Dow Jones futures and S&P 500 futures edged lower early Friday, while Nasdaq futures also declined, with JPMorgan and Wells Fargo earnings topping views. The stock market rally had a rough Thursday, as highly valued growth stocks such as Tesla, Roblox and ServiceNow led the retreat.
The Nasdaq tumbled to its worst close since October while the S&P 500 slid below key support.
Taiwan Semiconductor (TSM) broke out Thursday on strong earnings and guidance. TSM stock gapped up 5.3% to 139.19, clearing an 11-month cup-with-handle base with a 135.60 buy point, according to MarketSmith analysis. But shares closed at session lows. Chip-equipment makers Applied Materials (AMAT), Lam Research (LRCX) and ASML (ASML) rallied on TSM’s strong capital spending plan, but they erased gains or reversed lower
Growth stocks struggled overall, especially highly valued unprofitable names or those with triple-digit price-earnings ratios, including Tesla (TSLA), Roblox (RBLX), ServiceNow (NOW) and Datadog (DDOG), along with many ARK-style stocks.
Tesla fell 6.75% on Thursday, back below its 50-day line. RBLX stock tumbled 10%, back below its 200-day line. NOW stock plunged 9.1% to its lowest level since June. DDOG stock skidded 7.65% to its worst close since late August.
Boeing (BA), Caterpillar (CAT) and Honeywell (HON) tried to keep the Dow Jones positive. BA stock and Honeywell reclaimed their 200-day lines and broke trend lines intraday, briefly flashing aggressive entries before pulling back. CAT stock popped after pausing for a few days following a gap above the 200-day line.
Dow Jones component JPMorgan Chase (JPM) and Wells Fargo (WFC) reported better-than-expected fourth-quarter earnings early Friday, kicking off bank earnings as financials have stood tall in the new year. Citigroup (C) also is on tap before the open.
JPM stock fell 3% before the open. Shares are below a traditional flat-base buy point. Wells Fargo, slightly extended, rose 2%. Citigroup, still trying to recover, dipped 1% before results.
The video embedded in this article discusses Thursday’s market sell-off and analyzes TSM stock, Simon Property Group (SPG) and JPMorgan.
Dow Jones Futures Today
Dow Jones futures slipped 0.1% vs. fair value, with JPM stock acting as a drag. S&P 500 futures declined 0.1% and Nasdaq 100 futures fell 0.2%.
The 10-year Treasury yield rose 3 basis points to 1.74%. U.S. crude oil prices climbed less than 1%.
Stock Market Rally
The stock market rally opened higher, turned mixed, then turned into a growth-led sell-off to close near session lows.
The Dow Jones Industrial Average fell 0.5% in Thursday’s stock market trading after being up for much of the session. The S&P 500 index slumped 1.4%, with ServiceNow the worst performer. The Nasdaq composite skidded 2.5%. The small-cap Russell 2000 lost 0.8%.
The 10-year Treasury yield edged lower for a third straight day to 1.71% on Thursday. Fed Gov. Lael Brainard, speaking at her confirmation hearing to be Fed vice chair, said inflation is her top priority. It’s the latest evidence that even dovish Fed members now favor tightening monetary policy.
Crude oil futures dipped 0.6% to $82.12 a barrel while natural gas prices tumbled after spiking in the prior session.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 1.3%, while the Innovator IBD Breakout Opportunities ETF (BOUT) lost 0.7%. The iShares Expanded Tech-Software Sector ETF (IGV) tumbled 4.2%. Both NOW stock and Datadog are IGV holdings. The VanEck Vectors Semiconductor ETF (SMH) sank 1.7%, with TSM stock, AMAT, LRCX and ASML all notable components.
SPDR S&P Metals & Mining ETF (XME) retreated 1.6% and Global X U.S. Infrastructure Development ETF (PAVE) edged down 0.3%. U.S. Global Jets ETF (JETS) climbed 2.2%, with Delta Air Lines (DAL) earnings and guidance lifting airlines. SPDR S&P Homebuilders ETF (XHB) dipped 0.4%. The Energy Select SPDR ETF (XLE) edged down 0.5%. The Financial Select SPDR ETF (XLF) gave up 0.3%, with JPM stock, Wells Fargo and Citigroup all notable holdings. The Health Care Select Sector SPDR Fund (XLV) gave up 1.55%
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) slumped 5.4% to a fresh 18-month low and ARK Genomics ETF (ARKG) tumbled 4.4% to a 19-month low. Tesla stock remains the top holding across ARK Invest’s ETFs. ARKK also owns some RBLX stock.
Market Rally Analysis
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