The Dow Jones Industrial Average pared gains to trade near 1.5% in Thursday afternoon trading. Strong reports on the profits of caterpillar (CAT), Honeywell (HON) and McDonald’s (MCD) pushed up the blue chip index.
The S&P 500 traded flat after rising nearly 1%, stuck below resistance at its 50-day moving average. The Nasdaq composite is down nearly 1%, even though the Russell 2000 Small Cap Index is more than 1% higher.
Crude oil rose more than 1% to trade at $89.27 a barrel. The yield on the 10-year Treasury note broke through the psychological level of 4%, falling to 3.92%.
Volume was lower on the NYSE and Nasdaq compared to the same time Wednesday.
US GDP hit 2.6% in the third quarter, reversing two quarters of contraction earlier this year.
Initial jobless claims rose slightly to 217,000 from 214,000 last week. The four-week average rose to 219,000. Last week’s numbers remained unchanged.
Meta, Facebook’s parent company, sold off strongly after the company forecast a large spending budget for 2023, despite declining growth and limited ad revenue. The stock is now trading at its lowest level in six years.
The selloff follows bearish reports of Alphabet (GOOGL) and Dow Jones component Microsoft (MSFT) earlier this week.
Apple’s revenue on the bridge
Dow Jones component Apple (AAPL) reports fiscal fourth quarter results after Thursday’s closing bell, with analysts looking for earnings of $1.27 per share on $88.8 billion in revenue. Sales are expected to grow just 6.5% year-over-year. AAPL shares are testing their 10-day moving average.
The company saw strong sales for its high-end iPhones during the quarter, according to The Wall Street Journal. In July, the tech titan said its iPhone sales continued to grow despite lockdowns in China and slowing consumer demand.
However, quarterly earnings growth has slowed since peaking at 119% in March 2021. This percentage has gradually declined over the past five quarters, dropping to 110%, 70%, 25%, 9% and decreasing to -9%. in June.
This reversed momentum is a dangerous signal for the whole market after major outbursts at Microsoft, Alphabet and Meta.
How can a rally attempt gain traction when the most widely held stocks plunge into a bear market?
Revenues from Intel, leader of the Dow Jones
Slowing PC demand will likely hurt Intel‘s (INTC) numbers, expected after the close.
FactSet estimates suggest a sharp decline in revenue of 21% to $15 billion, with net income down 93% to $494 million. The chipmaking stalwart has raised $861 million from the mobileye (MBLY) IPO Wednesday. INTC is down more than 1% in late trading Thursday.
Also on the bridge, Amazon(AMZN)’s cloud and ad business will likely offset the slowdown in its e-commerce business, but weaker Azure growth at Microsoft could signal problems in that market. Shares fell more than 3% in the afternoon.
Biotech Leader and Stock IBD Leaderboard Summit (VRTX) is also on deck. The shares crossed a buy point of 306.05 in a flat basis, falling more than 7% and triggering a sell signal. They passed their 50-day line this afternoon.
Other solid gains on the Dow Jones
McDonald’s, a component of the Dow Jones, had a strong third quarter, with revenue of $5.87 billion and EPS of $2.68. The fast-food giant is off a four-day winning streak and is approaching a buy point of 271.25.
Shares of Peer Dow and industrial giants Caterpillar and Honeywell also jumped after beating views.
Caterpillar sales rose 21% to $15 billion, with adjusted earnings of $3.95 per share. Honeywell raised its outlook after reporting sales of $8.9 billion and earnings per share of $2.28. In health care, Merck (MRK) rose 2% after beating views. Caterpillar gained 9% while Honeywell jumped more than 4% earlier in the day. Both held on to their gains late in the session.
Wednesday, gas station and convenience store operator United States (MUSA) reported third-quarter net income of $219.5 million, with earnings of $9.28 per share, compared with $104 million and $3.98 per share, respectively, last year.
MUSA shares are above a buy point at 303.19 in a flat basis.
In health care, Molina (MOH) beat views on Wednesday with sales of $7.9 billion and earnings of $4.36 per share. The MOH fell more than 3% late in the session. Watch for sell signals should the trend persist.
Stocks break out today
The Innovator IBD 50 (FFTY) ETF rose 0.5%.
arch capital (ACGL) exits consolidation with a buy point of 50.83.
BP (BP) is in a cup base with handle and exceeds the buy point of 32.98.
Be sure to follow Vidya Ramakrishnan @IBD_Vidya on Twitter for more stock market news.
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