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Dow Jones futures rally on earnings reports

by Jonathan Adams
Dow Jones

The market had a strong day with Fed chief Jerome Powell hinting at new asset purchases

Dow Jones futures were little changed Wednesday evening, along with S&P 500 futures and Nasdaq futures, as the earnings parade marches on. Qualcomm (QCOM), Qorvo (QRVO), PayPal (PYPL), Sprouts Farmers Market (SFM) and O’Reilly Automotive (ORLY) are signalling buying opportunities overnight after reporting late.

The coronavirus stock market rally had a strong Wednesday, as the major indexes jogged while leaders ran. Stocks rallied on earnings reports and Fed chief Jerome Powell hinting at new asset purchases. Investors took in stride an antitrust hearing featuring the CEOs of Apple (AAPL), Amazon.com (AMZN), Facebook (FB) and Google parent Alphabet (GOOGL).

Apple stock, Amazon stock, Facebook stock and Google stock all rose more than 1% Wednesday. The stock market spotlight will continue on these tech titans with all four reporting earnings late Thursday.

In extended trade PayPal stock rose on strong earnings after clearing a short consolidation Wednesday. Aggressive investors could buy PYPL stock now. Qorvo stock gapped higher on earnings, signalling a move beyond a buy point. Fellow chipmaker Qualcomm, whose stock closed just in buy range, is set to spike higher on strong earnings and a licensing deal with Huawei. Sprouts stock and O’Reilly Auto stock, which also closed just above proper buy points, are set to pop on blowout earnings.

Dow Jones futures fell 0.15% vs. fair value. S&P 500 futures sank 0.1%. Nasdaq 100 futures rose 0.1%, with PayPal, Qualcomm and other earnings winners lifting tech futures.

The coronavirus stock market rally had a strong session, building momentum in contrast to Tuesday’s afternoon sell-off.

The major indexes opened higher on strong earnings, then added to gains as Fed chief Jerome Powell raised hopes that the central bank would announce new asset purchases at the next policy meeting in September. The lack of bombshells at the Big Tech antitrust hearing also may have helped.

The Dow Jones Industrial Average climbed 0.6% in Wednesday’s stock market trading. The S&P 500 index rallied 1.2%. The Nasdaq composite added 1.35%, but is still firmly in the middle of its recent trading range.

Meanwhile, leading stocks had a strong day, with many surging on positive earnings.

Shopify (SHOP), Monolithic Power (MPWR), AMD (AMD) and Wingstop (WING) were among the big earnings winners, but many leaders delivered strong or solid gains without earnings, including Chipotle (CMG) and DocuSign (DOCU).

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) climbed 1.6%. The iShares Expanded Tech-Software Sector ETF (IGV) jumped 1.95%. The VanEck Vectors Semiconductor ETF (SMH) leapt 2.5%, hitting a fresh high. QCOM stock is a top 10 holding.

The CEOs of Apple, Amazon, Facebook and Google appeared to emerge from Wednesday’s antitrust hearing largely unscathed, though questions continued into the evening. But antitrust concerns will loom over Big Tech for the foreseeable future. The Justice Department and FTC are probing Big Tech companies. Many Democrats want major restrictions on internet giants. Europe has been happy to levy fines and impose sanctions on U.S. tech giants.

Right now investors are going to be looking at Thursday’s earnings reports and guidance from Apple and the FANG trio. Those four stocks boast a combined market cap of nearly $5 trillion, with Apple stock and Amazon stock both over $1.5 trillion. So their post-earnings reaction will be key for Friday’s stock market trend.

Apple stock found support above its 10-week moving average, while AMZN stock and GOOGL stock pulled back to their 21-day lines. FB stock is hitting resistance just below its 50-day and 10-week lines. All have been consolidating for a couple of weeks.

Important
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

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