Dow Jones Futures: Market Rally Still Must Take This Step; 5 Key Earnings


Dow Jones futures were little changed Sunday night, along with S&P 500 futures and Nasdaq futures. A stock market rally attempt showed whipsaw action last week, but closed with strong gains Friday.




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Tech titans Apple (AAPL) and Microsoft (MSFT) led the way, having positive reactions on earnings. Tesla (TSLA) plunged last week, but did hold last-ditch support on Friday.

Investors should remain cautious, but also prepare for new buying opportunities. Pay attention to several key earnings this coming week. Google parent Alphabet (GOOGL), Ford Motor (F), Qualcomm (QCOM), Fortinet (FTNT) and Advanced Micro Devices (AMD) are five notable reports. All of these charts have had a rough stretch, though Google stock could be actionable soon. Ford stock, Qualcomm and Fortinet aren’t plunging vs. the broader market. AMD stock is a former chip leader that is trying to find a bottom.

Tesla stock and Microsoft are on IBD Leaderboard. Microsoft, Google and FTNT stock are on IBD Long-Term Leaders. Microsoft and GOOGL stock are on the IBD 50.

The video embedded in this article discussed the volatile market action and analyzed Apple stock, Microsoft and Ford.

Dow Jones Futures Today

Dow Jones futures were even with fair value, erasing slim losses. S&P 500 futures and and Nasdaq 100 futures were little changed.

The 10-year Treasury yield rose 2 basis points to 1.8%. Crude oil futures climbed more than 1%.

China official manufacturing purchasing managers index dipped to 50.1 in Jan. from 50.3 in December, just above views for a break-even 50. The nonmanufacturing index dipped to 51.1, also slightly above views.

The Caixin China manufacturing gauge fell to 49.1 from December’s 50.9.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Futures and regular-session trading have been volatile over the past several days.


Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live


Coronavirus News

Coronavirus cases worldwide reached 375.09 million. Covid-19 deaths topped 5.68 million.

Coronavirus cases in the U.S. have hit 75.57 million, with deaths above 907,000.

New Covid cases have clearly topped in the U.S., although they are still very high. Hospitalizations also may have peaked nationwide.

Stock Market Rally

A stock market rally attempt began on Monday as the major indexes reversed modestly higher from steep losses. After some negative reversals during the week, the major indexes rallied back on Friday.

The Dow Jones Industrial Average rose 1.3% in last week’s stock market trading. The S&P 500 index climbed 0.8%. The Nasdaq composite edged up 1 point, bailed out by Friday’s 3.1% spike. The small-cap Russell 2000 finished down 0.9%.

The 10-year Treasury yield rose 3 basis points to 1.78%, despite pulling back late in the week. Short-term Treasury yields climbed further, squeezing banks’ lending profitability and signaling some concerns about overall economic growth.

U.S. crude oil futures rose for a sixth straight week, up about 2% to $86.82 a barrel, trading at their highest level since 2014.


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No Federal Reserve ‘Put’ For Stocks

The Federal Reserve plans to raise interest rates and cut its balance sheet fairly aggressively in the coming months. Markets are pricing in at least four Fed rate hikes in 2022, starting in March, with Bank of America predicting seven quarter-point cuts. Atlanta Fed President Raphael Bostic said the central bank could opt for a 50-basis point cut in March. Bostic, one of the more hawkish policymakers, does not have an FOMC vote this year.

Over the past several decades, Fed rate hikes generally have been discretionary, and policymakers were quick to pause or reverse course if financial markets faltered. But with inflation at 40-year highs, Fed chief Jerome Powell and his colleagues have made it clear that this time they are not going to stop just because stocks are struggling somewhat. If the economy falters, that’s a different story — the Fed is not going to adopt a Paul Volcker-esque stance — but there’s no “Powell put” for the market.

A rising rate environment could be tricky for stocks indefinitely, especially for highly valued growth stocks.

ETFs

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 1% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) edged up 0.1%. The iShares Expanded Tech-Software Sector ETF (IGV) gained 1%. MSFT stock and Fortinet are IGV components. The VanEck Vectors Semiconductor ETF (SMH) tumbled 3.7%. AMD stock and Qualcomm are key SMH holdings.

SPDR S&P Metals & Mining ETF (XME) retreated 2.1% last week. The Global X U.S. Infrastructure Development ETF (PAVE) sank 0.8%. U.S. Global Jets ETF (JETS) descended 2.1%. SPDR S&P Homebuilders ETF (XHB) dipped 0.3%. The Energy Select SPDR ETF (XLE) jumped 5.1% and the Financial Select SPDR ETF (XLF) added…



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