Dow Jones futures tilted higher, along with S&P 500 futures and Nasdaq futures. The stock market extended losses Wednesday even as the 10-year Treasury yield retreated modestly.
The software sector has been among the hardest hit over the past several weeks. Microsoft stock and Palo Alto Networks (PANW) gained ground on Wednesday, while Fortinet (FTNT) and New Relic (NEWR) reversed lower, but outperformed the general market. All are below their 50-day lines, especially Microsoft (MSFT). But these are a handful of software stocks that you may want to keep your eye on for the next stock market rally.
Meanwhile, tech titan Apple (AAPL) continues to look better than just about any big tech stock. But Apple stock fell 2.1% on Wednesday to 166.23, finally closing below its 50-day line.
Alcoa earnings easily beat views while sales narrowly topped. AA stock rose modestly in extended trade. Shares dipped 0.7% on Wednesday, but are holding their 21-day line, near highs.
United Airlines reported a smaller-than-expected Q4 loss as revenue topped, but guidance on costs and capacity disappointed investors. UAL stock fell modestly in overnight action after closing down 2.65%, below its 50-day line.
American Airlines stock slumped 3% Wednesday after dropping below its 50-day line on Tuesday.
Union Pacific stock rose a fraction on Wednesday, but is still below its 50-day line after Tuesday’s 3.3% tumble.
Baker Hughes stock retreated 1.9% to 26.29, just below a 27.76 buy point.
Dow Jones Futures Today
Dow Jones futures rose 0.1% vs. fair value. S&P 500 futures advanced 0.1% and Nasdaq 100 futures climbed 0.2%.
The 10-year Treasury yield rose 1 basis point to 1.84% overnight. Crude oil prices fell slightly.
Stock Market Correction Wednesday
The stock market opened higher Wednesday but reversed lower and closed near session lows.
The Dow Jones Industrial Average lost nearly 1% in Wednesday’s stock market trading. The S&P 500 index retreated 1%. The Nasdaq composite, up more than 1% soon after the open, fell 1.15%. The small-cap Russell 2000 slumped 1.6%.
The 10-year Treasury yield fell about 4 basis points to 1.83%, retreating from two-year highs. U.S. crude oil prices climbed 1.8% to $86.96 a barrel, continuing to set multiyear highs. Soaring energy prices raise the prospect of higher inflation, or at least staying high for longer.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) tumbled 3.2%, while the Innovator IBD Breakout Opportunities ETF (BOUT) retreated 1.8%. The iShares Expanded Tech-Software Sector ETF (IGV) eked out a 0.1% gain after a solid morning advance. MSFT stock is a major IGV holding, with Fortinet, Palo Alto and New Relic also in the ETF. The VanEck Vectors Semiconductor ETF (SMH) skidded 2.8%.
SPDR S&P Metals & Mining ETF (XME) dipped 0.1%, with AA stock a notable holding. The Global X U.S. Infrastructure Development ETF (PAVE) sank 1.2%. U.S. Global Jets ETF (JETS) descended 1.6%. SPDR S&P Homebuilders ETF (XHB) gave up 1.85%. The Energy Select SPDR ETF (XLE) retreated 0.7% and the Financial Select SPDR ETF (XLF) fell 1.7%. The Health Care Select Sector SPDR Fund (XLV) edged down 0.4%
Microsoft stock edged up 0.2% to 303.33, after running up to 313.90 intraday. That follows Tuesday’s 2.4% decline to a three-month low amid the market sell-off and Microsoft’s $69 billion takeover deal for Activision Blizzard (ATVI). MSFT stock is in a flat base with a 349.77 buy point, according to MarketSmith analysis, but shares are still 8% below their now-declining 50-day line. This stock definitely has repair work to do.
The relative strength line for Microsoft stock has retreated from November highs, but that’s after a solid advance for most of last year.
Microsoft earnings are due next Tuesday. Revenue growth has accelerated for the past four quarters. Earnings growth picked up for three quarters in a row before cooling to a still-solid 25% in the September-ending quarter.
Fortinet stock was one of the last software holdouts, breaking out to a new high in late 2021. But the cybersecurity leader sold off hard to start the new year. FTNT stock has bounced a little from its Jan. 6 lows, but is still below its 50-day line. Shares dipped 0.4% to 307.16…