Dow Jones Futures: Microsoft, Google Fall On Earnings; Market Rally Runs Up To Key Test

Dow Jones futures fell slightly overnight, while S&P 500 futures and especially Nasdaq futures lost more ground, and Microsoft (MSFT) and parent Google Alphabet (GOOGL) headlines a big night in earnings.




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The stock market rally had another strong session, as Treasury yields and the dollar retreated. But the S & P 500 and Nasdaq are coming to a key resistance level. Investors should participate in confirmed increases, but do not rush in.

Intel (INTC) IPO price for it Furnished (MBLY) self-driving unit-Tuesday night, slightly above the expected range. Twitter (TWTR) moved closer to its control price on these recent signs Tesla (TSLA) CEO Elon Musk will close the deal by Friday.

Microsoft and Google launched megacap tech earnings Tuesday night. Enphase energy (ENPH) and Chipotle Mexican Grill (CMG) was also reported.

Microsoft earnings and revenue beat, but MSFT shares fell sharply overnight on disappointing cloud revenue and weak guidance. Google shares fell after missing the views. Enphase rallied on strong results. CMG stock initially rose, but then turned modestly lower.

Microsoft and Google stocks are on IBD’s list of long-term leaders. ENPH stock is on the IBD Big Cap 20.

Intel put in Mobileye IPO price

Intel sold 41 million shares of Mobileye at $ 21 a pop, from the expected range of $ 18-$ 20. That raised $ 861 million. That valued Mobileye at $16.7 billion, far below the $50 billion that Intel once expected. The chipmaker paid $15.3 billion for Mobileye in 2017.


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Musk-Twitter Deal Deal

Equity investors in Tesla CEO Elon Musk’s planned Twitter deal received paperwork today, CNBC reported Tuesday, the latest sign that Musk will close the $44 billion deal by Friday.

Bloomberg reports that Musk told his bank he intends to close the Twitter takeover on Friday. Twitter stock added to intraday gains, closing up 2.6% to 52.84, not far from the $54.20 contract price. Tesla stock briefly pared gains Tuesday afternoon, but ended 5.3% higher at 222.41.

Concerns that Musk will need to sell more stock to pay for the Twitter deal weighed on TSLA stock.

The video embedded in this article discusses Tuesday’s market rally and analysis Shockwave Medical (SWAV), Accelerate Energy (EE) and Dollar general (DG).

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Dow Jones Futures Today

Dow Jones futures plunged 0.3% against fair value. S&P 500 futures fell 1%. Nasdaq 100 futures lost 2.1%. Microsoft stock is a giant of the Dow Jones, S&P 500 and Nasdaq. Google Stock and Enphase are components of the S&P 500 and Nasdaq.

Remember that overnight actions in Dow futures and elsewhere do not necessarily translate into actual trading in the next regular stock market session.


Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live


Stock market rally

The stock market rally continued on Tuesday, with tech and small leading a strong session.

The Dow Jones Industrial Average rose 1.1% in stock market trading on Tuesday. The S&P 500 index gained 1.6%. The Nasdaq Composite rose 2.25%. The small-cap Russell 2000 jumped 2.7%.

The 10-year Treasury yield fell 13 basis points to 4.11%. Falling Treasury yields also weighed on the US dollar. Still, the two-year Treasury yield, which is most closely tied to Fed policy, declined just 3 basis points to 4.47%.

US crude oil prices rose 0.9% to $85.32 a barrel. Natural gas futures rose 8%, continuing to rebound after plunging 23% last week.

ETFs

Among the best ETFs, the Innovator IBD 50 ETF ( FFTY ) rose 0.55%. The iShares Expanded Tech-Software Sector ETF ( IGV ) rallied 2.5%. MSFT stock is a major IGV hold. The VanEck Vectors Semiconductor ETF ( SMH ) advanced 1.6%.

SPDR S&P Metals & Mining (XME) rose 1.8%. SPDR S&P Homebuilders (XHB) rose 4.35%. The Energy Select SPDR ETF ( XLE ) rose 0.1%. The Healthcare Sector SPDR Fund ( XLV ) added 0.8%.

Reflecting stocks with more speculative histories, ARK Innovation ETF ( ARKK ) rose 6.7% and ARK Genomics ( ARKG ) rose 5.4%. Tesla stock is a major holding through Ark Invest’s ETFs.


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Key salary

Microsoft’s earnings and modest revenue exceeded fiscal Q1 views. Cloud computing revenue led the way but missed at least some targets. The software giant then warned of Q2 revenue on advertising, PC and currency accounts.

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MSFT stock sold in overnight trading. Shares rose 1.4% to 250.66 on Tuesday, coming in at the 50-day line. But Microsoft stock is well below the 200-day line and is still not far from bear-market lows. Cloud software stocks fell on Microsoft’s results.

Google earnings and revenue both missed. YouTube revenue fell, while online advertising rose just 2.5%. Cloud-computing revenues have exceeded estimates. GOOGL shares fell in extended action. Shares rose 1.9% Tuesday to 104.48, also closing at the 50-day line. But like Microsoft, Google shares are not far from bear-market lows, and some distance from the 200 day.

Microsoft and Google’s cloud computing results could foreshadow Amazon Web Services’ headline growth Amazon.com (AMZN) earnings on Thursday night. AMZN stock fell slightly overnight.

Enphase earnings comfortably beat as revenue breaks opinion. ENPH stock rose strongly overnight. Enphase stock was already up 4.85% at 265.59 on Tuesday, moving back above the 21-day line. Shares could be starting to build to the right of a new base but are still below the 50-day line.

First Solar (FSLR), which reported Thursday night, was little changed on Enphase earnings.

Chipotle’s earnings beat, with same-store sales and impressive margins. CMG stock turned slightly lower in extended trading amid concerns about future margins. Shares advanced 2.5% on Tuesday to 1,584.02. Chipotle stock is approaching the 50-day line as it works to the right of a short base with a buy point of 1,754.66, according to MarketSmith analysis.

Boeing (BA), General dynamics (GD), Waste management (WM) and Hilton worldwide (HLT) report early Wednesday.


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Market gathering analysis

The stock market rally continued to gain momentum, with Treasury yields falling and the US dollar providing a tailwind for stocks.

The Nasdaq and small caps led Tuesday’s gains. The Dow Jones lagged on Tuesday but remained the leader of the rally, pushing above the 50-day line. The S&P 500 and Russell 2000 are approaching this key level. The Nasdaq still has some distance to reach the 50-day mark. But the S&P, Russell and Nasdaq are all above their 10-week line.

It is still unclear if this is just another bear-market rally. Will the S & P 500 and then the Nasdaq move decisively above their 50-day moving averages. But if so, will the major indices clear the 200 day?

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On the plus side, a number of growth stocks showed bullish action, including Shockwave, DoubleVerify (DV) and Roblox (RBLX).

These people join medical leaders, including biotechs, health insurance companies and drug distributors. Auto parts dealers are doing well.

Energy stocks continue to perform well.

Treasury yields, earnings and economic data could weaken the nascent rally.

Microsoft and Google reported Tuesday night, and Meta Platform (META), Apple ( AAPL ) and Amazon earnings later this week.

It’s no coincidence that the stock of Microsoft, Google, Amazon and Apple all closed Tuesday at or just below their 50-day line. Even Meta stock, which nearly hit a low in Friday’s bear market, is returning toward its 50-day low.

Microsoft, Google and Amazon are all pulling back from this key level. Futures signal the S&P 500 and Nasdaq will also do so at the open on Wednesday.


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What To Do Now

A confirmed stock market rally is in progress, with a number of leading stocks flashing buy or break signals, including some big growth names.

So investors should participate carefully in this market rally, taking positions in quality stocks or broad market ETFs. Step in slowly. If your positions and the market rally are working, you can gradually add exposure.

The major indexes face a series of resistance levels is yet another reason to enter, not run.

But be ready to take profits or cut losses quickly.

Keep working on the watch lists. Several days of market gains bring more stocks into position.

Read the Big Picture every day to stay connected with market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter @IBD_ECarson for the latest stock market news and more.

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