Dow Jones futures fell slightly Thursday morning, along with S&P 500 futures and Nasdaq futures, with the Russia/Ukraine crisis in focus and Nvidia headlining overnight earnings. The stock market rally fell solidly intraday Wednesday, but rallied to close little changed after newly released Fed meeting minutes that held no new, hawkish surprises.
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The U.S. envoy to the U.N. said Russia is moving toward an imminent invasion of Ukraine. Late Wednesday, a senior U.S. official said Russia has added some 7,000 troops near the border, refuting Kremlin claims that it was withdrawing some forces. The Kremlin said overnight that it’s worried about a flare-up of unrest in eastern Ukraine. Both the Ukrainian government and pro-Russia separatists claimed cease-fire breaches
Key Earnings Wednesday Night
Nvidia (NVDA), Albemarle (ALB), Applied Materials (AMAT), Cisco Systems (CSCO) and DoorDash (DASH) were among the many earnings reports Wednesday night.
Nvidia stock fell modestly early Thursday despite strong earnings and guidance. AMAT stock rose modestly on its positive results.
Cisco stock advanced on strong results, a 3% dividend increase and a $15 billion buyback plan, signaling a move above its 200-day line but still below its 50-day line. The Cisco results follow strong earnings from faster-growing rival Arista Networks (ANET) on Monday.
ALB stock plunged on disappointing earnings guidance.
DASH stock shot up 25% in extended trade on its earnings. If that holds during regular trading, the app-based delivery firm would test its tumbling 50-day line. That would still be more than 50% below DoorDash’s November peak of 257.25.
Look below for more on Nvidia, Albemarle and AMAT earnings and stock action.
PLTR Stock
Palantir Technologies (PLTR) missed on earnings and topped on revenue. PLTR stock tumbled 9% before the open.
Palantir investors were hoping for a PLTR stock spike like Upstart (UPST) and DASH stock. But plenty of beaten-down growth stocks have plunged recently on earnings.
In other news, National Highway Traffic Safety Administration initiated yet another Tesla probe, this time investigating “phantom braking” in Model 3 and Model Y vehicles. The complaints, which have mounted in recent months, are said to involve random, often repeated braking at highway speeds. Some 416,000 vehicles are potentially exposed. Tesla stock lost a fraction.
Fed Minutes
Fed minutes from the Jan. 25-26 policy meeting showed policymakers ready to begin interest rate hikes and curb the massive balance sheet soon, to confront inflation. But that was largely known before.
There may have been some relief that were no new hawkish surprises, such as several policymakers favoring turbocharged-tightening even last month. Remember, the January Fed meeting came before the January CPI report, which sent the 10-year yield above 2% and ramped up Fed rate hike forecasts.
The 10-year Treasury yield closed flat at 2.05%. But the two-year Treasury yield, more closely tied to Fed policy moves, sank 5 basis points to 1.52%. The U.S. dollar fell and gold rose. All of these moves indicate at least a sense that the Fed minutes were no-more hawkish than expected.
Nvidia stock is on IBD Leaderboard and the IBD 50.
Dow Jones Futures Today
Dow Jones futures lost 0.4% vs. fair value, getting a lift from Walmart (WMT), which topped views early Thursday. S&P 500 futures gave up 0.5% and Nasdaq 100 futures declined 0.7%.
Nvidia stock is a notable weight in the S&P 500 and especially Nasdaq futures. CSCO stock is a Dow Jones, S&P 500 and Nasdaq component.
The 10-year Treasury yield fell 4 basis points to 2%. Crude oil futures fell slightly, but paring losses on Russia invasion fears. It’s well above levels in early electronic trading Wednesday afternoon while stock markets were still open.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
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Stock Market Rally
The stock market rally fell solidly intraday, but came off lows on the Fed minutes release, closing narrowly mixed.
The Dow Jones Industrial Average dipped 0.2% in Wednesday’s stock market trading. The S&P 500 index rose 0.1%. The Nasdaq composite edged down 0.1%. The small-cap Russell 2000 edged up 0.2%.
Crude oil futures rose 1.7% to $93.66 a barrel, right around their highest levels since 2014. But crude oil prices fell in electronic trading, more than wiping out regular-session gains while U.S. stock markets were still open, as an Iranian nuclear negotiator said “we are closer than ever” to a deal with the Biden administration.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) and Innovator IBD Breakout Opportunities ETF (BOUT) both rose 0.4%. The iShares Expanded Tech-Software Sector ETF (IGV) retreated 0.8%. The VanEck Vectors Semiconductor ETF (SMH) closed just below break-even. Nvidia and AMAT stock are notable holdings.
SPDR S&P Metals & Mining ETF (XME) advanced 0.5% and Global X U.S. Infrastructure Development ETF (PAVE) gained 0.75%. U.S. Global Jets ETF (JETS) were just above break-even. SPDR S&P Homebuilders ETF (XHB) picked up 0.4%. The Energy Select SPDR ETF (XLE) advanced 0.8% and the Financial Select SPDR ETF (XLF) inched up 0.1%. The Health Care Select Sector SPDR Fund (XLV) climbed 0.15%
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) sank 3.2% and ARK Genomics ETF (ARKG) 1.3%.
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Nvidia Earnings
Nvidia earnings jumped 69%, coming in above fiscal Q4 views on strong data-center chip sales. The chip giant also gave bullish guidance.
Nvidia stock lost less than 2% early Thursday. Shares edged up 16 cents to 265.11 Wednesday, after surging 9.2% on Tuesday.
A move above the fast-falling 50-day line would also clear last week’s high and break a trend line, offering an aggressive entry in NVDA stock.
Nvidia earnings are especially important for the stock market rally and especially growth names. Nvidia stock is a megacap that has been a huge winner in recent years, and is close to an aggressive buy point. The Nvidia earnings reaction could be a catalyst for chip and tech stocks broadly, up or down. And while NVDA stock has a high price-to-earnings ratio of 68, it isn’t in the triple digits.
Applied Materials Earnings
Applied Materials earnings and sales narrowly topped fiscal Q1 views.
AMAT stock rose 2% in extended trade, getting close to its 50-day line. Shares edged up 0.8% to 140.96 on Wednesday, just above the 200-day line.
Applied Materials stock could be working on a new consolidation after a failed breakout, but needs more time and work. Reclaiming the 50-day line would be a good step.
Albemarle Earnings
Albemarle earnings fell slightly vs. a year earlier, but topped estimates. Revenue rose slightly, beating some views while just missing others. The lithium producer gave mixed guidance for 2022.
ALB stock plunged 11% before the open. Shares are signaling a dive below the 50-day moving average and nearing the 200-day line. Shares climbed 1.9% to 246 Wednesday. Albemarle stock popped 6% on Tuesday, moving back above the 50-day line. The Jan. 12 peak of 248 could offer an early entry, but that doesn’t seem relevant for the moment. The traditional buy point is 291.58, according to MarketSmith analysis.
The Albemarle earnings call isn’t until 9 a.m. ET on Thursday, so that also could move ALB stock right around the open.
Another lithium producer, Livent (LTHM), reports Thursday night. LTHM stock climbed 2.9% to 25.08 on Wednesday, also close to an early entry. But shares fell modestly overnight in sympathy with ALB stock.
Market Rally Analysis
The stock market rally gave up a good slice of Tuesday’s solid rebound. The S&P 500 index fell back below its 200-day moving average.
The major indexes are still within a range from their early February highs to Monday’s lows, but below their 21-day moving averages. If the major indexes break above their recent highs, that would signal renewed strength. But if the market rally — already under pressure — breaks below Monday’s lows, it would be a very bearish signal.
The Russell 2000 has fared a little better than other indexes over the past several sessions, reflecting slightly better market breadth in that time. But the small-cap index remains below key moving averages and not far from 52-week lows.
In the market overall, new lows continue to outpace new highs.
There are a number of headwinds facing the stock market rally. The Russia/Ukraine situation could go any number of ways over the next several weeks, making it very hard for the broader market to price in the future. Investors also are dealing with the Federal Reserve confronting the worst inflation in 39 years. The Fed meeting minutes may not have held any bombshells, but policymakers are going to start raising rates in mid-March.
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What To Do Now
With the stock market rally rangebound, moving on ever-changing headlines, there’s no real trend to follow right now. If a stock breaks out or flashes an early buy signal, how much confidence can you have that it won’t quickly fizzle out? There’s just no edge to be significantly invested right now.
If the market rebounds from here and goes on an extended run for weeks or months, you’ll have plenty of opportunities to take advantage.
Focus on building up watchlists and reviewing past trades. Stay engaged with the market, but you also don’t have to stare at screens nonstop. Make sure you’re mentally fresh for the next big advance.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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