Dow Jones Futures Turn Lower; Will The Market Rally Survive? All Eyes On Apple, Amazon, Facebook - Investor's Business Daily

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Dow Jones futures and S&P 500 futures turned lower Thursday morning, while Nasdaq futures slashed gains. The stock market rally came under increasing pressure Wednesday, as stocks sold off on mixed earnings reports, coronavirus cases spurring lockdowns in much of Europe and the looming election.

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Pinterest (PINS) and ServiceNow earnings offered some hope overnight, giving a lift to several peers. But with the stock market rally reeling, all eyes are on Thursday's earnings tsunami, including Apple stock, Amazon.com (AMZN), Facebook (FB) and Google parent Alphabet (GOOGL).

The Nasdaq composite tumbled through its 50-day line, joining the Dow Jones and S&P 500. Megacap techs, which propped up the Nasdaq on Tuesday, sold off Wednesday. Microsoft (MSFT) fell on mixed earnings. Apple stock sank to a one-month low while the FANG trio Amazon.com, Facebook and Google parent Alphabet fell back below their 50-day averages. Tesla stock and Nvidia (NVDA) closed below their 50-day lines. ServiceNow stock fell, but rebounded from its 50-day. Shopify (SHOP) tumbled toward that key level while Adobe (ADBE) is nearing the low of its base.

The most positive news from Wednesday's session may have been the surge in fear. After barely moving during the late September stock market retreat, the CBOE Volatility Index (CBOE) spiked intraday to its highest level since mid-June, though well off the March summit. The put/call ratio rose to 0.9, which is high but not extreme.

Excessive bearishness often is associated with short-term bottoms. But it doesn't have to happen right away and any bounce doesn't have to last.


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Earnings Late Wednesday

ServiceNow (NOW), Pinterest, Etsy (ETSY), Visa (V), Teladoc Health (TDOC), Livongo (LVGO) and SunPower (SPWR) reported earnings after the close.

ServiceNow rose modestly and Pinterest stock spiked in Thursday's premarket. ServiceNow earnings gave a slight lift to some business software makers after several peers gave weak guidance. Pinterest earnings buoyed soon-to-report Facebook and Twitter stock, which both popped recently on blowout Snap (SNAP) results.

Visa were little changed overnight following weak Mastercard results. Etsy stock retreated modestly after falling just below a buy point on Wednesday. Teladoc stock and merger partner Livongo retreated early Thursday as Teladoc forecast a wider fourth-quarter loss. SunPower fell modestly after rallying Wednesday on sunny First Solar earnings.

Thursday Earnings

Early Thursday, Shopify stock, coronavirus vaccine maker Moderna (MRNA), Idexx Labs (IDXX) and Spotify (SPOT) were on tap. Shopify crushed views. Idexx Labs reported its best growth in years while coronavirus vaccine maker Moderna had mixed results. Spotify missed on earnings and sales, though it did top revenue targets. SHOP stock and Idexx stock rose early Thursday, while Shopify retreated.

Then the main event: Apple (AAPL), Amazon stock, Facebook and Google report Thursday night, as well as Twitter (TWTR) and many others.

Meanwhile, Marvell Technology (MRVL) reportedly is close to a $10 billion deal to buy fellow chipmaker Inphi (IPHI). Marvell fell 7% and Inphi stock soared 27%.

Tesla (TSLA), Microsoft, Nvidia and ServiceNow stock are on IBD Leaderboard. Microsoft stock, Adobe, ServiceNow and Idexx Labs are IBD Long-Term Leaders. Nvidia, Amazon, Adobe, Microsoft and ServiceNow are on the IBD 50.

Dow Jones Futures Today

Dow Jones futures fell 0.4% vs. fair value, reversing solid overnight gains. S&P 500 futures dipped 0.1% and Nasdaq 100 futures rose 0.25%, far below premarket highs. 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.


Coronavirus News

Coronavirus cases worldwide reached 44.87 million. Covid-19 deaths topped 1.18 million.

Coronavirus cases in the U.S. have hit 9.12 million, with deaths above 233,000.

France will impose a new lockdown effective Friday, with people told to stay at home except to buy essential goods, seek medical care, exercise or go to work if their employer says the job can't be done at home. But schools will remain open. Germany will shut down bars and restaurants starting Monday. Several other European nations have imposed partial coronavirus lockdowns or other restrictions. That will take a toll on travel, consumer spending and the global economy.

So far U.S. cities and states have not sharply raised coronavirus restrictions, but Americans could stay at home more and step up social distancing measures if the pandemic continues to flare up.

Meanwhile, Pfizer (PFE) said Tuesday that it won't have interim coronavirus vaccine data from final-stage trials until after the Nov. 3 election, after previously signaling that it could disclose such data before the end of October.

A coronavirus vaccine won't be available until January, Dr. Anthony Fauci, the nation's top infectious-disease official, predicted Wednesday.

Stock Market Rally

The stock market rally suffered heavy losses, closing essentially at session lows. The Dow Jones Industrial Average fell 3.4% in Wednesday's stock market trading, undercutting its late September low to its worst level since late July. The S&P 500 index lost 3.5%, hitting its worst level since Sept. 25. The Nasdaq composite tumbled 3.7%, through its 50-day line and also to the lowest point since Sept. 25.

Microsoft became the latest software maker to give weak guidance, falling 5% Wednesday. Fellow Dow Jones stock as well as S&P 500 and Nasdaq component Apple sank 4.6%. Amazon dropped 3.8% while Facebook and Google stock dropped 5.5%. Tesla reversed 4.4%. All of these tech giants fell through their 50-day moving averages.

Shopify stock fell 5.5% after making a promising move Tuesday.

With those losses, it's not surprising the Nasdaq crumbled through its 50-day line.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) sank 3.1%. The iShares Expanded Tech-Software Sector ETF (IGV) retreated 3.5%, with Microsoft and ServiceNow stocks notable members. The VanEck Vectors Semiconductor ETF (SMH) fell 3.2%. Nvidia stock is a key component.

ServiceNow Earnings

ServiceNow earnings rose 22% vs. a year earlier. Revenue climbed 30% to $1.15 billion. Analysts had seen ServiceNow earnings of $1.03 a share on revenue of $1.11 billion.

The business software maker also guided slightly higher on subscription revenue for Q4.

The ServiceNow earnings report and guidance follow warnings or weak guidance from several software makers. German software giant SAP (SAP) issued a major warning on Sunday. Microsoft, Twilio (TWLO) and Dynatrace (DT) gave mixed guidance this week That all followed the warning by Fastly (FSLY), which missed lowered views late Wednesday.

ServiceNow stock rose 3% overnight. NOW stock sank 3.15% on Wednesday but found support, for now, at its 50-day line.

Adobe and Salesforce.com (CRM) edged higher after sinking more than 4% on Wednesday.

Pinterest Earnings

Pinterest earnings shot up to 13 cents a share vs. 1 cent a year earlier. Revenue leapt 58% to $443 million. Analysts expected Pinterest earnings of four cents a share on revenue of $383.5 million.

PINS stock shot up 30% in premarket trade. Shares fell 6.2% to 49.25 on Wednesday but were already greatly extended.

Facebook stock climbed 3% and Twitter 6.5% after both lost more than 5% Wednesday ahead of their earnings Thursday night.

Stock Market Analysis

On Monday, IBD changed the market direction classification to "uptrend under pressure." Suffice it to say that the stock market rally is under even more pressure now.

With coronavirus concerns soaring and such crucial events as Thursday's earnings tsunami and next Tuesday's Election Day, it's hard to make the case to step up exposure. Apple and Amazon earnings could be great and investors cheer the election results, but that's just a guess. Right now, the stock market rally is reeling.

Dow Jones futures have reversed lower, and even Nasdaq futures are up just a fraction of what it lost on Wednesday.

Trying to get ahead of the market rally in the past few weeks has meant jumping in just as the tide recedes.

Recent breakouts and early buy points have largely failed. Many leaders have broken down. Investors should be cutting their holdings and awaiting renewed stock market vigor before making new buys. That could come in a few days, weeks or months.

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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