Dow Jones futures rose slightly overnight, along with S&P 500 futures and Nasdaq futures. Netflix (NFLX) were little changed late on earnings while Intuitive Surgical (ISRG) jumped.
Meanwhile, President Joe Biden is moving closer to dropping his re-election bid, according to some reports, while others disputed that.
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Broad Market Losses
The stock market rally saw broad losses Thursday in the key indexes. The Dow Jones and small caps led the declines. The Nasdaq fell again, but pared losses near the close.
Nvidia (NVDA) rebounded from a key level while Taiwan Semiconductor Manufacturing (TSM) ping-ponged between key levels after its strong results.
Tesla (TSLA) is showing tight action ahead of earnings next week.
Microsoft (MSFT) and Google parent Alphabet (GOOGL) are fighting for key support.
Meanwhile, Amazon.com (AMZN), CrowdStrike (CRWD), Eli Lilly (LLY) and Novo Nordisk (NVO) have suffered significant damage.
Nvidia and Eli Lilly stock are on IBD Leaderboard. Microsoft stock is on IBD Long-Term Leaders. Nvidia stock and Google are on the IBD 50. Google stock is on IBD Big Cap 20.
Biden Close To Dropping Out?
President Biden is starting to accept he may need to drop out of the race, The New York Times reported Thursday evening, citing several sources close to him. We’re close to the end,” a person close to Biden told NBC News.
However, other reports said those close to Biden are furious at the growing pressure campaign for him to step aside.
All this comes amid growing concern about Biden’s mental fitness and chances of defeating former President Donald Trump.
Vice President Kamala Harris is now the odds-on favorite to be the Democratic nominee, according to PredictIt. But if Biden drops out it’s not clear how Democrats would proceed.
Meanwhile, Trump gave a primetime address Thursday night, formally accepting the Republican nomination.
Dow Jones Futures Today
Dow Jones futures advanced 0.1% vs. fair value. S&P 500 futures rose 0.15% and Nasdaq 100 futures climbed 0.3%. Nvidia and Intuitive Surgical are S&P 500 and Nasdaq 100 components.
The 10-year Treasury yield edged up to 4.21%.
Crude oil futures fell slightly.
Biden dropping out would inject new uncertainty into financial markets, which had started to price in a Trump victory.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Earnings
Netflix subscribers grew by just over 8 million, beating views, as ad-supported users jumped. Earnings and revenue slightly topped. The streaming media giant guided higher on Q3 EPS but slightly lower on revenue.
NFLX stock edged lower in extended trade after initially falling solidly. Shares edged down 0.7% to 643.04 on Thursday, just above a 639 buy point from a cup base initially cleared in late May. But Netflix stock has pulled back below a rising 50-day line.
Intuitive Surgical earnings comfortably beat views. ISRG stock jumped in overnight action. Intuitive Surgical stock fell 2.4% to 416.14, back in a buy zone and just undercutting the 50-day line.
Dow Jones giants American Express and Travelers Cos. (TRV) report early Friday, along with oil services giants SLB (SLB) and Halliburton (HAL), and meter maker Badger Meter (BMI).
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Stock Market Rally
The stock market rally showed across-the-board losses in key indexes and ETFs.
The Dow Jones Industrial Average fell 1.3% in Thursday’s stock market trading, reversing from a record high and ending a six-session win streak. The S&P 500 index lost 0.8%, closing just above its 21-day line.
The Nasdaq composite gave up 0.7%, a day after its worst loss since December 2022. While closing somewhat off intraday lows, the tech-heavy index is now clearly below the 21-day line.
The small-cap Russell 2000 tumbled 1.85% after reversing from multiyear highs on Wednesday.
The Invesco S&P 500 Equal Weight ETF (RSP) closed down 0.9% after hitting a record high intraday.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) also lost 0.9%, below its 21-day line.
Many homebuilders and insurers continued to rise. Banks and industrials fell back after big moves while energy plays were mixed. But many of these non-tech leaders are extended from buy points or their 50-day lines — or have earnings in the next week or so.
U.S. crude oil prices fell 3 cents to $82.82 a barrel.
The 10-year Treasury yield rose 4.5 basis points to 4.19%, bouncing from Wednesday’s four-month low.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) sank 2.2% after Wednesday’s 3.9% tumble. The iShares Expanded Tech-Software Sector ETF (IGV) fell 1.5%, with Microsoft stock a key member. The VanEck Vectors Semiconductor ETF (SMH) climbed 0.5%. Nvidia and Taiwan Semi stock are the top SMH holdings.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) slumped 3.8% and ARK Genomics ETF (ARKG) shed 4.5%. Tesla stock is the No. 1 holding across Ark Invest’s ETFs. Cathie Wood’s Ark also owns a small stake in BYD.
SPDR S&P Metals & Mining ETF (XME) shed 1.8%, as traditional miners tumble with ore prices. The Global X U.S. Infrastructure Development ETF (PAVE) fell 0.6%. SPDR S&P Homebuilders ETF (XHB) edged up 0.3%, but ended well off intraday highs. The Energy Select SPDR ETF (XLE) nudged 0.2% higher. The Health Care Select Sector SPDR Fund (XLV) declined 2.3%, with LLY stock a major holding.
The Industrial Select Sector SPDR Fund (XLI) dropped 0.8%. The Financial Select SPDR ETF (XLF) retreated 1.2%. The SPDR S&P Regional Banking ETF (KRE) fell back 1.8%.
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Tech Leaders At Key Points
Nvidia stock rose 2.8% to 121.29 on Thursday, finding support just above the 50-day line and regaining the 10-week. Shares could be working on a new double-bottom base, but need more time. The 21-day line is a near-term objective.
Taiwan Semi stock hit resistance at the 21-day line, reversed lower, then bounced off its 50-day. TSM stock closed up 0.4% at 171.87. Before the open, the foundry giant beat Q2 views and guided higher.
Microsoft dipped 0.7%, but bounced off the 50-day line. Google stock retreated 1.8%, just below its 50-day. Google earnings are due on July 23, with Microsoft a week later.
Amazon and CrowdStrike lost 2.2% and 3.35%, respectively, clearly below their 50-day lines after undercutting buy points on Wednesday. Both look like failed breakouts.
Eli Lilly stock plunged 6.3%, below the 50-day line. Novo Nordisk stock retreated 4%, now a failed breakout. LLY and NVO are down 10.5% and 8.5%, respectively, for the week.
Tesla Stock
Tesla stock edged up 0.3% to 249.28, a second straight inside day. TSLA stock is tightening up bullishly on a daily and weekly chart after a huge run. Shares have a 271 handle buy point on a consolidation starting in late or mid-2023. It’s trading just above a long-term trendline going back to the late 2021 peak. Tesla earnings are due July 23.
Archrival BYD (BYDDF) advanced 0.6% to 30.54. Shares on Wednesday fell below a 30.84 cup-with-handle buy point. The China EV and battery giant is right on a long-term trendline going back to its mid-2022 peak. BYD will likely release preliminary Q2 results in the next week.
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What To Do Now
Tech stocks look they need some time before they make another run. A lot of non-tech stocks and sectors that offered buying opportunities in recent days also look stretched.
Meanwhile, earnings season is ramping up. Like Tesla, a number of stocks near buy points report next week, including United Rentals (URI), Weatherford International (WFRD) and Tenet Healthcare (THC). Many more quality names report the following week.
So it may not be a great time right now to make further new purchases. Investors should be cutting losers.
That could change quickly. So have your watchlists up to date. And stay engaged. Investors need to be ready to make new buys or sells — or both — in the coming days.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
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