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Dow Jones futures fall under Microsoft’s weak guidance; Tesla earnings on touch


Dow Jones futures fell overnight, along with S&P 500 and Nasdaq futures. Microsoft (MSFT) guide has passed the scary earnings better. ASML (ASML), Boeing airplanes (father) and Tesla (TSLA) is being broadcast on Wednesdays.




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The stock market rally traded in a relatively narrow range on Tuesday following strong gains in the previous two sessions. The major indexes closed mixed. Nasdaq withdraws as Justice Department files second antitrust lawsuit against parent company Google Alphabet (GOOGLE).

Microsoft earnings surpass past views about the strong development of cloud computing. But the software giant gave weak guidance. MSFT stock, initially rallied, then reversed lower.

visual surgery (ISRG) and Texas Instruments (TXN) are also reported. Missed ISRG earnings with inline revenue. Texas Instruments hit lightly, but the guide is lower. ISRG shares fell while TXN shares fell slightly.

Early Wednesday, massive ASML report on chip equipment, with other semiconductor manufacturers Lam study (LRCX), country (TER) and wolf speed (WOLF) is due after closing.

Boeing and Freeport-McMoRan (FCX) also reported early Wednesday.

Tesla will lead in earnings Wednesday night. Tesla earnings will be important but investors will likely focus on the 2023 guidance, especially after the massive worldwide price drop earlier in the year. Those price cuts have boosted Tesla’s demand – at the expense of profits – but will that boost last?

Following the closure, Tesla said it would spend $3.6 billion at or around its original “Gigafactory” outside of Reno, Nevada. It will be used for the Tesla Semi series and for mass production of 4680 batteries.

Tesla shares fell 2% overnight. Shares rose 0.1% on Tuesday to 143.89, near the 50-day moving average. TSLA stock is up nearly 17% through 2023.

Dow Jones Futures Today

Dow Jones futures are down 0.2% from fair value. S&P 500 futures fell 0.45%. Nasdaq 100 futures fell 0.7%, reversing modest gains initially. MSFT stock is a component of the Dow Jones, S&P 500, and Nasdaq.

Remember that action overnight in future index and other places that don’t necessarily translate into actual transactions the next time stock market meeting.


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Stock market recovers

After the NYSE glitch disrupted about 100 stocks at the open, the stock market recovered to trade slightly lower in the morning before slowly improving to mixed.

The Dow Jones Industrial Average rose 0.3% on Tuesday stock market trading. The S&P 500 index fell 0.1%. The Nasdaq composite fell 0.3%. The Russell 2000 small-cap index rose 0.25%.

US crude oil prices fell 1.8% to 80.13 USD/barrel. Natural gas fell 5.5% after gaining more than 6% on Monday.

Yields on the 10-year Treasury note fell by 3 basis points to 3.47% amid mixed to weak manufacturing data.


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DOJ sues Google again

DOJ sued Google over its online advertising dominance, which sought to force the company to divest some assets. In October 2020, the Department of Justice filed an antitrust lawsuit alleging abuse of the right to search online. National groups have three antitrust lawsuits against Google, one of which is related to advertising.

Shares of Google fell 2.1% to 97.70 on Tuesday, though that was after rising 10% on heavy volume in the previous three sessions.

Google reports fourth-quarter earnings on February 2.

ETFs

Among the growth ETFs, the Innovator IBD 50 ETF (FFTY) and Innovator IBD Breakthrough Opportunity ETF (HOUR) increased higher. iShares Expanded Tech-Soft Sector Sector ETF (IGV) decreased by 0.6%. Microsoft stock is a major component of the IGV.

VanEck Vectors Semiconductor ETF (SMH) fell 0.7%, ASML stock was heavily held, with TXN, LRCX and TER also in SMH.

Reflecting stocks with more speculative stories, the ARK Innovation ETF (ARKK) decreased by 1.6% and ARK Genomics (ARKG) lost 1.4%. Tesla stock is the primary stock held on Ark Invest ETFs. Cathie Wood’s Ark has been strengthening her TSLA position in recent weeks, adding more stock as recently as Monday.

SPDR S&P Metals & Mining ETF (XME) rose 0.2% and the Global X US Infrastructure Development ETF (PAY THE ROAD RED) increased by 0.4%. US Global Jets (jet plane) is inflated lower. SPDR S&P Homebuilders ETF (XHB) increased by 0.4%. Energy Select SPDR ETF (XLE) yielded 0.4% and the Financial Select SPDR ETF (XLF) inched up 0.1%. SPDR Foundation for healthcare sector (XLV) decreased by 0.7%.


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Microsoft earnings

Microsoft earnings fell 6% from a year earlier, excluding various items, just below fiscal Q2 view. Revenue rose 1.9%, the smallest increase in more than six years and missed forecasts. Revenue from Azure and other cloud services grew 31% — 38% excluding currency fluctuations — slightly above the consensus view. Analysts were worried about Azure’s growth.

Investors are relieved by the positive results of the Dow Jones technology giant. But Microsoft has issued weak guidance, warning about deceleration activity.

MSFT stock fell 1% after initially gaining 5% or more in hours.

Last week, Microsoft announced plans to cut 10,000 jobs, about 4.5% of employees.

Shares fell 0.2% to 242.04 on Tuesday, holding the 50-day line after retaking that key level on Monday. Arguably, Microsoft stock has a bottom base of 264.02 buy points. It forms below the 200-day line, but a breakout would involve breaking above that level and breaking a long-term downtrend.

Microsoft earnings and guidance are important to other software makers, PC-related stocks and cloud gaming like Google and Microsoft. amazon.com (AMZN). Microsoft’s recent large stake and its alliance with OpenAI, the creators of ChatGPT, could be another threat to Google and Amazon.

Amazon and several cloud software companies fell overnight after an initial increase on Microsoft earnings.

Analysis of market recovery

The stock market rally paused on Tuesday, with the major indexes ending mixed. But that’s normal after big gains on Friday and Monday, especially when it comes to a huge earnings wave.

The S&P 500, which broke through last week’s high and 4,000 on Monday, has held those key levels.

The Nasdaq composite fell and remained modestly below the 200-day line and its December high.

The Dow Jones Index extended gains from the 50-day line after retrieving that key level on Monday

The Russell 200 small-cap index is down but close to its late 2022 peak.

The market rally looks strong, but all major indexes are facing resistance levels. Technology was the market leader in 2023, but now we’re getting a bunch of tech earnings. Even if the macroeconomic picture stabilizes and Fed rate hikes ease, companies could cut their guidance over the next few weeks.

Microsoft may be just getting started.

In addition to Tesla, ASML and Boeing on Wednesday, Apple (AAPL), parents Facebook Meta . Platform (META), Amazon, AMD (AMD), Google and more will be reported next week

If the market rally breaks through the late 2022 highs by the end of next week, it will be a strong signal that a sustained uptrend is underway.


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What to do now

The stock market rally has shown more strength and offers some buying opportunities.

Investors should gradually increase their exposure and not focus too much on a particular stock or sector. Earnings season can rock the markets, but especially individual stocks. One option for investors is to purchase a market or sector ETF, along with individual names.

Definitely focus on building your watch list. Be aware of the main earnings for your market and shares, including competitors, customers and suppliers for the companies in which you have positions.

Read Big picture every day to stay in sync with market trends and top stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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