Dow Jones futures were little changed early Thursday morning, along with S&P 500 futures and Nasdaq futures. The current stock market rally suffered a setback Wednesday, with the major indexes and top stocks flashing some negative signs. That's despite a strong Apple stock boost to the Dow Jones, S&P 500 index and Nasdaq composite. Meanwhile, Square (SQ), Qualcomm (QCOM), Ceridian HCM (CDAY) and Cree (CREE) fell overnight after reporting earnings.
XQualcomm stock has an IBD Composite Rating of 91, while Square has a 92. Cree stock boasts a 94 Composite Rating. Ceridian stock is at 89.
Dow Jones Futures Today
Dow Jones futures fell about 0.1% vs. fair value, S&P 500 futures were just above break-even. Nasdaq 100 futures rose 0.1%. Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Current Stock Market Rally
The current stock market rally opened well on Apple (AAPL), which closed up 4.9%. The Federal Reserve made a technical tweak intended to curb the effective Fed rate. Stocks initially added to modest gains, but then reversed lower as Fed Chairman Jerome Powell said recent low inflation is likely "transitory." That suggests the Fed won't be cutting rates anytime soon.
The Dow Jones and Nasdaq closed down 0.6% and the S&P 500 index shed 0.75%. It was the second straight distribution day for the Nasdaq.
Growth stocks had a tough day as AMD (AMD) and several software stocks such as Twilio (TWLO) reversed sharply lower after recent earnings. Many other top stocks fell modestly in sympathy.
Among the best ETFs, Innovator IBD 50 (FFTY) fell 1.6%. The iShares Expanded Tech-Software Sector ETF (IGV) also retreated 1.6%. The VanEck Vectors Semiconductor ETF (SMH) lost 0.8%.
The S&P 500 index and Nasdaq closed below their 10-day moving averages for the first time since March 28. Along with negative reversals and failed breakouts in some top stocks, that could point to further losses for the current stock market rally. So do Dow Jones futures.
More broadly, the current stock market rally may be in the early stages of a multiyear bull market. But investors can't expect stock market gains to be as strong as they were in the first few months of the rally.
Bottom line: Investors should be alert and a little more cautious right now.
Qualcomm Earnings
Qualcomm earnings dipped 1% to 77 cents a share in fiscal Q2 as revenue sank 5% to $5 billion. But that beat analyst views for Qualcomm earnings of 71 cents a share on sales of $4.8 billion.
Qualcomm guided low for the current fiscal Q3, excluding a big Apple payment related to a major settlement over patent licensing terms and royalties.
Qualcomm stock fell 0.7% early Thursday, off overnight lows. Shares rose 0.3% Wednesday. Qualcomm stock has soared 51% since the wireless chip giant's Apple settlement last month.
Square Earnings
Square earnings came at 6 cents a share adjusted, flat vs. a year earlier. Revenue climbed 59% to $489 million. Analysts expected Square earnings of 8 cents on revenue of $478.3 million.
Square also guided lower for the current Q2.
Square stock tumbled 4.8% before the open, signaling a sharp drop through the 200-day line. Shares of the mobile payments leader had risen 1.1% to 73.62 on Wednesday.
Square stock rallied in the first few weeks of the current stock market rally, but has gone sideways since then. The relative strength line, which tracks a stock's performance vs. the S&P 500 index, has been trending slightly lower since late January.
Cree Earnings
Cree earnings came in at 20 cents a share for fiscal Q3. Analysts had expected Cree earnings per share of 16 cents. But sales rose 22% to $274.05 million, just below estimates. The LED chipmaker also guided lower for the current Q4.
Cree stock retreated 9.7% in the premarket. Shares retreated 2% on Wednesday to 64.78. Cree stock hit 69.21 last week, its best level since late 2013.
Ceridian Earnings
Ceridian earnings came in at 8 cents per share, missing views by 4 cents. Revenue rose 8% to $203.7 million, just below forecasts.
Ceridian stock skidded 7.3% late. Shares of the maker of human capital management software closed down 2.6% to 51.76 after reversing from a record high.
Ceridian stock priced its IPO at 22 in April 2018.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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2019-05-02 11:34:56Z
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