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Sunday, June 26, 2022

Dow Jones Futures: Nasdaq Hits High As Market Rally Awaits Jobs Report; Apple, Microsoft Trade Tightly

Dow Jones futures tilted lower late Thursday, along with S&P 500 futures and Nasdaq futures, with the July jobs report looming Friday morning. The stock market rally had a solid Thursday, with the Nasdaq hitting a record high and the S&P 500 nearly doing so.




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Floor & Decor (FND), Cloudflare (NET), Carvana (CVNA) and Paylocity (PCTY) were key earnings after the close. FND stock and Cloudfare retreated from record highs overnight. CVNA stock jumped while Paylocity was indicated higher.

Growth stocks generally fared well Thursday, though new IPO Robinhood Markets (HOOD) tumbled as the free trading app announced a HOOD stock sale a week after its IPO. HOOD stock is still up sharply this week.

Meanwhile, Apple (AAPL) and Microsoft stock are tightening up, consolidating after earnings and strong runs. Apple stock arguably is in buy range now, but both the iPhone maker and Microsoft (MSFT) are worth watching for future buys.

MSFT stock is on IBD Leaderboard and IBD Long-Term Leaders. Floor & Decor and NET stock are on the IBD 50.

Jobs Report

The Labor Department releases the July jobs report at 8:30 a.m. ET. Economists expect nonfarm payrolls to rise 900,000 with the unemployment rate falling to 5.7%. The July jobs report comes two days after the ADP employment report estimated private employment grew by 330,000 last month, far below estimates.

A strong jobs report could encourage the Federal Reserve to begin discussing winding down its massive asset purchases. A weak report could push “taper talk” past the September Fed meeting.

Dow Jones Futures Today

Dow Jones futures lost 0.15% vs. fair value. S&P 500 futures fell 0.1% and Nasdaq 100 futures dipped about 0.1%.

Expect the July jobs report to swing Dow Jones futures.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.


Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live


Stock Market Rally Thursday

The stock market rally enjoyed solid gains, closing near session highs. The Dow Jones Industrial Average rose 0.8% in Thursday’s stock market trading. The S&P 500 index climbed 0.6%. The Nasdaq composite advanced 0.8%. The small-cap S&P 500 index popped 1.8%.

Crude oil futures rose after falling sharply over the prior three days this week. The 10-year Treasury yield edged up for a third-straight session.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.6%, while the Innovator IBD Breakout Opportunities ETF (BOUT) added 0.6% as well.  The iShares Expanded Tech-Software Sector ETF (IGV) rallied 0.9%, with MSFT stock a major holding. The VanEck Vectors Semiconductor ETF (SMH) dipped 0.1% as its holding AMD (AMD) retreated after surging 30.5% over the prior six sessions.

SPDR S&P Metals & Mining ETF (XME) slumped 0.7% and Global X U.S. Infrastructure Development ETF (PAVE) edged up 0.4%. U.S. Global Jets ETF (JETS) popped 3.6%. SPDR S&P Homebuilders ETF (XHB) rose 0.7%. The Energy Select SPDR ETF (XLE) gained 1.2% and the Financial Select SPDR ETF (XLF) climbed 1.3%.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) rose 1.9% and ARK Genomics ETF (ARKG) 4.3%.


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Robinhood Stock

HOOD stock tumbled 27% to 51.20, starting to fill in the gap from Wednesday’s huge move. Robinhood stock on Wednesday gapped up as high as 85, closing up 50% to 70.39. But anyone who bought HOOD stock on Wednesday is now down.

Robinhood said early Thursday that it would sell nearly 97.8 million shares on behalf of existing shareholders. That news came a week after the HOOD IPO began trading.

While brand-new IPOs are exciting, it’s generally better for investors to wait for the market’s initial price discovery. At some point, a new issue will settle down and form at least a short IPO base. Even then, buying an IPO stock is a high risk/high reward scenario.

HOOD stock fell Thursday, but needs to consolidate over several days or weeks.

Key Overnight Earnings

Floor & Decor, Cloudflare, Carvana and Paylocity all beat earnings views.

FND stock fell in extended trading, but trading was limited. Shares of the flooring retailer rose 1.1% to 126.89 on Thursday, hitting a fresh high. FND stock is well extended from a 109.95 cup-with-handle buy point.

NET stock sank nearly 6% overnight as the networking and security software maker gave mixed guidance. Shares had risen 1.2% to 121.46, a record close. NET stock is extended from a 95.87 buy point.

Carvana stock jumped 9% in late trading. Shares climbed 1.8% on Thursday to 337, but still in range from a 323.49 buy point. CVNA stock could offer an earnings gap buying opportunity Friday morning.

Paylocity stock was indicated at least modestly higher. PCTY stock rose 2.25% to 219.28 on Thursday, hitting a record high. Shares popped 5.4% on Wednesday, as fellow human capital software maker Paycom Software (PAYC) jumped on its report. But the best time to buy PCTY stock may have been as it cleared 202.10 in late July from what was either an early entry or a double-bottom buy point.


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Apple Stock

Apple stock edged up 0.1% to 147.06 on Thursday. Shares are modestly extended from a 137.17 buy point based on a cup-with-handle base within a larger consolidation. But it’s within range of that larger consolidation, with a 145.19 entry. Since hitting a record 150 on July 15, AAPL stock has been moving sideways in a fairly narrow range. It’s not quite enough to be a tight pattern, but investors could use 500.10 as an alternate buy point.

Apple earnings doubled in the latest quarter as revenue rose 36%.

Microsoft Stock

Microsoft stock climbed just over 1% to 289.52, a record close. Shares are extended from a cup base with a 263.29 buy point, according to MarketSmith analysis. Since late July, MSFT stock has traded tightly, but isn’t on track to form a tight pattern so far. If the software and cloud-computing giant could move sideways or drift lower for a few more weeks, it might form a new base and perhaps let the 50-day/10-week lines catch up.

Microsoft earnings growth has accelerated for four straight quarters while sales gains have picked up in the last three quarters.

Market Rally Analysis

The stock market rally had a solid session. The Nasdaq hit a record high but is only 3.7% above its 50-day line. Apple stock, Microsoft and other tech titans pausing for a few weeks has helped the Nasdaq and Nasdaq 100 avoid getting extended.

If Apple and Microsoft stock did go on another run, the Nasdaq could quickly become extended.

The S&P 500 came within a point of an all-time high with the Dow Jones not far behind. The Russell 2000 moved back above its 21-day line, but remains stuck below its 50-day line. It was a positive day for market breadth, but the rally remains relatively narrow, led by software and other techs.

As for leading stocks, there were a few new buying opportunities. Square (SQ) followed through and hit the top of its base. HubSpot (HUBS) gapped out of a base. Globant (GLOB) cleared a consolidation. Meanwhile, many other growth names continued to move higher.

Amid several earnings winners, there were a few big earnings losers, including Etsy (ETSY), DXC Technology (DXC) and Revolve (RVLV). That once again shows the importance of having a strategy for deal with earnings.

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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