Dow Jones futures dipped during after-hours trading, along with S&P 500 futures and Nasdaq futures. Earnings reports from Meta Platforms and ServiceNow took the spotlight, while Amazon’s report was scheduled for Thursday night. Additionally, several important economic reports were set to be released. CNBC reported that Ford Motor and negotiators from the United Auto Workers reached a tentative labor deal, causing Ford stock to rise slightly overnight. The strike between the United Auto Workers and Ford, General Motors, and Stellantis has been ongoing since September 14. On Wednesday, the stock market experienced significant losses, with the S&P 500 and Nasdaq falling below recent lows and ending their rally attempts. The small-cap Russell 2000 reached a new 52-week low. Meanwhile, the 10-year Treasury yield rose, and the majority of earnings reactions were negative. While Microsoft saw a modest increase following its results and guidance, Google’s parent company, Alphabet, experienced a significant decline due to weak cloud performance. The declination of Google stock impacted other technology stocks, including Meta, multiple software companies, and Amazon. Meta stock also experienced a decline overnight due to concerns about advertising weakness. Chip-equipment manufacturer KLA Corp. had minimal changes, while ServiceNow saw solid growth. Meta stock is featured on the IBD Leaderboard, with ServiceNow on the Leaderboard watchlist. Microsoft stock is listed as part of IBD Long-Term Leaders, and META is included in the IBD 50 list. The embedded video in the article provides an analysis of the market’s performance on Wednesday as well as Google stock, Vertiv, and CME Group. Currently, Dow Jones futures have fallen slightly compared to fair value, while S&P 500 futures and Nasdaq 100 futures have experienced more significant declines. Meta stock, ServiceNow, and KLA are components of the S&P 500 and Nasdaq 100 indexes. Google and Amazon saw further losses, while Microsoft experienced a slight decline. It’s important to note that overnight trading in Dow futures and other areas does not always reflect actual trading in regular stock market sessions. At 8:30 a.m. ET, the Commerce Department plans to release its first estimate of third-quarter GDP growth, which includes a quarterly version of the PCE price index. On Friday, the September PCE price index will be disclosed, and on Thursday at 8:30 a.m. ET, Commerce will reveal September durable goods orders, alongside weekly jobless claims from the Labor Department. The stock market experienced a sell-off due to disappointing earnings and a sharp increase in the 10-year Treasury yield. While MSFT stock saw a 3.1% climb, Google stock fell 9.5% to a three-month low. Most earnings reactions, particularly in the technology sector, were negative. Google’s cloud issues resulted in a 5.6% drop in Amazon stock. In Wednesday’s stock market, the Dow Jones Industrial Average dipped by 0.3%, the S&P 500 index sank 1.4%, and the Nasdaq composite tumbled 2.4%. Both the Nasdaq and S&P 500 fell below recent lows, indicating the end of their brief rally attempts. The S&P 500 is now significantly lower than its 200-day moving average, while the Nasdaq is approaching its long-term support level. However, the Dow Jones has yet to fall below Monday’s lows, allowing its rally attempt to continue, although the overall trend remains bleak. This includes market breadth, as seen with the small-cap Russell 2000 reaching its lowest point since October 2022 and the Invesco S&P 500 Equal Weight ETF falling to its worst levels since early November 2022. The 10-year Treasury yield rose by 11 basis points to 4.95%. Although it is lower than Monday’s short-lived peak above 5%, the 10-year Treasury bond yield has increased for the week. U.S. crude oil prices rose by 2% to $85.39 a barrel. In terms of ETFs, the Innovator IBD 50 ETF decreased by 2.25%, the iShares Expanded Tech-Software Sector ETF dropped 2.7%, and the VanEck Vectors Semiconductor ETF experienced a 3.9% decline. The ARK Innovation ETF plunged by 5.25%, and the ARK Genomics tumbled by 5.4%. Additionally, the SPDR S&P Metals & Mining ETF slipped by 0.7%, the SPDR S&P Homebuilders ETF fell by 2.2%, the Energy Select SPDR ETF dipped by 0.2%, and the Health Care Select Sector SPDR Fund retreated by 0.9%. The Industrial Select Sector SPDR Fund sank by 1.3%, and the Financial Select SPDR ETF saw a 0.4% decline. Meta reported a 168% surge in earnings compared to the previous year, with revenue up 23%, slightly surpassing expectations. Costs also decreased by 7%. The parent company of Facebook and Instagram slightly adjusted its capital spending forecast for 2023, with a potential capex boost in 2024 that is not as significant as anticipated. This news may impact suppliers such as Arista Networks. Initially, Meta stock rose in after-hours trading but eventually fell after the CFO expressed concern about weaker advertising trends in Q4. On Wednesday, the stock declined by 4.2%, breaking through its 50-day moving average. Investors may continue to use 326.50 as a buy point, while more aggressive traders may opt for an early entry at Tuesday’s high of 318.35; however, market conditions carry greater risks in this scenario. ServiceNow reported a 49% increase in earnings, with a 25% rise in revenue, both surpassing expectations. The business software giant also provided an optimistic outlook for subscription revenue. ServiceNow stock saw solid growth in after-hours trading. On Wednesday, the stock fell by 4.4%, dropping below the 21-day moving average and reaching a four-month low. However, it still offers potential with a buy point of 607.90 from a double-bottom pattern. Early entries may be made above the 50-day moving average, although market conditions are not currently favorable. KLA reported earnings that exceeded expectations, while sales slightly surpassed fiscal Q1 projections despite a decrease compared to the previous year. The chip equipment giant also experienced growth in Q2. KLA stock remained relatively stable in trading after hours. On Wednesday, the stock declined by 3.3% to 454.84, falling from resistance at the 21-day moving average but remaining above the 50-day average. KLA stock has a cup-with-handle base with a buy point of 506.92. It’s important for investors to navigate the market strategically using IBD’s ETF Market Strategy and exercise caution during this correction period. The market is showing signs of breaking lower, with leading stocks experiencing significant damage. As a result, investors should exercise caution and hold a large portion, if not all, of their portfolio as cash. It’s crucial to wait for clear indications that the market is transitioning from a downturn to an upturn. A strong start or a couple of positive days alone are not sufficient indicators. If investors feel compelled to make purchases, they should do so in small amounts, avoid buying at the market open, and be prepared to exit quickly. The market can potentially rebound quickly, especially if earnings and Treasury yields become supportive factors instead of obstacles. However, it’s important to acknowledge that this bullish thesis is contingent on “if” statements. On a positive note, the decline in tech stocks due to Google’s cloud issues means that some bad news may already be priced into the market, thus lowering the bar for companies such as Amazon. However, it’s still possible for stocks to decline further. Investors should monitor stocks that are holding up relatively well and showing signs of relative strength, as these could become leaders in the next market rally. It’s crucial to stay updated on the market direction, leading stocks, and sectors by accessing The Big Picture on a daily basis. Follow Ed Carson on X/Twitter at @IBD_ECarson, Threads at @edcarson1971, and Bluesky at @edcarson.bsky.social to receive stock market updates and more. Other useful tools to explore include IBD’s Premium Stock Lists, Tools, and Analysis on IBD Digital, as well as MarketSmith, which helps identify the next high-performing stocks. Remember, the 200-day moving average serves as the last line of support.
Dow Jones Futures Plummet: S&P 500, Nasdaq Take a Dive Amidst Google’s Plummet; Meta Turns Bearish
