Dow Jones futures were little changed overnight, along with S&P 500 futures and Nasdaq futures, with the October jobs report looming large.
The stock market rally, now under pressure, continues to digest Fed chief Jerome Powell’s hawkish comments that the peak or “terminal” fed funds rate may be higher than previously expected.
The main index fell on Thursday morning. They rebounded from early lows, with the Dow Jones briefly turning positive, but stocks faded to the close.
Megacap technology continues to weigh on major indexes, especially the Nasdaq. Microsoft stock joins Amazon.com (AMZN), parent of Facebook Meta Platform (META) and parent Google Alphabet (GOOGL) in setting bear market lows. Apple (AAPL) is still above June lows, but has fallen this week back to October lows.
Thursday night’s main revenue driver is included Amgen (AMGN), Yelp (YELP), Source of EOG (EOG), PayPal (PYPL), Square Master Block (SQ), Progyny (PGNY), Cloudflare (CLEAN) and Paylocity (PCTY).
Amgen shares were little changed while Yelp and PYPL shares fell. NET shares also slumped, with cloud software names appearing overnight. SQ stock surged and PGNY soared. PCTY is not yet trading.
Cardinal Health (CAH) reported early Friday, with CAH stock slightly extended from a buy zone.
Economists expected the October jobs report to show nonfarm payrolls rose by 210,000, with the jobless rate rising to 3.6%. That would be the third straight month of slow hiring and the smallest job gains since December 2020, but not impressive enough for the Fed to like.
There is reason to believe October employment data will be much weaker than expected.
However, other labor data this week was warmer than expected, including September job openings and weekly jobless claims.
The October jobs report on Friday will be key to Fed rate hike expectations and perhaps the direction of the stock market, at least in the short term. The November jobs report and two CPI inflation reports will also arrive before the December Fed meeting.
The market now sees a 52% chance of a 50 basis point hike on Dec. 14.
Dow Jones Futures Today
Dow Jones futures fell 0.15% against fair value. S&P 500 futures were down 0.1% and Nasdaq 100 futures were higher.
The 10-year Treasury yield rose 4 basis points to 4.16%.
The Labor Department’s October jobs report will be released at 8:30 a.m. ET on Friday. Expect big moves, possibly whipsaw action, for Dow futures and Treasury yields.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
IBD experts analyze the stock market rally on IBD Live
Stock Market Rally
The stock market rally was weaker on Thursday, with the Nasdaq suffering the most once again.
The Dow Jones Industrial Average was down 0.5% in stock market trading Thursday. The S&P 500 index retreated 1.1%. The Nasdaq Composite fell 1.7%. The small-cap Russell 2000 gave up 0.6%.
The 10-year Treasury yield rose 6 basis points to 4.12%, but was down from a daily high of 4.2%. The dollar rose after strong gains on Wednesday.
US crude oil prices fell 2% to $88.17 a barrel, amid a strong dollar and concerns about global demand.
Apple Stock, Megacaps
Apple shares sold off by 4.2%. Now down 10.2% for the week, the Dow Jones, S&P 500 and Nasdaq titans have fallen back from their 200-day line and dipped below their 50-day line.
Google shares gave up 4.1%, hitting a two-year low. GOOGL shares are down 10.4% for the week.
Microsoft shares fell 2.7% to 214.25, finally breaking below the October low to the worst level since January 2021. MSFT shares have slipped 9.2% this week.
Amazon shares lost 3.1% to their lowest point since March 2020. AMZN shares have plunged 13.6% this week.
META shares retreated 1.8%, hitting a seven-year low. Parent Facebook has lost 10.4% this week after falling nearly 24% last week.
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Among the top ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.4%. The iShares Expanded Technology Software Sector ETF ( IGV ) declined 2.5%, with MSFT shares a key component. VanEck Vectors Semiconductor ETF (SMH) lost 1.2%.
SPDR S&P Metals & Mining ETF (XME) lost 0.3%. US Global Jets ETF (JETS) lost 0.1%. The Energy Select SPDR ETF (XLE) rose 1.85% and the Financial Select SPDR ETF (XLF) fell 1.1%. The Healthcare Select Sector SPDR Fund ( XLV ) was down 0.4%.
Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKK) shed 0.7% and the ARK Genomics ETF (ARKG) shed 0.9%.
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Market Assembly Analysis
The stock market rally moved into “uptrend under pressure” after Wednesday’s big reversal on Fed chief Powell’s hawkish comments.
The Nasdaq closed below its October 21 follow-up day low. That’s a very bearish sign for the market’s rally, although the Nasdaq has clearly lagged behind in the current uptrend. Other major indexes are well above FTD lows, although the S&P 500 fell below its 50-day line and the Dow Jones cut below its 200-day line.
The sell-off continued Thursday, with the Nasdaq once again leading the decline and nearing session lows.
That’s largely due to Apple, Amazon, Microsoft, Google and the megacaps Meta Platform.
The S&P 500, Dow Jones and Russell 2000 fared better, but slipped to close.
The Russell 2000 managed to finish above the 50-day and 21-day lines.
The Invest S&P 500 Equal Weight ETF (RSP) fell 0.5%, outperforming the megacap-heavy S&P 500, but closed below its 50-day.
Don’t overstate the resilience of the market rally outside of Apple and large caps. The Russell 2000 and RSP ETFs rebounded strongly on Wednesday, along with most of the leading stocks. And they lost more ground on Thursday.
With the Fed once again cementing its hawkish stance and Treasury yields rebounding, the stock market will struggle to hold on, let alone make meaningful progress.
Friday’s jobs report could support a market rally, or send the major indexes tumbling toward market lows.
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What to do now
With markets under pressure and leading stocks volatile, investors should keep their exposure light. If the rally rebounds, such as the S&P 500 reclaiming its 50-day line, that could be a signal to consider gradually increasing exposure again.
There are some stocks that are almost actionable. So work on that watch list. Stay involved and be flexible so you’re ready to add exposure or move outside.
Read The Big Picture daily to stay abreast of market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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