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Dow Jones futures: Apple leads earnings wave, Fed rate hike looms; What to do now

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Dow Jones futures open on Sunday evening, along with S&P 500 futures and Nasdaq futures. The stock market posted a strong rally last week, breaking through some key resistance. Technicians retreated on Friday Click (SNAP) and other bad earnings.

Apple (AAPL), Microsoft (MSFT), the parent company of Google Alphabet (google), Amazon.com (AMZN) and Facebook parent Platform meta (META) headline a major earning week.

META and Google shares sold off heavily on Friday due to Snap results and a lack of guidance. Microsoft shares are back to their 50-day line. Amazon just cut back on a big weekly gain. But Apple stock is one of five even close to its 200-day line and doesn’t have an obvious buy point.

Meanwhile, the Federal Reserve is in session and Wednesday is likely to see another big 75 basis point rate hike. Guidance for future steps will be key. Investors began to cut the September rate hike, after which they were tightened slightly. This is largely due to the fact that the economy is rapidly slowing down, perhaps even falling into a recession. A recession, along with still high inflation, is not the best combination for corporate profits.


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While the recent performance of the major indexes has been promising, investors should still be cautious as they increase risk.

Few leading stocks gave buy signals. Meanwhile, several promising stocks have seen flash sell-offs, including dollar tree (DLTR), Lantheus (LNT), Agilon Health (AHL) and Lee Auto (LI), forcing investors to make difficult decisions.

LNTH shares are on the IBD leaderboard, while Agilon exited on Friday. Li Auto and Agilon are in the IBD 50. MSFT and Google are both long-term IBD leaders.

The video embedded in the article looks at important market actions and also analyzes Health care cross-country (CCRN), shares of Li Auto and DLTR.

Dow Jones futures today

Dow Jones futures open at 6:00 pm ET Sunday, along with S&P 500 and Nasdaq 100 futures.

Remember that overnight action in Dow futures and elsewhere does not necessarily translate into real trading in the next regular stock market session.


Join IBD experts as they analyze valuable stocks in the stock market rally in IBD Live.


stock market rally

The stock market rally posted a strong weekly gain, even with Friday’s pullback.

The Dow Jones Industrial Average rose 2% in stock trading last week. The S&P 500 added 2.6%. The Nasdaq Composite Index jumped 3.3%. Small-cap Russell 2000 shares jumped 3.7%.

The 10-year Treasury yield fell 15 basis points to 2.78%, down 25 basis points from Thursday to Friday. The Treasury yield curve has been flipped from a one-year to a 10-year. The six-month Treasury bill rate of 2.94% is well above the yield on 10-year Treasury bonds. All this reflects the growing risks of a recession.

U.S. crude oil futures fell nearly 3% last week to $97.59 a barrel.

ETFs

Among the top ETFs, the Innovator IBD 50 ETF (FFTY) fell 0.6% last week, while the Innovator IBD Breakout Opportunities (BOUT) ETF rose 0.45%. The iShares Expanded Tech-Software Sector ETF (IGV) jumped 5.4%, with MSFT as the main component. The VanEck Vectors Semiconductor (SMH) ETF rose 5.6%.

The SPDR S&P Metals & Mining ETF (XME) jumped 1.9% last week. The Global X US Infrastructure Development ETF (PAVE) jumped 5%. The US Global Jets ETF (JETS) edged up 0.9%. The SPDR S&P Homebuilders ETF (XHB) is up 6%. The Energy Select SPDR (XLE) ETF added 3.7%, while the Financial Select SPDR (XLF) ETF gained 3%. The Health Care Select Sector SPDR Fund (XLV) fell 0.3%.

Reflecting more speculative stocks, shares of the ARK Innovation ETF (ARKK) were up 4.85% last week and the ARK Genomics ETF (ARKG) were up 1.2%, though both lost more than half of their weekly gains on Friday.


Top 5 Chinese stocks to watch now


Stock shake-ups, extortion

When leading stocks sell to or below their buy point, investors are faced with a difficult decision: stay away, get out, or cut the position. Not necessarily the “correct” answer. Sometimes stocks bounce right away, others continue to fall, perhaps after a short bounce. A more cautious approach may make more sense in the current volatile market. Buying near the entrance can also offer a little more cushioning.

DLTR shares have been gradually rising in the buying zone this week, when they suddenly fell almost 5% intraday on Thursday. According to MarketSmith analysis, the stock slightly undermined the 166.45 buy point, but found support at the 21-day line. By the close, DLTR shares were down just under 1%. On Friday, Dollar Tree shares briefly moved out of the buying zone before the close, almost unchanged.

Shares of LNTH hit an all-time high on Wednesday, fresh off the bottom of the cup but closing nearly 14% above the 50-day line. On Thursday, Lantheus shares fell 7.8% on the day, although they cut losses to 3.1%. Quick shake? Probably no. LNTH shares fell 4.5% on Friday.

Shares of Agilon broke out of the lower base on Thursday with a buy point of 27.12. But the shares fell 8.3% to 25.18 on Friday.

Shares of Li Auto bounced off their 21-day line on July 13 and posted solid gains by Monday, July 18. But the stock fell below its 21-day line intraday on Tuesday, though it rebounded to close above that key level, down 4.7%. On Wednesday, LI shares fell 3.7% to Tuesday’s low. On Thursday, Li Auto nearly regained its 21-day line, but then sold out convincingly on Friday. Ultimately, it was a bearish reversal week for the Chinese electric car maker.

Market Rally Analysis

The stock market rally moved forward significantly last week. The major indexes have risen above their 50-day and 10-week moving averages, which has been a key sticking point in recent months.

Weak results from Snap, Verizon (VZ), Seagate technology (STH) and Intuitive surgical (ISRG) was the catalyst for Friday’s retreat.

But perhaps the market should have pulled back, especially the Nasdaq and growth stocks. It is better to get this rollback before the complete collapse of profits.

If everyone is optimistic about profits, this is a direct path to a big sell-off in actual results. This may be especially true this time around, with leadership particularly unclear as the economy deteriorates rapidly.

Friday’s meeting highlights how treacherous the reporting season is, and not just for the company. Snap’s earnings report hit Meta and Google shares, as well as other firms dependent on online advertising, and the broader market.

Friday’s retreat also shows the risks of bottoming, buying underdog growth stocks as they pull back.

It’s entirely possible that the market bottomed in mid-June, but that doesn’t necessarily mean it’s a quick and easy march to all-time highs and beyond. The market bottomed in late 2002 and late 2008, but there was no sustained growth for several months.

In addition to tech titans Apple, Microsoft, Meta, Google and Amazon, other notable results this week include ExxonMobil (HOM), Chevron (CVH), Merck (MRK), pfizer (PFE), General Motors (GM) and Qualcomm (KCOM).

Apple, Microsoft, Merck, and XOM stocks are all components of the Dow Jones.


Market Time with IBD ETF Market Strategy


What to do now

Investors should still have, at the most, modest exposure to risk. There weren’t many good stocks to buy and they could be subject to flash selloffs. The reporting season and the Fed meeting can send the market, various sectors and individual stocks in a variety of directions.

So be especially careful over the next few days. If you are making new purchases, look for opportunities to buy early and try to buy as close to these entrances as possible.

Keep working on your watchlists. The market rally showed some strength. You want to be ready to take advantage.

Read The Big Picture every day to stay up to date on market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson to update the stock market and much more.

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