Dow futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures. Investors will be looking forward to a huge week of earnings, led by… Tesla (TSLA), Microsoft (MSFT) And Boeing (Bachelor’s).
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The stock market rally eased in the middle of the week, with major indexes falling below major moving averages. But they rebounded again on Friday, particularly the Nasdaq and technology stocks. The Nasdaq, lagging behind in 2022, led the big-cap indices in 2023 as tech growth names returned in favor.
The recent decline presented an opportunity for many stocks to take a breather, forging handles or other new buying opportunities.
Investors should pay close attention, but they should be wary about new deals. The market rally revolves around critical levels. Earnings season can rattle indices and specific sectors as well as individual stocks.
Hundreds of companies will report this next week. Here are 10 earnings reports to watch closely: Tesla, Microsoft, Boeing, and… service now (right Now), chevron (CVX), visa (Fifth) And Master Card Credit Card (Master’s), as well as chip and gear giants ASML (ASML), L Research (LRCX) And KLA Corp. (KLAC).
These reports will provide insight into their respective industries, and can have a significant impact on the market as a whole. Tesla and Microsoft stocks still have a lot of repair work to do, while Boeing is stretched. The stock may now be near a strong early entry. CVX, Visa and Mastercard stocks are all close buys. So do LRCX and KLA, while ASML is a little more elusive.
KLAC stock is located at IBD Big Cap 20. Microsoft stock and ASML in action Long-term leaders of IBD.
Microsoft, Boeing, Chevron, and Visa stocks are all components of Dow Jones.
The video embedded in this article reviews an important week in the market and analytics etsy (ETSY) and LRCX Stock and ServiceNow.
Dow jones futures today
Dow Jones futures open at 6 p.m. ET on Sunday, along with futures for the S&P 500 and Nasdaq 100.
Remember to work in overnight Dow Jones futures contracts and elsewhere that does not necessarily translate into actual trading in the next regular session Stock market session.
Join IBD experts as they analyze actionable shares in the bullish stock market on IBD Live
Stock market rise
The stock market rally suffered a downward reversal on Wednesday, and fell further on Thursday, but ended relatively well.
The Dow Jones Industrial Average fell 2.7% in the past week Stock market trading. The S&P 500 fell 0.7%. The Nasdaq Composite Index rose 0.55%. Small cap Russell 2000 fell 1.1%.
The 10-year Treasury yield fell 3 basis points to 3.48% on Friday. The return was 3.37% for the week, its lowest level in four months.
Expired February crude oil futures rose 1.8% to $81.31 a barrel last week. The March contract, the new near-month crude oil contract, ended at $81.64.
Exchange Traded Funds
Among the ETFs, the Innovator IBD 50 ETF (fifty) fell by 1% last week. iShares Expanded Technology and Software ETF (IGV) was up 1.45%, with MSFT and ServiceNow shares both being large holdings. VanEck Vectors Semiconductor Corporation (SMH) increased by 0.7%. ASML stock is a large holding, along with LRCX, KLAC, and TER.
Reflecting more speculative stories, the ARK Innovation ETF (ARK)ark(up 1.4% last week and ARK Genomics ETF)ARKG) lost 1%. TSLA stock remains a major holding across Ark Invest’s ETFs. In fact, Cathie Wood’s Ark has reloaded its Tesla stock holdings in recent months.
SPDR S&P Metals & Mining ETFs (XME) fell 0.5% after a significant weekly gain. Global Infrastructure Development Fund X US (cradle) fell nearly 3%. US Global Gates Foundation ETF (Planes(Up only 0.35% but up sharply in 2023. SPDR S&P Homebuilders ETF)XHB) fell 2.4%.
Energy Defined Fund SPDR ETF (xle) rose 0.7%, its sixth consecutive weekly advance. Chevron stock is a staple. SPDR Financial Selection Fund (XLF) sank 2.1%. SPDR Health Care Sector Selection Fund (XLV) fell 1.1%, the sixth decline in seven weeks.
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Main earnings
Tesla’s earnings are due Wednesday night. Investors expect earnings to rise 34% and revenue 39%. This will be the first quarter in which revenue growth will outpace earnings, an early sign of margin pressure.
The focus will likely be on the outlook, especially in the wake of massive price cuts around the world to start in 2023. Will Tesla stick to its 50% delivery growth target? Will Elon Musk provide more details on the Cybertruck, and confirm the reported Model 3 renewal? How about a new EV factory? Tesla stock rose 9% last week to 133.42, above the 21-day moving average after falling as low as 101.81 during the day on Jan. 6. But it is still below the 50-day line, especially the 200-day line.
Microsoft’s earnings are due Tuesday night. Analysts expect Microsoft’s earnings to decline slightly, with minimal gains. Microsoft’s results will be key to software makers, the PC segment, and cloud computing competitors such as Amazon.com (AMZN). Last week, tech giant Dow Jones said it would cut 10,000 jobs, or 4.5% of employees. MSFT stock rose 0.4% last week, hitting resistance at the 50-day line. It can be said that Microsoft has a bottom base below the 200-day line. But the breakout would involve clearing the 200 day line and a long downward sloping trend line.
Boeing reported earnings on Wednesday morning, with little profit expected after a string of losses. Investors are betting on a rebound in earnings and cash flow in the coming years. Boeing shares fell 3.4 percent to 206.76 last week. After a huge move, BA stock needs to set up again.
ServiceNow earnings are set on Wednesday night. Analysts expect a 38% gain in earnings per share, the second straight quarter of exponential growth. Executives were optimistic about IT spending for 2023. The report will be key to the names of high-value business software. NOW stock rose 6.5% to 441.83 after rising 13% in the previous week. Stocks shed their 200-day line on Friday, hitting a four-month high and snapping a long downtrend. This provided a very early entry, but the profits coming in make it very risky.
Chevron’s earnings release is scheduled for Friday morning. Analysts expect EPS growth for another booming quarter versus a year earlier, but down from Q2 and Q3. CVX stock rose 1.8% to 180.81 last week, restoring the 50-day line. Chevron is in a flat base, but a move above Wednesday’s high of 182.38 would provide an early entry. Chevron’s earnings will be important to the oil and gas sector, especially major oil companies such as Exxon Mobil (xom).
Mastercard’s earnings are due early Thursday, with Visa’s earnings due after the close. Mastercard EPS saw an increase of nearly 10% with Visa increasing by 11%. The credit card giants’ findings and feedback will be important to other payment companies and to provide insight into consumer spending trends. Visa and Mastercard stocks are in the long run of consolidation, trading around key resistance levels dating back to early 2022.
ASML earnings are due early Wednesday, with Lam Research and Teradyne after the close. KLA reports late Thursday. ASML earnings are expected to fall 11%, but Lam Research’s earnings will rise 15% and KLA’s earnings will rise 27%. Guidance will be key in what is likely to be a challenging 2023. Together these earnings reports, along with chipmakers like Intel (INTC), will give insight into the semiconductor space and end markets.
ASML stock extends from the 200-day line. LRCX stock is trading above the 50-day and 200-day lines in a bottoming base. KLAC stock has a small handle on the year-old weekly consolidation chart.
Market rally analysis
The stock market rally was due to a downturn, and it got a downturn. Major indices fell sharply on Wednesday and continued lower on Thursday. But it closed off Thursday’s lows and rebounded strongly on Friday.
The Nasdaq posted a weekly gain, decisively retracing the 50-day moving average on Friday. Friday’s action was another follow-up day for the Nasdaq.
The S&P 500 has regained the 50-day line and crept back above the 200-day line. The Russell 2000 found support at the 200 day handle and could attempt to test its late 2022 peaks soon.
The Dow was the biggest loser of the week, dropping below 50 a day and ending the week below that level.
Outside of the Dow, the recent decline looks normal and healthy so far.
The pause gives the blue-chips an opportunity to form handles while a few collapse. If anything, holding back a little longer might be helpful in this regard.
But the major indices have a number of key resistance levels. The S&P 500 needs to decisively reclaim the 200-day line, as last week’s highs and the December peak were key milestones.
Earnings season can be the catalyst for big market gains or losses – or both.
Next week will also provide the first reading of Q4 GDP, along with a measure of PCE inflation for December. That will set the stage for the Fed’s policy meeting on February 1st.
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Technology continues to revive
The stock market rally seems to be heading towards technological growth after a long break. The Nasdaq Composite Index reached its recent bear market closing low on Dec. 28. But in 2023, the Nasdaq is up 6.4%. The chip ETF SMH climbed 12%, the IGV program ETF 5.5% and the speculative ARKK up 16.8%.
What is driving the rebound in technological growth?
Treasury yields are falling, which is a positive for high-value growth stocks. Meanwhile, there are hopes for a soft economic downturn, as China and Europe improve and the Fed’s rate hike appears to be nearing its peak. This raises the bets that a lot of bad news is priced in if stocks grow
Russell 2000, another risky game, is almost on par with the Nasdaq, up 6.1% in 2023.
The S&P 500 rose 2.5% to start the new year. The Dow Jones rose 0.7%, and that was only a positive thanks to the strong gains on Friday.
There aren’t many tech growth names in the position yet. LRCX stock is among the leading high-cap chip startups. Software is rare, though NOW stock makes a case. E-commerce is making a comeback, though MercadoLibre (millie) break out and etsy (ETSY) Preparation. Chinese e-commerce and Internet companies are also doing well.
The big earnings reports over the next two weeks are technically heavy, so investors will see if the growth rebound has legs.
Meanwhile, many financial institutions struggled last week, while defense contractors, food stocks and defense-minded consumer goods faltered.
But metals and mining stocks look strong. Airlines have taken flight, while investors are moving into hotels, too. Retail is a mixed bag. So is medicine: biotechnology sounds interesting but health insurers are weak.
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What are you doing now
The market rally showed some resilience late last week, along with several high-quality stocks. It can still resume a current rollback, dealing permanent damage. Earnings season can lead to huge moves in certain stocks, as well as moves by their competitors, suppliers, and customers.
So while the market, and especially the NASDAQ, may signal “risk,” investors should be careful about adding exposure. One possible option is via market or sector ETFs, to avoid individual stock risk. If you add exposure, get ready to go out quickly. If you are not ready and willing to get out quickly, you need to be more conservative in entering positions.
But the next few weeks could provide many buying opportunities. So prepare your watchlists and keep participating.
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