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Dow Jones Futures Fall On Weak Microsoft Guidance; Tesla Earnings On Tap


Dow Jones futures fell overnight, along with S&P 500 futures and Nasdaq futures, as Microsoft (MSFT) guidance overrode better-than-feared earnings. ASML (ASML), Boeing (BA) and Tesla (TSLA) are on tap Wednesday.




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The stock market rally traded in a relatively narrow range Tuesday after big gains in the prior two sessions. The major indexes closed mixed. The Nasdaq retreated as the Justice Department filed a second antitrust suit vs. Google parent Alphabet (GOOGL).

Microsoft earnings edged past views on strong cloud-computing growth. But the software giant gave weak guidance. MSFT stock, up strongly initially, reversed lower.

Intuitive Surgical (ISRG) and Texas Instruments (TXN) also reported. ISRG earnings missed with in-line revenue. Texas Instruments slightly beat, but guided lower. ISRG stock tumbled while TXN stock fell slightly.

Early Wednesday, chip equipment giant ASML reports, with fellow semiconductor equipment makers Lam Research (LRCX), Teradyne (TER) and Wolfspeed (WOLF) due after the close.

Boeing and Freeport-McMoRan (FCX) also report early Wednesday.

Tesla will headline earnings Wednesday night. Tesla earnings will be important but investors will likely focus on 2023 guidance, especially following big price cuts worldwide to start the year. Those price cuts have boosted Tesla demand — at the expense of margins — but will that boost last?

After the close, Tesla said it will spend $3.6 billion at or around its original “Gigafactory” outside Reno, Nevada. It’ll be used for a Tesla Semi line and for mass producing 4680 battery cells.

Tesla stock fell 2% overnight. Shares edged up 0.1% on Tuesday to 143.89, nearing the 50-day line. TSLA stock is up nearly 17% so far in 2023.

Dow Jones Futures Today

Dow Jones futures fell 0.2% vs. fair value. S&P 500 futures declined 0.45%. Nasdaq 100 futures sank 0.7%, reversing from modest gains initially. MSFT stock is a Dow Jones, S&P 500 and Nasdaq component.

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 actionable stocks in the stock market rally on IBD Live


Stock Market Rally

After a NYSE glitch disrupted some 100 tickers at the open, the stock market rally traded modestly lower in the morning before gradually improving to mixed.

The Dow Jones Industrial Average rose 0.3% in Tuesday’s stock market trading. The S&P 500 index dipped 0.1%. The Nasdaq composite declined 0.3%. The small-cap Russell 2000 gave up 0.25%.

U.S. crude oil prices fell 1.8% to $80.13 a barrel. Natural gas slumped 5.5% after rising more than 6% Monday.

The 10-year Treasury yield fell basis points to 3.47% amid mixed to weak manufacturing data.


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DOJ Sues Google Again

The DOJ sued Google over its online ad dominance, seeking to force the company to divest certain assets. In October 2020, the Justice Department filed an antitrust suit over alleged misuse of online search power. Groups of states have three antitrust suits against Google, including one involving advertising.

Google stock fell 2.1% to 97.70 on Tuesday, although that’s after running 10% higher in heavy volume in the prior three sessions.

Google reports Q4 earnings on Feb. 2.

ETFs

Among growth ETFs, the Innovator IBD 50 ETF (FFTY) and Innovator IBD Breakout Opportunities ETF (BOUT) edged higher. The iShares Expanded Tech-Software Sector ETF (IGV) declined 0.6%. Microsoft stock is a major IGV component.

The VanEck Vectors Semiconductor ETF (SMH) fell 0.7%, ASML stock is a big holding, with TXN, LRCX and TER also in SMH.

Reflecting stocks with more speculative stories, the ARK Innovation ETF (ARKK) sank 1.6% and ARK Genomics (ARKG) lost 1.4%. Tesla stock is a major holding across Ark Invest’s ETFs. Cathie Wood’s Ark has been beefing up its TSLA position in recent weeks, adding shares are recently as Monday.

The SPDR S&P Metals & Mining ETF (XME) rose 0.2%, and the Global X U.S. Infrastructure Development ETF (PAVE) climbed 0.4%. U.S. Global Jets (JETS) blipped lower. SPDR S&P Homebuilders ETF (XHB) advanced 0.4%. The Energy Select SPDR ETF (XLE) ceded 0.4% and the Financial Select SPDR ETF (XLF) nudged up 0.1%. The Health Care Select Sector SPDR Fund (XLV) fell 0.7%.


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Microsoft Earnings

Microsoft earnings fell 6% vs. a year earlier, excluding various items, just beating fiscal Q2 views. Revenue rose 1.9%, the smallest increase in more than six years and missing forecasts. Revenue from Azure and other cloud-computing services jumped 31% — 38% excluding currency swings — slightly exceeding consensus views. Analysts had been worried about Azure growth.

Investors were relieved by the Dow Jones tech titan’s decent results. But Microsoft gave weak guidance, warning about decelerating activity.

MSFT stock fell 1% after initially jumping 5% or more after…



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