Dow Jones futures were little changed after hours, along with S&P 500 futures and Nasdaq futures ahead of key economic data Wednesday.
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Twilio (TWLO), AppLovin (APP), JFrog (FROG), Upwork (UPWK), Fastly (FSLY) and Cisco Systems (CSCO) were big earnings movers after the close.
The stock market rally rebounded Wednesday after Tuesday’s sharp sell-off on hot inflation data. Small caps and leading growth stocks led.
Nvidia (NVDA) continued to climb the Magnificent Seven ranks, with its market valuation topping Google parent Alphabet (GOOGL) after moving past Amazon.com (AMZN) on Tuesday. Meanwhile, Apple (AAPL) tested a key level as the Dow giant’s underperformance vs. the S&P 500 hit a one-year low.
Late Tuesday, Warren Buffett’s Berkshire Hathaway (BRKB) released its 13F SEC filing disclosing stock holdings. Buffett continued to play stock market defense in Q4.
The video embedded in the article analyzed Wednesday’s market action as well as Netflix (NFLX), Birkenstock (BIRK) and Celsius Holdings (CELH).
Nvidia stock is on IBD Leaderboard. Netflix stock and Nvidia are on SwingTrader. Celsius stock, Nvidia and Netflix are all on the IBD 50.
Dow Jones Futures Today
Dow Jones futures edged higher vs. fair value. S&P 500 futures rose about 0.1%. Nasdaq 100 futures were little changed. Cisco stock is a Dow Jones, S&P 500 and Nasdaq 100 component.
At 8:30 a.m. ET Thursday, investors will get January retail sales data and weekly jobless claims. That stakes have been raised following Tuesday’s hot CPI report.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze leading stocks and the market on IBD Live
Earnings Results
AppLovin earnings beat views. APP stock surged in extended trade. Shares rose 2.3% to 46.87 in Wednesday’s regular session, within buy range of a 44.57 double-bottom buy point, according to MarketSmith analysis. AppLovin stock initially broke out in late January, then whipsawed down and back up before settling down in the past couple of weeks.
Upwork earnings and sales modestly beat views with the staffing firm giving generally positive guidance. UPWK stock rose solidly overnight. Shares leapt 9.5% to 15.24 on Wednesday, running past the 50-day line as well as Monday’s high of 15.06. Investors could have used that as an early entry in a short consolidation if it weren’t for the earnings report.
JFrog earnings topped consensus. FROG stock leapt more than 10% in extended action. Shares climbed 3.75% to 37.09 on Wednesday, at the very top of a buy zone from a flat base, base-on-base pattern. On Tuesday, JFrog stock briefly undercut the 35.35 buy point after Monday’s downside reversal from a two-year high.
Twilio easily beat EPS views but gave mixed guidance. TWLO stock fell sharply in overnight trade. Shares rose 4.3% to 72.27 on Wednesday, still below the 50-day line. Twilio stock tested a prior 67.62 double-bottom buy point intraday Tuesday. A decisive move above the 50-day line would offer an early entry in a flat base, base-on-base pattern with a 78.16 buy point.
Fastly reported a surprise fiscal Q3 profit but revenue just missed, while the company also guided low for the current Q4. FSLY stock plunged 20% or more in overnight trade. Shares had risen 2.8% to 23.54 in Wednesday’s session.
Cisco earnings slightly topped views but the networking giant guided low on the current fiscal Q3. Cisco says it’ll cut 5% of staff. CSCO stock retreated solidly in after-hours action. Shares rose 1.3% on Wednesday to 50.28, just above the 50-day line but below the 200-day line.
Stock Market Rally
The stock market rally rebounded after Tuesday’s sharp losses.
The Dow Jones Industrial Average advanced 0.4% in Wednesday’s stock market trading, edging up from the 21-day line. The S&P 500 index rose nearly 1% and the Nasdaq composite climbed 1.3%, after both came close to their 21-day lines intraday Tuesday.
Breadth was strong after losers crushed winners on Tuesday.
The small-cap Russell 2000 jumped 2.4%, rebounding from its 50-day line to back above its 21-day.
The Invesco S&P 500 Equal Weight ETF (RSP) gained 0.9%, bouncing back above its 21-day line after testing its 10-week line on Tuesday. The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) climbed 1.2%, rebounding from its 21-day.
Leading stocks rebounded, notably those that held up well on Tuesday.
U.S. crude oil prices fell 1.6% to $76.64 a barrel.
The 10-year Treasury yield fell five basis points to 4.27% after soaring Tuesday.
The indexes rebounding from or near key levels suggests that Tuesday’s sell-off was a one-off, or at least that a pullback won’t be straight down.
Holding around these levels for several days or a few weeks could be ideal. That would keep the Nasdaq from becoming significantly extended right away yet again. It would also let leading stocks forge new buying opportunities. That’s what happened during the late November-early December pause and early January pullback.
A pause also might cool hot bullish sentiment. Some 58.8% of investment newsletters were bullish in the latest Investors Intelligence survey, the highest since summer 2021 and approaching the extreme 60% level. Excessive bullishness is often associated with at least short-term market tops.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) popped 2%, with AppLovin stock in the ETF. The VanEck Vectors Semiconductor ETF (SMH) also gained 2%, with Nvidia stock the largest holding by far.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) jumped 5.5% and ARK Genomics ETF (ARKG) leapt 4.4%. Twilio stock is a notable Ark Invest holding, though Cathie Wood has been slashing her stake in the communications software maker.
SPDR S&P Metals & Mining ETF (XME) rebounded 1.9%. SPDR S&P Homebuilders ETF (XHB) bounced 1.8%. The Energy Select SPDR ETF (XLE) edged down 0.1% and the Health Care Select Sector SPDR Fund (XLV) advanced 0.9%. The Industrial Select Sector SPDR Fund (XLI) rebounded 1.7%.
The Financial Select SPDR ETF (XLF) rose nearly 1%. The SPDR S&P Regional Banking ETF (KRE) climbed 1.9%.
Time The Market With IBD’s ETF Market Strategy
Nvidia Stock Rises
Nvidia stock rose 2.5% to 739 on Wednesday, a fresh closing high. The AI chip leader now has a $1.825 trillion market cap vs. $1.814 trillion for Google. NVDA stock passed Amazon’s valuation on Tuesday. Amazon is now at $1.776 trillion.
Nvidia is now the third-most valuable Magnificent Seven stock behind Microsoft (MSFT) ($3.042 trillion) and AAPL stock ($2.842 trillion).
Meta Platforms (META) ($1.216 trillion) and Tesla (TSLA) ($601 billion) round out the Mag 7.
Nvidia earnings are due Feb. 21, with massive implications for the chip sector, AI plays and the broader market rally.
Apple Stock Slides
Apple stock was a drag on the major indexes, dipping 0.5% to 184.15 on Wednesday, down 2.5% so far this week. The iPhone giant did managed to hold its 200-day line. But the relative strength line continues to skid to a 52-week low.
AAPL stock edged lower Wednesday night as Buffett’s Berkshire disclosed it slightly trimmed its Apple stake in the fourth quarter.
What To Do Now
The market rally remains in good shape, with the major indexes not far from record highs.
Aggressive investors could have nibbled at some buying opportunities Wednesday. Those will probably work if the market rally moves higher, but being aggressive going in means you have to be nimble on the way out.
There’s nothing wrong with standing pat with current exposure, waiting for new setups and buying opportunities.
So keep working on your watch lists.
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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