Dow Jones futures were little changed late Tuesday, along with S&P 500 futures and Nasdaq futures, amid earnings from MSFT stock, Google parent Alphabet (GOOGL) and Advanced Micro Devices (AMD). The stock market rally came off Tuesday’s highs as Tesla (TSLA) and many other leading stocks reversed. Facebook (FB) and Upstart Holdings (UPST) broke key support.
Trump SPAC partner Digital World Acquisition Corp. (DWAC) fell sharply for a second straight session. That follows two massive days of gains for DWAC stock on news that it have a SPAC merger with newly created social media firm Trump Media & Technology Group.
Microsoft earnings and revenue topped views, with revenue guidance strong. MSFT stock rose modestly overnight.
Google stock fell despite beating headline estimates, as some key metrics disappointed.
AMD stock tilted lower despite a beat-and-raise report. Nvidia (NVDA) also edged lower overnight.
See below for more on Microsoft, Google and AMD earnings and other key reports.
The video embedded in this article reviews the day’s market action and analyzes Intuitive Surgical (ISRG), S&P Global and UPST stock.
Dow Jones Futures Today
Dow Jones futures were about even with fair value. S&P 500 futures edged lower and Nasdaq 100 futures fell 0.1%. MSFT stock is a member of the Dow Jones, S&P 500 and Nasdaq composite.
The 10-year Treasury yield rose 1 basis point to 1.53%. Crude futures tilted lower.
Stock Market Rally
The stock market rally opened strongly but soon pared gains, with the major indexes wiping out gains or turning slightly negative before ending slightly positive.
The Dow Jones Industrial Average closed just above break-even in Tuesday’s stock market trading. The S&P 500 index rose 0.2%. The Nasdaq composite edged up less than 0.1%. The small-cap Russell 2000 fell 0.7%.
The 10-year Treasury yield dipped 2 basis points to 1.52%, the third straight decline.
U.S. crude oil futures rose 1.1% to $84.65, the best close in seven years.
Facebook stock slumped 3.9%, breaking below its 200-day line. Facebook earnings topped views, but revenue missed, though the company did announce a $50 billion buyback. FB stock had already sold off in recent weeks, including last Friday following weak Snap (SNAP) results and guidance.
Upstart stock, which had pulled back from its Oct. 15 peak, skidded 9.1% to 327.08. It’s now clearly back into a short consolidation that could have been seen as a high tight flag. UPST stock also decisively undercut its 21-day moving average for the first time in at least three months. On the upside, Upstart stock found support above its 10-week line.
Lockheed Martin (LMT) plunged 11.8% on mixed results, dragging down some other defense giants. LMT stock was the worst performer on the S&P 500 index on Tuesday.
Tesla Stock, EVs
Tesla stock dipped 0.6% to 1,018.43 after hitting 1,094.94 intraday. Shares shot up nearly 13% Monday as Hertz ordered 100,000 Tesla Model 3 cars.
Tesla stock held up better than some rivals.
Xpeng (XPEV) fell 5.7%. XPEV stock surged 11.5% on Monday to close a penny over a buy point. Li Auto gave up 3.4% and Nio shed 1.9% after big gains Monday.
Chinese stocks in general had a rough session.
Trump Stock DWAC
Trump stock DWAC plunged nearly 30% to 59.07 on Tuesday after reversing lower on Monday for an 11% decline. DWAC stock is still up massively from last Thursday, when it closed at 9.96. The Trump stock partner skyrocketed 357% on Friday. It then surged 107% on Monday, though it closed well off the intraday peak of 175.
DWAC stock is now 66% below Monday’s high. Worse, it’s below Monday’s low. Any investor who bought on Monday and is still holding DWAC is underwater.
This isn’t too surprising given the action of recent meme stocks. Could DWAC stock rebound? Absolutely, though Monday’s 175 peak could be a long-term high. On the flip side, the Trump stock could continue to give up recent gains.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 1.3%, while the Innovator IBD Breakout Opportunities ETF (BOUT) dipped 0.35%. The iShares Expanded Tech-Software Sector ETF (IGV) ceded 0.25%. MSFT stock is a top IGV component. The VanEck Vectors Semiconductor ETF (SMH) added 0.6%. AMD stock is a key SMH holding.
SPDR S&P Metals & Mining ETF (XME) sank 1.25%, and Global X U.S. Infrastructure Development ETF (PAVE) retreated 0.5%. U.S. Global Jets ETF (JETS) closed flat. SPDR S&P Homebuilders ETF (XHB) gave up 0.8%. The Energy Select SPDR ETF (XLE) rose 0.6%, and the Financial Select SPDR ETF (XLF) edged up 0.1%.
Microsoft earnings and revenue topped, fueled by Azure and other cloud-related growth.
On the Microsoft earnings call, executives gave upbeat revenue guidance for the current quarter.
Google earnings and revenue topped views. Despite the mixed reports from Facebook and Snap, Google reported strong ad revenue. But YouTube and cloud revenue fell short.
Google stock fell about 1% in extended trade. Shares rose 1.35% to 2,786.17 on Tuesday, but below the 50-day line after tumbling below the key level Friday on Snap’s results. GOOGL stock has a 2,925.17 buy point from a flat base. Investors might treat a move above the 50-day line or above last week’s high of 2,873.35 as early entries.
AMD earnings topped views, with the chipmaker also guiding higher.
AMD stock edged lower in overnight action. Shares edged up 0.5% on Tuesday to 122.93, off intraday highs. But it was the fifth straight advance and the 10th gain in 11 sessions. AMD stock is extended from a 114.59 double-bottom buy point or an early entry from near the 50-day line.
Nvidia stock edged lower late. NVDA stock gapped up 6.7% on Tuesday, now extended from various buy points.
Visa stock fell 3% after easily beating Q4 views, but guiding below consensus on 2022 revenue growth.
Texas Instruments stock fell solidly after the chipmaker missed on revenue.
Twitter earnings missed badly, but advertising revenue was up strongly. Twitter stock rose modestly. TWTR stock has fallen for five straight sessions amid the disappointing Snap and Facebook earnings reports.
Boyd Gaming stock fell back from near a buy point despite topping views.
HOOD stock fell sharply on weak Robinhood revenue, user growth and crypto trading. It gave disappointing guidance.
Enphase stock spiked higher on an easy Q3 beat and strong Q4 guidance. Shares of the maker of solar products could offer a fresh entry on Wednesday.
Market Rally Analysis
The stock market rally had a stalling day Tuesday, with the major indexes giving up nearly all their intraday gains in higher volume. After running up over the past couple of weeks, the Nasdaq ran up to just shy of record highs before pulling back. Tesla stock, EV rivals and many leading growth stocks erased gains or lost ground after huge gains Monday and in recent weeks.
Don’t make too much of the intraday retreat. It’s just one day.
Still, it wouldn’t be surprising to see growth stocks take a breather. Many have run up a lot, from Asana (ASAN) to Upstart to Tesla stock. In many cases, the stocks may have temporary pauses or pullbacks. But it could be something deeper or longer for others.
On the upside, a wide variety of sectors are acting well, beyond chips, software and EVs. Financials, energy, steel and transportation groups are acting well. Industrial firms are also showing some strength. A number of medical stocks are setting up.
What To Do Now
Investors might not want to add to growth exposure in the very short run, as the Nasdaq hits resistance and leading growth names fall back after huge gains. They might consider taking partial profits in some of these winners, either on the way up as they get extended from moving averages, or as they come tumbling through support levels like UPST stock knifing through its 21-day line.
Other sectors could still be on the upswing, such as steel, but rotation and market action have been fickle.
Tuesday’s action underscores the importance of not buying extended stocks. There’s nothing worse than having a red-hot stock that you are down on.
Stay focused over the next several days, as massive earnings reports wash over the market rally and leading stocks. This could provide buying opportunities and sell signals — almost certainly both — so be alert and flexible.
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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Read More:Dow Jones Futures: Market Rally Stalls, Donald Trump Stock DWAC Dives; Microsoft, Google, AMD Earnings In Focus