Dow Jones futures, S&P 500 and Nasdaq Futures all fell early on Friday. The June jobs report is a major factor.
Stocks fell Thursday after strong economic data sent Treasury rates soaring. Indexes, however, pared some of their morning losses. ADP Employment Report estimates that private payrolls soared by 497,000 in the month of June, which is more than twice what was expected. ISM's services sector index increased more than expected. Initial claims for unemployment rose modestly but the four-week mean fell, while continuing claims declined. Last month, announced layoff plans decreased significantly.
Meta Platforms (META), a Twitter competitor, did well with its Threads application. It attracted 30 million signups in fewer than a single day. This is the fastest download ever. Twitter has threatened to take legal action against its new competitor. Elon Musk (TSLA), CEO of Tesla, which owns Twitter, has said that "cheating" was not acceptable.
Microsoft (MSFT), boosted by a higher price target, rallied.
Visa (V), Mastercard (MA), and DexCom DXCM are all in the buy zone. Nvidia's (NVDA), continues to be traded tightly. HubSpot (HUBS), which had a rough day on Thursday, rallied from key support.
The FDA has approved Biogen’s Alzheimer’s treatment Leqembi. This was announced late Thursday. Biogen and Eisai have already received accelerated approval. However, a full FDA approval will increase their chances of receiving Medicare reimbursement for Leqembi.
Biogen stock has been halted. The shares fell 0.3% in Thursday's regular trading session. Eli Lilly's (LLY) Alzheimer's drug is currently being tested. Overnight, the stock price rose. LLY shares fell 0.5% on Thursday.
IBD Leaderboard includes META, Nvidia, and HubSpot. Microsoft is listed on IBD's Long-Term Leaders. IBD Big Cap 20 includes HUBS.
This article includes a video that discusses Thursday's stock market and analyzes MSFT, Adobe (ADBE), and HubSpot.
Job Report: What to Expect
The Labor Department will publish the June jobs report by 8:30 a.m. ET.
The economists predict a decrease of 213,000 new jobs from the 339,000 in May. The unemployment rate is expected to drop from 3.6% to 3.6%. The average hourly wage growth will slow down to 4.2%, from 4.3% in May.
ADP has a poor track record in predicting Labor non-farm payrolls. The odds of a Fed rate increase on July 26 are 93%. The odds of a further quarter-point rate hike in November have risen to approximately 56%. This is a significant increase from just a few weeks ago.
Dow Jones Futures Today
Dow Jones futures have lost a small fraction of their fair value. S&P 500 Futures lost less that 0.1%, and Nasdaq100 futures dropped 0.2%.
The yield on the 10-year Treasury rose by 2 basis points, to 4.06%.
Treasury yields, Dow futures and Dow Futures will be affected by the jobs report before the opening.
Keep in mind that overnight trading in Dow futures or elsewhere may not necessarily translate to actual trading during the next regular session of the stock market.
Stock Market Rally Analysis
Stocks fell on the back of rising yields after ADP's report. However, indexes closed off their lows. The 10-year Treasury yield increased 10 basis points, to 4.04%. This is a new four-month high. The yield on the 2-year bond rose 5 basis points, to 5%, after reaching a 16-year intraday high of 5.12%.
In Thursday's stock trading, the Dow Jones Industrial Average fell by 1.1%. The S&P 500 and Nasdaq Composite both fell by 0.8%. Russell 2000, the small-cap index, fell 1.6% following Wednesday's 1% drop.
The Nasdaq 500 and S&P 500 both found support at their 10-day moving mean. The Dow Jones fell below both its 10-day and its 21-day lines. It was not far away from its 50-day line.
The market breadth on Thursday was poor, with losers outnumbering winners by 6 to 1 on the NYSE (NYSE) and 3 to 1 on the Nasdaq. This followed a negative market breadth on Tuesday.
Invesco's S&P Equal Weight Index ETF (RSP), which tracks the 500-stock index, lost 0.8%. The First Trust Nasdaq 100 Equal Weighted Index Index ETF(QQEW), however, fell by 1.3%. Both ETFs recovered from their 21-day line.
The U.S. crude price rose by 1 cent, to $71.80 per barrel.
Stocks that are leading the market declined further on Thursday. Some stocks found support at important levels, but others did not.
Innovator IBD ETF (FFTY), which tracks growth ETFs declined by 2%. The iShares Extended Tech-Software Sector ETF(IGV) lost just over 1%. IGV is heavily influenced by MSFT. VanEck Vectors Semiconductor ETF SMH fell by 1.2% following Wednesday's loss of 1.9%. NVDA is the top holding in SMH. The No. 1 holding of SMH is NVDA.
ARK Innovation ETFs (ARKK and ARKG) both fell 3.8%, reflecting the more speculative stories stocks.
Global Jets (JETS) fell 2.2%. SPDR S&P homebuilders ETF XHB slid 2%. Energy Select SPDR ETF XLE (XLE) fell by 2.25%, and Health Care Select Sector SPDR Fund XLV (XLV) declined by 0.8%.
The Industrial Select Sector SPDR Fund XLI lost 0.75%.
XLF KRE (slid by 0.6%.
META's stock fell 0.8% to 291,99, but held strong after climbing by 2.9% Wednesday to a 17 month high in anticipation of Threads' launch.
In the first 16-hour period, more than 30 millions people signed up for Instagram's text-based threads. According to a media report citing Meta data, the number of sign-ups in the first 24 hour surpassed 48 million. Even the lower number is the highest ever first-day download. ChatGPT, by comparison, had 1 million downloads within its first five-day period.
Threads, with its celebrity users, journalists of high profile and other Twitter power users posting quickly, appears to be Twitter's biggest threat. Since Elon Musk purchased Twitter for $44 Billion last fall, the site has been struggling. Musk's restrictions have alienated many users, and advertisers in particular.
A Twitter lawyer threatened to take legal action against Meta. Alex Spiro, a lawyer for Twitter, accused Meta in a letter sent to Meta CEO Mark Zuckerberg of hiring former Twitter employees and misappropriating Twitter's intellectual property and trade secrets.
Musk wrote in response to a Twitter tweet regarding the legal threat from Twitter, "Competition's fine, but cheating isn't."
Meta responded to Twitter's legal threats by saying "Nobody on the Threads engineering staff is a former Twitter worker."
Microsoft's stock rose 0.9%, to 341.27. It has been bouncing off its 21-day line. Morgan Stanley increased its MSFT price target from 335 to 415. Since hitting a record 351.47 on 16 June, shares have been consolidating for the last few weeks. Investors may view the recent pause in shares as a high-handle to a consolidation that will last until late 2021. Investors should wait until there is a longer pause to invest in Microsoft.
Stocks to Watch
Visa shares fell 0.2% to 238,88. They continue to remain above the flat-base purchase point of 235,57. According to MarketSmith's analysis, Mastercard shares fell 0.3% to 393.14, barely above the 392.20 buy-point. Both payment giants made early entries in the last week but are still within reach of the 50 day line.
Nvidia shares fell 0.5%, to 421.03, which is above their 10-day line. The shares are not far from the 21-day line but haven't reached that short-term price in two months. NVDA's stock is in a tight pattern of three weeks that could become a four-week pattern after Friday. Tests of the 21-day or 400-level could provide a nice shakeout, and allow the 50-day line to close the gap. The official buy-point is 439.90 but the high of Wednesday at 431.77 could be a good entry point.
DexCom's stock fell 0.3%, to 127.70. It closed above its flat-base purchase point of 126.44 after finding support for the third consecutive session at its 21-day-line. DXCM has been struggling to break out of a range since the beginning of November. Since late January, the shares have been trending higher in choppy fashion.
HubSpot managed a 0.1% increase to 521.34, closing over the 21-day line. The shares fell to a low of 497.03 intraday, but recovered from the 10-week line. Investors may have been shaken up if they bought HUBS shares as the company tried to clear a tight four-weeks at the end June. It could still set up.
What to Do Now
The market's new or renewed pullback can be a positive thing, as it could create new opportunities for buying by allowing the market to drop below key levels.
Investors don't realize that the current decline will be mild again or that their position will hold up well.
This is the time to think about trimming your profits and cutting losses quickly, especially if you've just bought something new.
Investors should also look out for stocks that are holding their key levels, and showing relative strength. Examples include Visa, Nvidia, and HUBS. In the next few days, watchlists may require a serious update. This work will pay off when the markets rally again.
The Big Picture is a daily read to keep up with market trends, leading stocks and sectors.