Dow Jones futures were little changed on Wednesday night, as were S&P 500 and Nasdaq futures, led by Facebook stocks and Pay Pal (PYPL). The stock rally ended mixed on Wednesday, taking big tech profits in stride and improving slightly following the announcement of the Fed meeting and the ever-conciliatory comments from Fed chief Jerome Powell.
Facebook (FB), PayPal actions, Ford (F), Qualcomm (QCOM), Align technology (ALGN) and Service now (NOW) headlined the earnings reports Wednesday night.
the Robin Hood (HOOD) The IPO is priced Wednesday night, with the no-charge trading app set to debut as a HOOD stock Thursday.
The stock rally started mixed, but the Nasdaq rose after strong earnings from Apple (AAPL), Microsoft (MSFT) and Google parent Alphabet (GOOGLE). Apple stock fell slightly and Microsoft changed little. But Google’s stock exploded and hit an all-time high, also boosting Facebook’s stock.
Advanced micro-systems (AMD) broke out on profits. Brother chipmaker Monolithic power systems (MPWR), which technically closed pennies above a buy point on Tuesday, also broke decisively into earnings on Wednesday. Steelmaker Cleveland cliffs (CLF) posted an early entry a few days after its good quarterly results. ArcelorMittal (MT) also crossed a buy point on Wednesday, but earnings are expected early Thursday.
Fed sees “progress”
The announcement of the 2 p.m. ET Fed meeting said policymakers were seeing “progress,” but did not report “substantial progress” that would indicate they have started discussing cutting back on purchasing. ‘assets. Fed chief Jerome Powell at his 2:30 p.m. ET press conference said the economy still had “some way to go.” He also said the United States had “ground to cover” before the Fed adjusted its easy money policies. He said inflation is likely to remain high for several months, but is expected to moderate.
The Fed meeting and Powell’s comments did not surprise markets, especially given the recent increase in Covid cases and associated restrictions. Powell could signal a “gradual conversation” at the end of next month during his Jackson Hole speech, or the trigger could come at the September Fed meeting. A real reduction in bond purchases would likely not start until late 2021 or early 2022.
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Generac (GNRC), AMD and Cleveland-Cliffs stocks were highlighted in the Stock Market Today video embedded in this story.
PayPal, Generac, and ServiceNow stocks are listed in the IBD rankings and long-term leaders. AMD stock is on SwingTrader. CLF, Generac and Facebook shares are on the IBD 50.
Dow Jones Futures Today
Futures contracts on Dow Jones increased 0.2% from fair value. S&P 500 futures have not changed much. Futures on the Nasdaq 100 plunged 0.15%. Facebook and PayPal shares weigh on technology futures.
Keep in mind that overnight action on futures contracts on Dow and elsewhere doesn’t necessarily translate into actual trades in the next regular trading session.
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Facebook profits were better than expected, but the social giant warned of slower revenue growth ahead. FB stock fell 3.5% in extended trading. Facebook stock rose 1.5% to 373.28 on Wednesday, hitting a new intraday high thanks to Google’s strong earnings report. FB stock also rose last week thanks to Snap’s profit explosion. So investors may have already taken in the good news about Facebook’s earnings.
PayPal profits topped views, but sales fell short and the leader in digital payments slumped third quarter revenue. PayPal stock fell 6% to 285 overnight, although this was an initial low. Shares climbed 0.5% to 301.98 on Wednesday after finding support at its 21-day moving average and closing in the range of a 296.11-cup buy point with a handle. But PYPL stock is expected to drop well below that buy point and possibly test an early entry of 277.96 allowed last month.
Ford’s earnings defied the outlook for a second quarter loss and guided higher despite a continuing chip shortage. Ford’s stock rose nearly 4% in extended action. Shares edged up 0.5% to 13.86 on Wednesday. Ford stock is still below its 50 day line but holds near the high of a previous consolidation.
Qualcomm’s profits were better than expected, with the wireless chip giant also guiding on the upside. QCOM stock rose 2% to around 146 in overnight trading. Shares climbed 1.1% to 142.44 on Wednesday. Investors might view 146.44 as early entry. The official purchase point is 167.68.
ServiceNow’s earnings exceeded consensus expectations. NOW stocks are up 1% late. Shares edged up 0.2% on Wednesday to 583.35. ServiceNow stock closed in the buy point range of 565.39 via a double bottom base.
Line up gains easily beats views, while manufacturer Invisalign has also guided above. ALGN stock rose 2% to 634 in extended trading, signaling a return above a buy point of 629.45 cup with handle, according to MarketSmith analysis.
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Stock exchange rally
The stock market rally ended in a mixed fashion on major indices, but executives performed well as many sectors advanced.
Along with the Fed meeting and big profits, further progress in finalizing an infrastructure bill was a positive headline. The rebound in Chinese equities has been positive, although it is unclear whether this is just a one-day respite.
The Dow Jones Industrial Average fell 0.4% in stock trading on Wednesday. The S&P 500 Index closed below the breakeven point. The Nasdaq composite rose 0.7%, while the Nasdaq 100 climbed 0.4%. Small cap Russell 2000 gained 1.5%.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) jumped 2.45%, while the Innovator IBD Breakout Opportunities (BOUT) ETF rose 0.9%. The iShares Expanded Tech-Software Sector (IGV) ETF rose 0.8%. VanEck Vectors Semiconductor (SMH) ETF rose 1.8%, with AMD stock helping to lead the way.
The SPDR S&P Metals & Mining (XME) ETF rose 1.2%, with CLF stock in the top 10. The Global X US Infrastructure Development ETF (PAVE) rose 0.6%. The US Global Jets ETF (JETS) rose 1.2%. The SPDR S&P Homebuilders ETF (XHB) fell 0.3%. The Energy Select SPDR ETF (XLE) climbed 0.9% and the Financial Select SPDR ETF (XLF) edged down 0.1%
Reflecting more speculative historical stocks, ARK Innovation ETF (ARKK) jumped 3.2% and ARK Genomics ETF (ARKG) jumped 2.3%. ARKK bounced off its 50 day line and just recovered its 200 day line. ARKG is back above its 50-day line but remains below its 200-day line.
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Market rally analysis
For growth investors, the stock rally had a strong session on Wednesday. The Nasdaq outperformed the Dow Jones and the S&P 500, and it also did a little better than the large-cap Nasdaq 100.
Tuesday night’s wave of earnings was strong but did not trigger major market swings. The Fed and Fed Chief Powell meeting appeased investors but also didn’t spark any madness.
During this time, a few new buying opportunities have emerged, including AMD stocks and CLF stocks. Some stocks that fell on earnings rebounded from key support, including Shopify (STORE), In Mode (INMD) and above all Generac (GNRC).
The Russell 2000 led, an example of improvement in market scope, at least for a session. However, the small cap index remains below its 50 day line.
The Nasdaq 100 is 5.3% above its 50 day line, so it wouldn’t take much to be extended again. But the Nasdaq composite, at 3.9% above its 50-day mark, still has some leeway.
The stock rally has moved sideways so far this week with major indices slightly lower. This is somewhat surprising given the flood of earnings and other headlines, but a welcome development. Combined with the expanding market and leading stocks, the overall picture is relatively positive for the market rally.
What to do now
This is a confirmed stock rally, but it is not a full nose bull market. Now is the time to be invested, but not too aggressive.
There were a few buying opportunities on Wednesday, especially on the AMD title. Investors could have taken advantage of this or simply kept their existing positions. The jackpot is won during the session. If you owned growth stocks, there’s a good chance you made money sitting on Wednesdays.
Continue to track the earning dates of your holdings and key stocks on your watchlist.
Be flexible, stay alert, and follow your rules.
Read The Big Picture every day to stay in tune with the market direction and major stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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