The Dow Jones Industrial Average and major stock market indexes ticked higher in the first hour of Friday’s session, adding points after Thursday’s monster short-covering rally. Amazon (AMZN) trapped bulls looking for a Friday rally repeat after warning about declining AWS growth. Intel (INTC) stunned market watchers, breaking out after another weak quarter. Its 2024 287% growth forecast has forced investors to look past current headwinds.
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Intel got sold after reporting an expected Q1 loss and lowering Q2 earnings guidance in Thursday’s post-market. All eyes were on Amazon at the time, while the megacap soared double-digits in reaction to an upbeat Q1 report.
The tables turned when Intel revealed it gained market share in the first quarter while, at the same time, Amazon warned about declining cloud-computing demand. Traders scrambled to hit their buttons as fast as they could, dropping AMZN to even and lifting INTC into a notable breakout above the 200-day moving average.
The rally and this morning’s bullish action should confirm a successful test of the November-to-April double-bottom pattern. Adding to the bullish picture, INTC stock will also confirm a weekly reversal at the 10- and 50-week lines if the rally holds into the close.
Taken together, the stock could be entering the first major uptrend since the 2021 top.
FactSet estimates forecast this Dow Jones stock will post fantastic 287% earnings growth in 2024 and many investors may be looking for the best entry.
However, the same analysts forecast a 74% earnings drop this year, as Intel works through their well-publicized turnaround plan. Not surprisingly, INTC guided Q2 to another loss during last night’s release, so there’s still plenty of short-term risk on the table.
As CEO Patrick Gelsinger admitted this morning, Intel is just “halfway through the turnaround.”
INTC stock traded nearly 6% higher at the end of the first hour Friday. Both Benchmark and Wedbush upgraded the stock this morning.
First Quarter Blow Ups
First-quarter earnings blowups continued at a feverish pace.
Amazon punished overeager bulls last night, rallying 13 points in reaction to an upbeat report and then collapsing after warning about cloud-computing growth. AMZN stock traded 18 points below the rally high in the first hour, in a bull trap that undermines Big Tech sentiment and buying power.
Even-uglier post-earnings declines in First Solar (FSLR) (13%), Cloudflare (NET) (25%), Snap (SNAP) (19%) and Pinterest (PINS) (17%) continued through the first hour.
PINS and SNAP results affirmed long-term stress in social media advertising revenue, despite the recent Meta Platforms (META) report. Smaller players are the most at risk, as clients direct shrinking budgets into deals with the biggest operators.
The Innovator IBD 50 ETF (FFTY) shook off earnings busts, rising 0.6%.
Chevron (CVX) pared losses early Friday after the oil and gas giant beat Q1 2023 top and bottom-line estimates on a 6.6% year-over-year revenue decline. ExxonMobil (XOM) delivered a mixed report that got buying interest. CVX stock fell 0.2% while XOM stock rallied 2.6%, still in buy range from a 117.28 buy point.
March personal income and personal spending, April consumer sentiment and the Q1 employment report all met or beat expectations, showing no signs of an economic slowdown.
The March personal consumption expenditures (PCE) price index posted a 0.1% uptick, right on expectations. However, the core PCE index has gotten too sticky, meeting 0.3% estimates after last month’s identical reading. On an annual basis, the PCE dropped to 4.6% after 4.7% in February.
This is the Federal Reserve’s favorite inflation gauge.
Dow Jones: Quiet Friday After Stunning Week
The Dow Jones Industrial Average added 0.4% while the S&P 500 gained 0.6%. The Russell 2000 small-cap led with a 1.0% gain. The Nasdaq composite split the difference at 0.5%. NYSE and Nasdaq volume drifted below Thursday levels.
Asian markets were higher across the board after the Bank of Japan kept stimulus measures in place. European markets were mixed.
The 10-year Treasury fell 6 basis points to 3.47%. Bitcoin tested new resistance at the $30,000 level.
Gold slumped eight bucks under the $2,000 level while West Texas Intermediate crude oil settled in the mid-70s. It seems about right, with Americans headed into the summer driving season and supplies well matched with demand.
The Nasdaq, S&P 500 and Dow Jones showed excellent strength Thursday and remain well above their 50-day and 200-day moving averages. The rally was a step in the right direction, but market indexes need higher prices and more time to cancel out recent distribution days. Until then, IBD’s more cautious “market under pressure” outlook makes sense.
Follow Alan Farley on Twitter at @msttrader.
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Source: https://www.investors.com/market-trend/stock-market-today/dow-jones-rally-gets-love-after-amazon-traps-bulls-intel-breaks-out-on-growth-forecast/?src=A00220&yptr=yahoo