Dow Jones futures fell modestly early Wednesday, along with S&P 500 futures and Nasdaq futures. Amazon.com (AMZN), Super Micro Computer (SMCI) and Advanced Micro Devices (AMD) headlined key earnings, while the Fed meeting announcement is due Wednesday afternoon.
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The stock market rally attempt retreated sharply, as a hot employment cost index raised fresh inflation concerns. The major indexes are hitting resistance, awaiting the Fed meeting as well as big earnings and economic data.
Eli Lilly (LLY) jumped on earnings Tuesday, briefly flirting with an early entry. Tesla (TSLA) retreated amid fresh layoffs, but is still up sharply over the past week.
Early Wednesday Amazon rose modestly on Tuesday night earnings despite weak guidance. AI plays Super Micro and AMD stock sold off in volatile action. Super Micro and AMD results and guidance are key for AI chipmakers such as Nvidia (NVDA).
TransMedics (TMDX), Powell Industries (POWL) and Pinterest (PINS) also reported late. TransMedics stock surged on earnings, gapping out of a base. PINS stock skyrocketed, vaulting above the 50-day line and a trendline, near the top of a new base. Powell Industries, which is another AI-adjacent plays, gapped up above the 50-day line on blowout results.
Nvidia and Eli Lilly stock are on IBD Leaderboard. Nvidia stock is on SwingTrader. Nvidia and TransMedics stock are on the IBD 50. Nvidia and SMCI stock are on the IBD Big Cap 20. Eli Lilly was Tuesday's IBD Stock Of The Day.
The video embedded in the article discussed Tuesday's market action and reviewed Eli Lilly, Modine Manufacturing (MOD) and Constellation Energy (CEG).
Dow Jones Futures Today
Dow Jones futures fell 0.2% vs. fair value. S&P 500 futures declined 0.4%. Nasdaq 100 futures lost 0.6%.
Crude oil futures declined nearly 2%.
Bitcoin continued to tumble.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Fed Meeting, Economic Data
The Federal Reserve concludes its two-day meeting on Wednesday, with the policy statement due at 2 p.m. ET. Fed chief Jerome Powell speaks at 2:30 p.m. Expect Powell and the Fed to signal no rush to cut rates, perhaps even waiting until next year.
Wednesday is packed with economic data. The April ADP Employment report is due out at 8:30 a.m. ET. At 10 a.m., the April ISM manufacturing index is on tap, as well as the March JOLTS report and construction spending.
On Friday, the April jobs report looms.
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Stock Market Rally
The stock market rally saw wariness heading into overnight earnings and ahead of the Fed meeting announcement, with a sharp sell-off right into the close.
The Dow Jones Industrial Average fell 1.5% in Tuesday's stock market trading. The S&P 500 index retreated 1.6% and the Nasdaq 2%, tumbling back from near their 50-day lines and undercutting their 21-day lines. The small-cap Russell 2000 sank 2.1%, also retreating below the 21-day.
Friday had many elements of a Nasdaq follow-through day, but did not technically qualify. In any case, FTDs are not infallible.
The S&P 500 and Nasdaq need to get above the 50-day line. That could come at any time, or in several weeks or months.
It was a risk-off session. U.S. crude oil prices fell 0.85% to $81.93 a barrel. Copper futures sank 2%. Bitcoin slumped 6% to $59,165.57, a two-month low.
The 10-year Treasury yield climbed 7 basis points to 4.68%. The two-year Treasury yield, more closely tied to the Fed rate outlook is back above 5%.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) retreated 2.5%. The VanEck Vectors Semiconductor ETF (SMH) slumped 2%, with AMD stock a notable holding. Nvidia is the largest SMH component, with AVGO stock also a member.
ARK Innovation ETF (ARKK) tumbled 3.7%, with Tesla stock the No. 1 holding.
The SPDR S&P Metals & Mining ETF (XME) skidded 3.45%. The SPDR S&P Homebuilders ETF (XHB) stepped down 1.8%. The Energy Select SPDR ETF (XLE) lost 3%.
The Health Care Select Sector SPDR Fund (XLV) edged down 0.1%. Eli Lilly stock is a key XLV component. The Industrial Select Sector SPDR Fund (XLI) declined 1.6% The Financial Select SPDR ETF (XLF) fell 1%.
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Amazon Earnings
Amazon earnings and sales topped Q1 views. Amazon Web Services revenue rose 17% as the tech giant cited AI-led gains. But sales guidance for Q2 was light.
Like other tech titans, Amazon pointed to heavy capital spending to beef up AI capabilities.
Amazon stock rose slightly in premarket trade. Shares fell 3.3% to 175 in Tuesday's session, dropping below the 50-day line.
Super Micro Earnings
Super Micro earnings easily beat fiscal Q3 views while revenue slightly missed. But the AI server maker guided well above consensus for the current quarter.
SMCI stock fell more than 10% early Wednesday. Super Micro stock fell 3.5% on Tuesday to 858.80. Shares are trying to recover after diving 23% on April 19 because the AI server maker didn't offer preliminary guidance when it announced its earnings date. That also triggered big losses in AI chip plays such as Nvidia and Broadcom.
AMD Earnings
AMD earnings and sales just topped views while revenue guidance was roughly in line.
AMD stock tumbled in extended action. Shares fell 1.1% to 158.38 on Tuesday, some distance below the 50-day line.
Nvidia stock declined modestly early Wednesday, threatening to undercut its 50-day line.
Eli Lilly Stock
Eli Lilly stock rose nearly 6% to 781.10 on Tuesday, rebounding above its 50-day and hitting 795.50 intraday. Early Tuesday, Eli Lilly earnings beat views on strong sales of weight-loss drug Zepbound. The drug giant raised full-year guidance.
LLY stock has an 800.78 buy point from a flat base. Investors could use 793.67 as an early entry.
Tesla Stock
Tesla stock fell 5.55% to 183.28 on Tuesday, with further losses early Wednesday. That's after gapping up 15.3% on Monday and 34% in the four sessions after the April 23 earnings report. Investors hailed Tesla clearing key hurdles for introducing Full Self-Driving in China, while with Elon Musk talking up "affordable" EVs, robotaxis and more.
Musk on Tuesday reportedly axed Tesla's Supercharger team, cutting hundreds of jobs in new layoffs that will likely slow Superchargers rollouts to a crawl. He also axed the new vehicles team, further evidence that truly new EVs may be many years away. That follows last week's layoffs of more than 10%, while two key executives departed.
Wednesday Earnings
Neurocrine Biosciences (NBIX), Generac Holdings (GNRC) and Carpenter Technology (CRS) report before Wednesday's open, along with Wingstop (WING), Allstate (ALL), Mastercard (MA) and more.
Investors get April deliveries from China EV makers Li Auto (LI), Nio (NIO) and XPeng (XPEV). Li Auto reported declining deliveries vs. March while Nio and XPeng saw increases. EV and battery giant BYD (BYDDF) will report April sales on Wednesday or Thursday.
What To Do Now
The stock market rally attempt is at a key juncture. It's not a time to be aggressive. If you want to make buys, make them precise and consider smaller positions. But waiting for the market to show decisive strength amid so much news makes a lot of sense.
If the market does rev higher, you'll want to be ready. A lot of stocks are setting up. If the market retreats and threatens recent lows, you want to scale out.
So have your watchlists and exit strategies up to date.
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Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
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