Dow Jones futures rose early Friday morning, along with S&P 500 futures and Nasdaq futures, on news of a high-level U.S.-Russia meeting. The stock market rally sold off Thursday, with the S&P 500 tumbling back below its 200-day line as Russia-Ukraine tensions once again were front and center.
Roku (ROKU) reported mixed earnings after the close. Roku stock plunged overnight.
Deere (DE) earnings are on tap Friday morning, with DE stock holding around a buy zone. Apple (AAPL) and UNP stock are also showing some strength. But Nvidia (NVDA) sold off following earnings. Tesla (TSLA) reversed downward amid some negative headlines.
Russia Invasion Threat ‘Very High’
Secretary of State Anthony Blinken will meet with Russian Foreign Minister Sergey Lavrov late next week, a State Department spokesman said Thursday night, “provided there is no further Russian invasion of Ukraine.” That raised some hopes for a peaceful resolution to the ongoing Ukraine crisis.
Earlier, President Joe Biden warned that the threat is “very high” that Russia will likely invade Ukraine “in the next several days.”
U.S. officials have said Russia is massing additional forces near the Ukraine border, refuting Kremlin claims that it’s withdrawing some troops.
Russia accused Ukraine of genocide on Thursday, offering a possible pretext to invasion. Moscow also expelled the No. 2 official at the U.S. embassy from the country.
Dow Jones Futures Today
Dow Jones futures rose 0.5% vs. fair value on news of the Blinken-Lavrov meeting. S&P 500 futures climbed 0.55% and Nasdaq 100 futures gained 0.6%.
The 10-year Treasury yields rose 1 basis point to 1.98%. U.S. crude oil prices fell slightly.
Roku earnings topped views Thursday night, along with user levels. But revenue came in light and the streaming media platform guided low on Q1 revenue. Roku stock fell 22% overnight. Shares already sold off 10% in Thursday’s regular session to 144.71. Roku stock is set to break below its late January lows to its worst level since mid-2020. Shares peaked at 490.76 in July 2021.
Heading into Friday’s earnings, Deere stock fell 2.6% to 380.53 on Thursday, back below the 388.20 handle buy point. DE stock also seems to be forming a new handle for the broader consolidation going back nine months. The relative strength line for DE stock has been trending higher for several weeks and is at a nine-month highs.
Stocks In Focus
Apple stock fell 2.1% to 168.88 on Thursday, just below its 50-day line. But it’s not far from a cup-with-handle buy point of 176.75. The RS line for AAPL stock is holding at record highs.
Union Pacific (UNP) dipped 1.1% to 250.99. It’s just below a 256.21 buy point in a flat base that’s just 8% deep, according to MarketSmith analysis. The rail operator reclaimed its 50-day line on Tuesday. Even at the traditional buy point, UNP stock would be close to its 50-day line.
On the downside, Nvidia stock tumbled 7.6% on Thursday. Nvidia earnings and guidance were strong late Wednesday, though there were some concerns about margins. NVDA stock had been coming up to short-term highs, a trendline and a falling 50-day line, signaling a possible aggressive entry. But Nvidia stock was turned away hard. The negative Nvidia earnings reaction reflects how unforgiving the current market can be when it comes to earnings.
Tesla stock sank 5.1% to 876.35. On Thursday, the National Highway Traffic Safety Administration announced yet another Tesla probe, this time involving Autopilot “phantom braking” in up to 416,000 Model 3 and Model Y vehicles. Complaints of random, repeated braking, sometimes at highway speeds, have mounted in recent months. Also, Consumer Reports named the Ford Mustang Mach-E as its top EV pick, replacing the Tesla Model 3. TSLA stock has traded relatively tightly in recent weeks after weeks of whipsaw action. But Tesla stock has been hitting resistance at the 21-day moving average. Holding the 200-day line is important, while there is not a clear early entry right now. The official buy point is 1,208.10.
Stock Market Rally
The stock market rally opened solidly lower and extended losses, with Russia-Ukraine news in focus. The Dow Jones Industrial Average fell 1.8% in Thursday’s stock market trading. The S&P 500 index sank 2.1%. The Nasdaq composite tumbled 2.9%. The small-cap Russell 2000 slumped 2.6%
The 10-year Treasury yield fell 8 basis points to 1.97%. April gold futures rose 1.6% to $1,902 per ounce, the highest price since June. Investors rushed into U.S. Treasuries and gold as safe havens amid Russia fears.
Crude oil futures fell 2% to $91.76 a barrel. While Russia tensions have supported energy prices, Iran claims that a new nuclear deal is nearing. A new Iran nuclear deal would pave the way for a big increase in Iranian oil exports.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) gave up 2.8%, while the Innovator IBD Breakout Opportunities ETF (BOUT) was off 0.8%. The iShares Expanded Tech-Software Sector ETF (IGV) dived 4.4%. The VanEck Vectors Semiconductor ETF (SMH) skidded 4%, with Nvidia stock a major holding.
SPDR S&P Metals & Mining ETF (XME) dipped 0.5% and Global X U.S. Infrastructure Development ETF (PAVE) lost 1.6%. U.S. Global Jets ETF (JETS) descended 2.6%. SPDR S&P Homebuilders ETF (XHB) also fell 2.6%. The Energy Select SPDR ETF (XLE) edged down 0.2% and the Financial Select SPDR ETF (XLF) retreated 2.5%. The Health Care Select Sector SPDR Fund (XLV) gave up 1.6%
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) skidded 6.4% and ARK Genomics ETF (ARKG) sold off 5.45%. Tesla stock remains the No. 1 holding for Ark Invest’s ETFs. Roku stock also is a notable ARK holding.
Market Rally Analysis
The stock market rally retreated Thursday amid rising concerns about a Russia invasion of Ukraine.
Setting aside any geopolitical news, the market’s technical action is poor. The S&P 500 index fell sharply back below its 200-day line. The Dow Jones undercut the low of its recent range. The S&P 500 and Nasdaq composite are still technically within a recent range, but closed at their worst levels since late January. The S&P 500 index once again closed below the low of its Jan. 31 follow-through day, a bearish signal. For the first time, the Nasdaq composite also closed below its FTD low.
The risks are growing that the major indexes break below their Jan. 24 lows, signaling a new leg in a market correction.
If the market rally were to rebound, it would face a number of hurdles. The S&P 500 bouncing back above the 200-day line and all the major indexes reclaiming the 21-day lines would be small, initial steps. Moving decisively above their early February highs, which would coincide with the S&P 500’s 50-day line, would be a stronger signal. But there would still be overhead resistance, especially for the growth-heavy Nasdaq.
The headline-driven nature of the market, and the risk that the latest news will be refuted or overtaken moments later, adds to the uncertainty.
Gold and gold stocks are leading right now, which gives a sense of the general market. But if Russia-Ukraine tensions ease, gold and other safe-haven plays could quickly reverse.
Even if the current Russia crisis wanes, the market will still be dealing with hot inflation and a Federal Reserve about to embark on aggressive rate hikes.
What To Do Now
The stock market rally, under pressure for several days, is struggling. The S&P 500 and Nasdaq are threatening to break below their recent ranges. Growth stocks are weak, with a few exceptions such as Apple. Leading stocks are not doing well, outside a few pockets of strength such as energy, fertilizer and hotels. But even those groups can swing dramatically on headlines, and can be hard to hold.
The market is a minefield, with seemingly positive paths quickly turning treacherous. It’s not a good time for significant exposure. If you have some winning stocks, you may want to take at least partial profits to make sure the trades end up positive. If you have losing positions, you should be looking to get out.
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