Dow Jones futures rose slightly after hours, along with S&P 500 futures and Nasdaq futures. Netflix (NFLX) headlined earnings overnight, with Tesla and ServiceNow on tap.
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The stock market rally was narrowly mixed Tuesday while Treasury yields continued to climb.
Netflix jumped overnight on booming subscriber growth. Stride (LRN), Intuitive Surgical (ISRG), Texas Instruments (TXN) and Steel Dynamics (STLD) also earnings movers late.
Chip-equipment maker ASML (ASML) reports early Wednesday, with Tesla (TSLA) and ServiceNow (NOW) on tap Wednesday night.
ServiceNow stock is on IBD Leaderboard. NOW stock is on the IBD 50. ASML stock and ServiceNow are on the IBD Big Cap 20.
Dow Jones Futures Today
Dow Jones futures were 0.1% above fair value. S&P 500 futures climbed 0.2% and Nasdaq 100 futures rose 0.4%. NFLX stock and Intuitive Surgical are both S&P 500 and Nasdaq 100 components.
The 10-year Treasury yield dipped to 4.12%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
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Stock Market Rally
The stock market rally closed mixed in a quiet session, with the major indexes right at record or multiyear highs.
The Dow Jones Industrial Average fell 0.25% in Tuesday’s stock market trading, with several Dow giants moving on earnings. The S&P 500 index rose 0.3% and the Nasdaq composite 0.4%, both closing near intraday highs.
Advancers edged out decliners after decliners edged out advancers after winners dominated for two sessions. Still, the overall trend one of lackluster breadth so far in 2024.
The small-cap Russell 2000 fell 0.4%, but held the bulk of its three-day advance and closed above the 21-day line.
Homebuilders and some construction and materials firms were big losers as D.R. Horton (DHI) reported weaker-than-expected earnings and orders. Rising Treasury yields also are weighing on the sector.
Some stocks that flashed buy signals Monday morning and pared gains fell back on Tuesday, including Affirm Holdings (AFRM). But some held up, including UiPath (PATH).
The 10-year Treasury yield climbed five basis points to 4.14%, right up to the 50-day line.
U.S. crude oil prices fell 0.5% to $74.37 a barrel.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) climbed 0.2%. NOW stock is a key IGV component. The VanEck Vectors Semiconductor ETF (SMH) advanced 0.5%. ASML stock is notable SMH holding, along with Lam Research and Taiwan Semi.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) edged up 0.1% and ARK Genomics ETF (ARKG) rose 0.5%. Tesla stock remains a major holding across Ark Invest’s ETFs.
SPDR S&P Metals & Mining ETF (XME) popped 1.1%. U.S. Global Jets ETF (JETS) ascended 2.3%. SPDR S&P Homebuilders ETF (XHB) tumbled 3.1%. The Energy Select SPDR ETF (XLE) rose 0.2% and the Health Care Select Sector SPDR Fund (XLV) dipped 0.1%
The Industrial Select Sector SPDR Fund (XLI) gained 0.2%. The Financial Select SPDR ETF (XLF) lost 0.1%.
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Netflix Earnings
NFLX stock jumped in overnight trade as investors ignored Netflix earnings falling short. That’s because Netflix subscribers grew by 13.1 million in the fourth quarter, far above views, as the new ad-tier and password crackdowns pay off.
Shares climbed 1.3% in Tuesday’s session to 492.19, rising within range of a 482.70 handle buy point.
Early Tuesday, Netflix and TKO Group (TKO) said that the streaming platform will carry the WWE’s flagship program Raw starting next year.
Other Earnings
ISRG stock leapt after hours as Intuitive Surgical earnings beat recently raised guidance. Intuitive Surgical stock fell 1.2% to 371.41. The robotic surgical systems leader reported strong preliminary revenue and procedures growth earlier this month. Shares had surged on the preliminary figures.
LRN stock popped in extended action after Stride earnings and revenue topped fiscal Q2 views. The K-12 online education firm closed flat at 62.09 on Tuesday. Stride stock is set to clear a 62.56 flat-base buy point on Wednesday
TXN stock fell solidly late. Texas Instruments earnings slightly beat while revenue just missed, with weak guidance for the current quarter. Shares edged down 0.3% on Tuesday to 174.34. Texas Instruments is in range of a 172.31 cup-with-handle buy point, but the relative strength line has been lagging for some time.
STLD stock fell slightly in overnight action with Steel Dynamics earnings in line while revenue edged past views. STLD stock edged up 0.6% to 116.14 on Tuesday, moving off the 50-day line and testing a downtrend within a new flat base. The official buy point is 128.57, according to MarketSmith analysis.
ASML earnings loom Wednesday morning. The Dutch chip-equipment giant rose 1.5% on Tuesday to 778.39, a two-year high. ASML stock is in range from a 765.79 cup-with-handle buy point. Chip-equipment makers surged late last week following the bullish guidance at Taiwan Semiconductor (TSM)
Lam Research (LRCX) reports Wednesday night with KLA Corp. (KLAC) due Thursday night. Both are stretched from the 50-day line.
Tesla Earnings
Tesla earnings are due Wednesday night. Analysts expect EPS to plunge 39% with revenue up some 5% to $25.62 billion. The focus will be on the 2024 outlook for gross margins and deliveries, especially with hefty price cuts and incentives continuing early in 2024.
Tesla stock edged up 0.2% to 209.14 on Tuesday. But shares have fallen for several weeks. The RS line has tumbled to an eight-month low, reflecting TSLA stock’s deterioration vs. the S&P 500.
ServiceNow Earnings
While Tesla results will get the most attention Wednesday night, ServiceNow earnings and guidance may be the most important as the first big software maker to report for the quarter.
ServiceNow stock also is a leader in the market rally. NOW stock nudged 0.1% higher to 753.42 on Tuesday. Shares are up 23% from an early November breakout.
What To Do Now
The stock market rally is still acting well.
Investors should be significantly invested. It may be a good time to let your positions work. A number of winners are stretched while some recent buys have pulled back, so new opportunities aren’t flush at the moment.
Earnings season ramping up to full force is another reason to be cautious. While there have been some big earnings winners, there have been notable losers as well. Definitely be aware of earnings that can affect your portfolio. Follow your rules on holding or selling stocks into earnings.
Keep working on your watchlists.
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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