Dow Jones futures fell after-hours, but S&P 500 and Nasdaq rose. Microsoft (MSFT), Google parent Alphabet, Snap (SNAP), and Visa (V), reported after the closing. Boeing earnings and Wednesday's Fed meeting are also scheduled.
The stock market rallied again on Tuesday, but the major indexes retreated from their gains at the close. Dow Jones' winning streak has now reached 12 consecutive sessions. S&P 500 reached a new 15-month high. The Nasdaq Composite led Tuesday thanks to Nvidia's (NVDA), and MSFT's stock. However, it is still working its way back towards last week's rally peaks. A number of technology leaders have bounced back from key support levels.
Microsoft's earnings were the most popular after-hours, but MSFT fell amid a slight slowdown in cloud growth. Google's stock rose, indicating a breakout. Alphabet's earnings were boosted by YouTube ads and Google Cloud. Microsoft and Google's earnings reports will have a huge impact on artificial intelligence, cloud computing, and the tech industry in general.
Visa's stock fell as the payments giant slightly outperformed views. Visa shares lost a small amount on Tuesday but remained in the buy zone.
Snap earnings were the most popular, but Snapchat parent Snapchat dived late with revenue guidance. This signaled a drop back below key moving-averages. SNAP's stock hit its highest level in almost a year on the 13th of July, but has dropped for seven out of eight sessions.
Banc of California, (BANC), and PacWest Bancorp, (PACW), both Californian financial institutions, agreed late Tuesday to merge their two companies in a merger of equal stock. Both companies also reported Q2 results following the close. PacWest was hit by deposit outflows in the region's banking crisis.
PACW's stock fell 27% to close Tuesday, following a Wall Street Journal article stating that a deal would be imminent. After the announcement, however, its stock rose by 44%. BANC's stock closed 11% higher, and jumped another 12 in extended trade.
Other regional bank stocks also fell, but they generally only lost a small portion of recent gains.
Wells Fargo, the money-center giant, announced after hours a $30 billion share buyback. Wells has also increased its quarterly dividend by 17%, to 35 cents per share. WFC's stock rose over night.
BA's stock fell 0.8% on Tuesday to 214.12, but found support near the official buy point of 223.91. RIO's stock jumped 4.8% to 69.81 in Tuesday's trading, displaying an aggressive entry alongside several other mining companies. Metal ore prices are rising due to China's stimulus pledges.
Nvidia is listed on the IBD Leaderboard. Microsoft is on IBD's Long-Term Leaders List.
Miniso, Nucor and Synopsys are all listed on the NASDAQ.
Dow Jones Futures Today
Dow Jones futures include MSFT, Visa and Boeing. S&P futures rose 0.15%. Nasdaq 100 futures rose 0.35%.
Keep in mind that overnight trading in Dow futures or elsewhere may not necessarily translate to actual trading during the next regular session of the stock market.
The markets have already priced in a Fed rate hike of a quarter point, but they see a small chance that another one will be made before the end of the year. How strongly will policymakers argue for a second rate hike?
Jerome Powell, Fed chief, will be speaking at 2:30 pm. ET.
Stock Market Rally
Stock market rallies had a good session led by technology, but indexes lost some of their gains in the last hour. In Tuesday's stock exchange trading, the Dow Jones Industrial Average rose 0.1%. S&P 500 index increased by 0.3%. The Nasdaq composite rose 0.6%. Russell 2000 small caps closed slightly above break-even.
Megacap techs such as Nvidia and Microsoft outperformed on Tuesday.
The Invesco Equal Weight S&P 500 ETF (RSP), which tracks the performance of this index, rose by about 0.1%
First Trust Nasdaq 100 Equal Weighted Index ETF QQEW grew by 0.4%, compared to the Nasdaq 100’s 0.7% increase.
Market rally doesn't seem to want to end. In the last two months, S&P 500 index has not even touched its 21 day line. Nasdaq hasn't touched its 21-day line since early May.
The price of U.S. crude rose by 1.1%, to $79.63 per barrel. This is a 5.7% increase in the last four sessions. The copper price rose 1.6% on Monday, after a 1% increase. Industrial commodities are being boosted by China's promises to revitalize the property sector.
The yield on the 10-year Treasury note jumped about 6 basis points, to 3.91%.
Innovator IBD ETF (FFTY), a growth ETF, grew 0.6%. The iShares Extended Tech-Software Sector ETF rose by 0.8%. MSFT is a major holding in IGV. VanEck Vectors Semiconductor ETF SMH grew 1.6% with NVDA as the top holding. SNPS is a part of IGV and SMH.
ARK Innovation ETFs (ARKK) and ARK Genomics ETFs (ARKG), which reflect more speculative stocks, have both declined by 0.3%.
SPDR S&P Metals & Mining ETF XME jumped 2%. Energy Select SPDR ETF XLE (XLE) climbed by 0.5%, while Health Care Select Sector SPDR Fund XLV (XLV) slipped a little.
Boeing stocks were a major component of the Industrial Select Sector SPDR Fund.
The Financial Select SPDR (XLF KRE), a fund that tracks the financial markets, fell 1.9% on Tuesday. KRE holds PACW.
Microsoft's earnings exceeded expectations, with revenue increasing 8%, to $56.19 Billion, for the second consecutive quarter. Azure cloud computing growth increased 26% from a year ago, beating expectations but falling short of the 27% increase in the previous quarter.
Last week, Dow Jones announced AI pricing for its enterprise customers.
Microsoft will provide guidance during its upcoming conference.
MSFT lost a small amount of its value in extended trading. Tuesday's gains of 1.7%, to 350.98, continued Monday's modest rebound from the 21-day level. Microsoft stock reached a record high of 366.78 in July.
Microsoft's earnings report may be the most important of the year, considering the company's size and leadership in many tech industries.
Google's earnings increased 19% in the fourth quarter, ending four consecutive quarters of declines. The revenue grew 7% for the second consecutive quarter. Google reported that cloud computing revenues rose by 28%, to $8.03 Billion.
Google's stock rose 6% overnight to around 130, indicating a breakout. On Tuesday, shares rose 0.6% to reach 122.21. GOOGL has a buy point of 127.10 from a base cup with handle. A move above the Monday high of 123 may offer an entry in the cup-and-handle and 50 day.
What to Do Now
The earnings season has reached fever pitch and the Fed's rate hike announcement is scheduled for Wednesday afternoon.
A few stocks flash buy. Investors could add exposure to industrial, commodity, or non-tech sectors, as growth names are likely to be the focus of much attention in the coming days. If the market falls on earnings and after the Fed's announcement, there are few safe havens.
In the short term, there's no harm in holding onto a large amount of exposure.
Investors need to pay attention to the market and continue working on their watchlists.
The Big Picture is a daily read to keep up with market trends, leading stocks and sectors.