Dow Jones futures fell slightly overnight, while S&P 500 futures and especially Nasdaq futures lost more points, with Microsoft (MSFT) and Google’s parent Alphabet (GOOGLE) title in one night earns a lot of money.
The stock market rebounded with another strong session, as Treasury yields and the dollar fell. However, the S&P 500 and Nasdaq are approaching key resistance. Investors should participate in a confirmed uptrend, but should not dive in.
Intel (INTC) IPO valuation for Mobileye (MBLY) self-driving car unit on Tuesday night, slightly above the expected range. Twitter (TWTR) has moved closer to its takeover price as the latest signs show Tesla (TSLA) CEO Elon Musk will close the deal on Friday.
Microsoft earnings and revenue took a beating, but MSFT stock plummeted overnight due to disappointing cloud revenue and weak guidance. Google shares tumbled after a lack of views. This news also caused many other technology stocks to drop.
Enphase restores with powerful results. CMG stock initially rose, but then fell slightly.
Intel IPO Pricing Mobileye
Intel sold 41 million Mobileye shares at $21 each, up from the $18-20 expected, raising $861 million. That values Mobileye at $16.7 billion, far less than the $50 billion Intel had hoped for. The chipmaker paid $15.3 billion to Mobileye in 2017.
The latest Musk-Twitter offers
Stock investors in Tesla CEO Elon Musk’s Twitter takeover plan received the paperwork today, CNBC reported on Tuesday, the latest sign that Musk will close a $44 billion deal on Wednesday. Six.
Bloomberg reports that Musk has told banks he plans to close the Twitter takeover on Friday. Twitter stock added to its gains on the day, closing up 2.6% to 52.84, not far from the $54.20 trading price. Tesla shares were briefly up Tuesday afternoon, but were 5.3% higher at 222.41.
Concerns that Musk would need to sell more stock to pay for the Twitter deal weighed on TSLA stock.
Dow Jones Futures Today
Dow Jones futures contract is down 0.3% from 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.
The yield on the 10-year Treasury note fell 1 basis point to 4.1%.
Crude oil futures fell 1%, while natural gas prices rose 1%.
Rally stock market
The stock market continued to rally on Tuesday, with technology and small-cap stocks leading a strong session.
The Dow Jones Industrial Average rose 1.1% on Tuesday stock market trading. The S&P 500 index rose 1.6 percent. The Nasdaq Composite Index rose 2.25%. The small-cap Russell 2000 gained 2.7%.
The yield on the 10-year Treasury note fell 13 basis points to 4.11%. Falling Treasury yields also hit the US dollar. However, yields on two-year Treasury notes, more closely aligned with Fed policy, fell only 3 basis points to 4.47%.
US crude oil prices rose 0.9% to $85.32 per barrel. Natural gas futures rose 8%, continuing to recover from a 23% drop last week.
Among the Best ETFsThe Innovator IBD 50 ETF (FFTY) increased by 0.55%. iShares Expanded Software-Technology Sector ETF (IGV) increased by 2.5%. MSFT stock is a very large IGV holding. VanEck Vectors Semiconductor ETF (SMH) increased by 1.6%.
Microsoft earnings and revenue topped out modestly compared to fiscal Q1 views. Cloud revenue leads the way, but falls short of at least some of the goals. The software giant then warned about Q2 revenue from advertising, PC, and currency.
MSFT stock sold off nearly 7% in overnight trading. Shares rose 1.4% to 250.66 on Tuesday, approaching the 50-day limit. But Microsoft stock is below the 200-day mark and still not far from a bear market low. Cloud software shares tumble on Microsoft’s results.
Google earnings and revenue both slipped. YouTube revenue fell while online advertising grew only 2.5%. Revenue from cloud computing topped estimates. GOOGL stock is down nearly 7% in the long run. Shares rose 1.9% Tuesday to 104.48, also closing above the 50-day line. Like Microsoft, however, Google stock isn’t far from bear market lows, with a gap of 200 days.
Microsoft and Google cloud computing results could herald the growth Amazon Web Services is headed for Amazon.com (AMZN) earnings on Thursday night. AMZN stock fell more than 4% overnight.
Earnings on Enphase comfortably beat when revenue crushes views. ENPH stock rose 3% overnight. Enphase stock jumped 4.85% to 265.59 on Tuesday, rebounding above the 21-day line. Stocks may be starting to build on the right side of a new base but remain below the 50-day level.
The first solar energy (FSLR), reported Thursday night, down 1% after Enphase earnings.
Chipotle’s earnings beat, with same-store sales and impressive profit margins. Initially rising, CMG stock fell 1.5% in extended trading amid concerns about future profit margins. Shares rose 2.5% on Tuesday to 1,584.02. Chipotle stock is approaching the 50-day line as it acts on the right side of a short-term base with 1,754.66 buy pointsbased on MarketSmith Analysis.
Market aggregation analysis
The stock market rally continues to pick up momentum, with Treasury yields falling and the US dollar providing a headwind for equities.
Nasdaq and small caps led gains on Tuesday. The Dow Jones Industrial Average lagged Tuesday but remained the leader of the rally, pushing above the 50-day line. The S&P 500 and Russell 2000 are near that critical level. Nasdaq still has a gap to reach 50 days. However, the S&P, Russell and Nasdaq are all above their 10-week lines.
It remains unclear whether this is just another bear market rally. Can the S&P 500 and later Nasdaq move decisively above their 50-day moving average? And if so, can the major indexes remove 200 days?
Participants join health leaders, including biotech, health insurers, and drug distributors. Auto parts retailers are doing well.
Energy stocks continue to perform well.
Treasury yields, earnings and economic data could undermine that early rally.
It’s no coincidence that shares of Microsoft, Google, Amazon and Apple all closed on Tuesday at or just below their 50-day mark. Even Meta stock, which was close to hitting a bear market low on Friday, is heading back to its 50-day high.
Microsoft, Google, and Amazon are all set to retreat from that critical level. Futures signal the S&P 500 and Nasdaq will do the same when they open Wednesday.
What to do now
A confirmed stock market rally is building momentum, with several top stocks signaling buy or breakout, including some high-growth names.
Therefore, investors should be cautious about participating in this market rally, buying quality stocks or broad market ETFs. Slowly enter. If your positions and the market rally are working, you can gradually add.
The major indexes face a series of resistance levels that are another reason to step in, not run.
But be ready to take profits or cut losses quickly.
Continue working on the watch list. The market rallies for several days that are putting more stocks in place.
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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