Market Rebounds After Fed-Driven Losses, Eyes Amazon and Apple Earnings

 

Futures on the Dow Jones and other major indexes shook off Federal Reserve-induced losses on Thursday as investors digested a surprise jump in jobless numbers. This came as investors prepared for Magnificent Seven stocks Amazon (AMZN) and Apple (AAPL) to report earnings after the market close.

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Before the opening bell, tech-heavy Nasdaq 100 futures rallied 0.6% premarket. Dow Jones futures rose less than 0.1%, while the S&P 500 gained 0.4%.

Among U.S. exchange traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) was up 0.6%, while the SPDR S&P 500 ETF (SPY) gained 0.4%.

The yield on 10-year government bonds fell further to 3.9%. Additionally, oil prices appeared to recover from Wednesday’s losses as West Texas Intermediate futures rose 1%. WTI futures traded at around $76.50 a barrel.

Initial jobless claims from the Labor Department were higher than expected Thursday morning, rising to 224,000 from 214,000 the previous week. According to Econoday estimates, claims are likely to remain stable at 214,000.

More economic reports are expected on Thursday, including S&P Global’s final manufacturing purchasing managers’ index for January. The index is expected to rise to 50.3, remaining unchanged from mid-month levels. The PMI is due at 9:45 a.m.

The Institute for Supply Management’s manufacturing index is also expected to remain unchanged at 47.4 in January. The reading is expected at 10 a.m.

Earnings reports: Amazon and Apple report

Key earnings movers Thursday include Align Technology (ALGN), Merck (MRK), Nextracker (NXT), Qualcomm (QCOM), Royal Caribbean (RCL) and Tractor Supply (TSCO).

Shares of Align rose 15%, while Nextracker gained 17% in the early stages. Dow Jones giant Merck rose 1.6% in early trading, while shares of Qualcomm fell 2%. Finally, Royal Caribbean rose more than 3%, while shares of Tractor Supply fell 1%.

Looking ahead, Magnificent Seven stocks Amazon and Apple will report after the market closes. Amazon shares are just off their recent highs, while Apple shares have abandoned their key 50-day line in recent sessions.

Dow Jones slides

On Wednesday, the Dow Jones Industrial Average fell 0.8% and the S&P 500 lost 1.6%. The tech-heavy Nasdaq Composite Index fell 2.2%.

Wednesday’s Big Picture column said: “The sharpest sell-off moment of the day? It came after Fed Chairman Jerome Powell said during a news conference that the U.S. central bank was unlikely to begin cutting the cost of money in March. But in reality, the bond market was also not entirely convinced that the key interest rate would be cut from its current range of 5.25% to 5.5% at the next Fed meeting in two months.”

Now is an important time to read IBD’s “The Big Picture” column amid the ongoing stock market rally. Be sure to read about how IBD’s new exposure levels can help you adapt to changing market conditions.

 

The best stocks to buy and watch.

DraftKings (DKNG), KKR (KKR), Novo Nordisk (NVO) and Snowflake (SNOW) — plus Dow Jones components Amgen (AMGN), Merck and Walmart (WMT) — are among the best stocks to buy and watch in the current market rally.

KKR and Walmart were featured in this Stocks Near A Buy Zone column. DraftKings is an IBD Leaderboard Watchlist stock, while KKR is on IBD SwingTrader.

Dow Jones: Merck rebounds in earnings

Biotech leader Amgen fell slightly on Wednesday, holding in a flat base outside the 5% buy range above the official 288.46 buy point. The 5% buy zone rose to 302.88. Amgen shares fell a fraction on Thursday.

Drugmaker Merck’s gains on Thursday broke above the 119.65 per cup buy point, according to pattern recognition from IBD MarketSmith. Shares closed just above their entry price on Wednesday, falling 0.8%.

Discount retail giant Walmart is in buy territory above a 163.57 entry in a cup with handle despite a slight decline on Wednesday. The stock rose 0.9% early Thursday.

DraftKings holds buy Point

IBD Leaderboard Watchlist stock DraftKings fell 3.1% on Wednesday, closing just above the official buy point of a double-bottom base at 38.97. DraftKings shares were up 1.4% on Thursday morning.

IBD SwingTrader stock KKR remains above a flat base entry of 85.66 despite a 1.3% decline on Wednesday. Shares rose 1.6% on Thursday morning.

Novo Nordisk, the weight-loss drug maker, rose 5.2% on Wednesday, moving through its buy range above a flat 105.69 buy point. Novo shares fell 1.3% early Thursday.

Software leader Snowflake gave up a 202.83 buy point on a flat base with a 5.1% decline on Wednesday, according to IBD MarketSmith. Snowflake shares rebounded 0.6% on Thursday.

 

Best Bets in Today’s Action

These are four best stocks to watch in today’s stock market, including a Dow Jones leader.

Company Name Symbol Correct Buy Point Type Of Buy Point
Novo Nordisk (NVO) 105.69 Flat base
Merck (MRK) 119.65 Cup base
DraftKings (DKNG) 39.35 Cup base
Spotify (SPOT) 202.88 Flat base
Source: IBD Data as of Jan. 31, 2024

The seven great stocks: Nvidia, Tesla

Magnificent Seven shares Nvidia (NVDA) and Tesla (TSLA) each rose 1% premarket on Thursday.

Nvidia gained 0.5% on Wednesday, more than 20% above a 505.48 buy point on a flat base after a breakout on Jan. 8. Stocks hit further record highs.

Tesla slipped 2.2% on Wednesday, ending a three-day winning streak and heading back toward its recent lows.

 

Dow Jones leader: Apple

Among Dow Jones stocks in the Magnificent Seven, Apple and Microsoft (MSFT) traded higher ahead of Thursdays open.

Apple shares fell 1.9% on Wednesday, extending their losing streak to six sessions and closing further below their 50-day line. Shares are about 6% away from their cup with handle buy point at 196.38. Shares rose 0.5% early Thursday ahead of the company’s earnings release.

Microsoft shares fell 2.7% on Wednesday, falling back past a 384.30 buy point and into a buy range on a flat base. The software giant was up 0.9% on Thursday morning.

 

Read also:

Top Picks for 2024: Embrace These 2 Utility Stocks and Steer Clear of the Troublesome One

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