Dow Jones futures rose modestly overnight, along with S&P 500 futures and Nasdaq futures, amid positive earnings reactions ServiceNow (NOW), IBM (IBM) and more. Key inflation data is tap.
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Techs Lead Market Sell-Off; Tenet Healthcare, Fiserv, Microsoft In Focus
United Rentals (URI), KLA (KLAC) and Universal Health (UHS) were also notable earnings after the close.
The stock market rally had a rough Wednesday. The Nasdaq composite and S&P 500 tumbled to below their 50-day lines. The small-cap Russell 2000 also fell sharply, though looks less damaged.
Tesla (TSLA) dived on earnings while Google-parent Alphabet (GOOGL) fell solidly. The rest of the Magnificent Seven — Nvidia (NVDA), Microsoft (MSFT), Meta Platforms (META), Amazon.com (AMZN) and Apple (AAPL) — retreated in sympathy, among with dozens of leading techs,
The Magnificent Seven suffered its worst one-day loss since October 2022.
Nvidia stock is on IBD Leaderboard. Microsoft stock is on IBD Long-Term Leaders. Nvidia and Google stock are on the IBD 50.
The video embedded in the article reviewed Wednesday’s market action and analyzed Tenet Healthcare (THC), Fiserv (FI) and Microsoft stock.
Dow Jones Futures Today
Dow Jones futures rose 0.2% vs. fair value, with IBM a Dow component. S&P 500 futures climbed 0.2%. Nasdaq 100 futures gained 0.3%. ServiceNow and KLA are Nasdaq 100 components. All are S&P 500 members.
The 10-year Treasury yield dipped to 4.26%.
Crude futures edged lower.
China’s central bank cut a one-year lending rate by 20 basis points to 2.3% overnight. That comes just days after trimming a 7-day rate by 10 basis points to 1.7%. The PBOC is offering modest monetary stimulus with China eschewing major fiscal stimulus for now.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
GDP, Inflation Data Due
Before Thursday’s open, investors will get the first reading for second-quarter GDP. Economists expect a 1.9% annualized gain after Q1’s 1.4% rise. The report will also include a Q2 reading for the PCE price index. That comes ahead of Friday’s June PCE price index. The Federal Reserve uses the core PCE price index as its primary inflation gauge.
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Automotive revenue experienced a nearly 7% decline, despite a surge in regulatory tax credits. During the Tesla earnings call, Elon Musk did not reveal much new information regarding upcoming vehicles, self-driving technology, or other potential growth drivers.
Google stock took a hit, dropping 5% to 172.63, falling below the 50-day line and reaching its lowest levels since early June. While Google’s earnings and revenue surpassed expectations, thanks to Google Cloud and online advertising, YouTube ad revenue fell short. Additionally, Google indicated higher expenses in Q3, leading to concerns about margins.
The negative performance of Tesla and Google had a significant impact on the market, affecting other major tech companies like Microsoft, Meta Platforms, Amazon, Apple, and Nvidia. Microsoft stock decreased by 3.6%, while Nvidia stock tumbled by 6.8%, both falling below their 50-day lines. Meta stock and Amazon also experienced declines of 5.6% and 3%, respectively, after facing resistance at their 50-day lines. Apple stock slumped by 2.9%, dropping below its 21-day line for the first time since May 1. Overall, the Magnificent Seven stocks collectively lost 4.6% on Wednesday, marking their worst performance since Sept. 13, 2002.
Given the weakness in tech stocks, investors are advised to consider reducing exposure and taking profits. While holding core positions in long-term winners is an option, scaling back overall tech exposure is recommended due to the current market conditions. It is important to stay updated with changes in watchlists and market trends by following The Big Picture daily.
For stock market updates and more insights, follow Ed Carson on Threads and Twitter. Consider using IBD tools like MarketSurge and SwingTrader to navigate the market effectively and identify top-performing stocks. Unlock premium stock lists, tools, and analysis with IBD Digital for comprehensive market research. following sentence:
The quick brown fox jumps over the lazy dog.
Revised sentence: The speedy brown fox leaps over the lethargic dog.