Dow Jones Futures Fall Slightly, Nasdaq Futures Down; AMD Reports Better-Than-Expected Earnings
In overnight trading, Dow Jones futures, as well as S&P 500 futures and Nasdaq futures, experienced a slight decline. Advanced Micro Devices (AMD) took center stage with its strong earnings report, while the Federal Reserve concluded its two-day meeting. Despite morning declines, the stock market rally showed signs of encouragement with major indexes rebounding higher. Nvidia stock initially dropped but managed to recover some losses. Market breadth improved, although the overall downward trend remains unbroken. Arista Networks (ANET) experienced a considerable surge in stock value after a decline last week due to Meta Platforms’ capital spending plans. Pinterest (PINS) and Cameco (CCJ) also saw a boost in stock prices on the back of positive earnings reports. Tesla (TSLA) rose modestly as a jury ruled that its Autopilot feature was not at fault in a fatal accident. However, ELF Beauty (ELF) plunged ahead of its earnings announcement. Dow Jones futures fell 0.2% compared to fair value, while S&P 500 futures and Nasdaq 100 futures slipped 0.2% and 0.25% respectively. The 10-year Treasury yield rose by several basis points. The stock market session may not necessarily follow the trend set by overnight futures trading. AMD reported third-quarter earnings and sales that exceeded expectations, although the company gave weak guidance. Initially, AMD stock fell after-hours but subsequently recovered due to positive comments about artificial intelligence (AI). Paycom Software (PAYC) beat EPS forecasts but fell short on revenue and Q4 guidance, leading to a significant drop in its stock value. A FDA advisory panel provided positive feedback on a gene-therapy treatment for sickle cell disease developed by Crispr Therapeutics (CRSP) and Vertex Pharmaceuticals (VRTX). While the panel did not vote on whether to recommend the treatment, the news had a positive impact on the stock market. Tesla stock saw a slight increase after winning the Autopilot lawsuit concerning a fatal accident that took place in 2019. Tesla’s China rivals Li Auto (LI), XPeng (XPEV), and Nio (NIO) reported October deliveries, with Li Auto surpassing 40,000 for the first time. Notably, EV and battery giant BYD (BYDDF) is expected to report its October sales soon. On Tuesday, the stock market rally attempt showed signs of improvement, with major indexes posting gains. The Dow Jones Industrial Average rose by 0.4%, the S&P 500 index increased by 0.65%, and the Nasdaq composite gained 0.5%. Nvidia stock faced a slight setback due to a report suggesting the possibility of canceling AI chip orders worth over $5 billion due to tighter U.S. restrictions. However, the stock managed to recover most of its losses. Market breadth improved, with winners outnumbering losers. The small-cap Russell 2000 climbed 0.9%, while the Invesco S&P 500 Equal Weight ETF (RSP) and the First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) also saw gains. Tuesday marked the third day of the stock market rally attempt for the Nasdaq and the second day for the S&P 500 and Dow Jones. A Nasdaq follow-through day may confirm the start of a new uptrend. The crude oil price dropped by 1.6% to $81.02 a barrel, experiencing a significant decline for the month. The 10-year Treasury yield remained steady but rose by 30 basis points in October. The future impact of the Federal Reserve’s policy meeting announcement and Powell’s statements remains uncertain. ETFs such as the iShares Expanded Tech-Software Sector ETF (IGV), the VanEck Vectors Semiconductor ETF (SMH), and the ARK Innovation ETF (ARKK) saw gains. The SPDR S&P Metals & Mining ETF (XME), the SPDR S&P Homebuilders ETF (XHB), the Energy Select SPDR ETF (XLE), the Health Care Select Sector SPDR Fund (XLV), the Industrial Select Sector SPDR Fund (XLI), and the Financial Select SPDR ETF (XLF) also experienced fluctuations in stock value. Arista Networks (ANET) surged, surpassing a key buy point of 198.70, while Cameco (CCJ) also saw an increase in stock value. Pinterest (PINS) experienced a significant jump, surpassing key resistance levels. Investors should exercise caution when buying stocks with earnings gaps during a market correction and should wait for potential handle formations or high handles. The stock market is currently in a correction phase, and investors should wait for a follow-through day to consider purchasing stocks.
