if not all, of their positions in cash. It is advisable to wait for clear signs of the market’s downtrend transitioning into an uptrend. While a strong open or a positive day or two may seem encouraging, it may not signify a sustainable market recovery. If investors choose to make purchases, it is recommended to buy in smaller quantities, avoid buying at the open, and be prepared to exit quickly. The market could potentially rebound quickly, especially if earnings and Treasury yields become favorable factors. However, it is important to note that there is no guarantee of this bullish scenario. The recent selling pressure experienced by tech stocks, specifically due to concerns regarding Google’s cloud business, may have already priced in some negative news. Nevertheless, stocks may still experience significant declines. It is essential to closely monitor stocks that demonstrate resilience and relative strength, as they may become leaders in the next market rally. Additionally, it is advised to stay informed about market direction, leading stocks, and sectors by reading The Big Picture on a daily basis. For stock market updates and more, follow Ed Carson on X/Twitter at @IBD_ECarson, Threads at @edcarson1971, and Bluesky at @edcarson.bsky.social.
