Dow Jones futures were little changed overnight, along with S&P 500 futures and Nasdaq futures. Strike crowd (CRUD) soared overnight and topped major earnings reports, while Federal Reserve chief Jerome Powell looms on Wednesday morning.
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The stock market rally suffered heavy losses on Tuesday, with the Nasdaq leading the declines. Apple (AAPL) and tesla (TSLA) continued to fall as software names sold off. Meanwhile, bank stocks continued to perform well, while home builders held steady.
Bitcoin jumped to a record high above $69,000 on Tuesday morning but pulled back sharply lower. Cryptocurrency Related Stocks Like Coinbase (CURRENCY) and Digital Marathon (MARA) also fell.
Cybersecurity leader CrowdStrike rises as database software stocks Box (BOX) and sofa base (BASE) rose in their earnings reports Tuesday night. rare technology (STRANGE) sank while Ross Stores (Rost) went down a little.
Featured Retailer Abercrombie & Fitch (ANF) due early Wednesday.
CRWD stock is in the IBD 50.
The video included in the article analyzes Tuesday's market action and analyzes Duolingo (by), PNC Financial Services (PNC) and Lennar (LEN).
Federal Reserve Chief Powell Testifies Wednesday
Federal Reserve Chairman Jerome Powell testifies before the House Financial Services Committee on Wednesday at 10 a.m. ET. He will speak before the Senate Banking Committee on Thursday. Powell is expected to reinforce his and other policymakers' recent comments that there is no rush to cut rates.
Markets now expect the Fed's rate cuts to begin in June, although those odds have strengthened in recent days.
The ISM services index fell slightly more than expected in February on Tuesday, but still showed continued growth. On Friday, the ISM manufacturing index unexpectedly fell and continued to contract.
On Friday, the Labor Department will release the February employment report.
Dow Jones Futures Today
Dow Jones futures were stable against fair value. S&P 500 futures rose 0.1%. Nasdaq 100 futures rose 0.3%.
The 10-year Treasury yield rose to 4.15%.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze leading stocks and the market on IBD Live
Profits
CrowdStrike's earnings beat and the cybersecurity leader offered strong guidance. CRWD shares soared more than 20% overnight. Shares fell 5.2% to 297.56 in the regular session on Tuesday, closing above the 50-day line.
Box's earnings surpassed, although revenue simply fell short. Case stocks rose modestly in expanded trading after initially skyrocketing. Shares fell 2.3% to 27.25 on Tuesday, but found support at the 200-day line after jumping just over 5% on Monday.
Couchbase reported a smaller-than-expected loss, while revenue peaked. BASE shares rose more than 10% overnight. Shares fell 3.9% on Tuesday to 26.87, falling below the 21-day line but still near a two-year high.
The extraordinary results exceeded, but the forecasts disappointed. ODD stock plummeted in long action. Shares fell 1.1% to 45.89 on Tuesday. The specialty beauty products firm has a consolidation buy point of 50.36.
Ross Stores' profits beat expectations as the discount clothing retailer raised its dividend and announced a new buyback. ROST shares fell 1% in overnight trading. Shares fell 0.5% on Tuesday to 149.17, just shy of all-time highs.
Stock market rally
The stock market rally had a rough day, although major indices pared their losses shortly before the close.
The Dow Jones Industrial Average fell 1% in trading on Tuesday. The S&P 500 index fell 1%. The Nasdaq composite fell 1.65%. The small-cap Russell 2000 fell 1%.
The Nasdaq has given up its strong gains from last Thursday and Friday to reach all-time highs. While leaders in AI chips, such as NVIDIA (NVDA) still maintain all or most of those gains, other technologies have fallen back sharply.
Software was a big loser on Tuesday as investors wary of CrowdStrike and following recent earnings sell-offs in Palo Alto Networks (PANW), Snowflake (SNOW) and GitLab (GTLB).
Meanwhile, Apple shares sank 2.8%, weighing on major indexes and hitting their worst levels since late October. This came amid new evidence of falling iPhone sales in China. That news also affected iPhone chip makers like Qorvo (QRVO).
Tesla shares fell 3.9% after Monday's 7.2% drop, approaching 2024 lows amid several negative headlines. The relative strength lines of both giants are at 52-week lows, reflecting their underperformance against the S&P 500 index.
The Nasdaq, which rose slightly again late last week, has fallen from 5.8% above the 50-day moving average to just 3.3%. It tested support at the 21-day line on Tuesday before bouncing slightly. In addition to Bitcoin reversing lower, some of the speculative froth in the market may be fading, at least temporarily.
But after last week's big gains or losses, there aren't many tech plays in position.
On the positive side, several banking stocks, especially super-regional banks, have been breaking out or showing buy signals in recent days. Homebuilders and many construction-related names continue to do well.
Bitcoin hit a record high of $69,208.79 on Tuesday morning but sold off sharply, briefly undercutting $60,000 before breaking back above $63,000 around 5 p.m. ET. COIN shares hit a two-year high before falling 5.4%. Marathon Digital plummeted 13.4% as the upcoming bitcoin halving will reduce rewards for bitcoin miners.
The 10-year Treasury yield fell 8 basis points to 4.14%, below the 200-day moving average for the first time in weeks.
US crude oil prices fell 0.75% to $78.15 a barrel.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (VAT) fell 3.8%, with CRWD stock being a notable holding. The VanEck Vectors Semiconductor ETF (SMH) fell 1.5%.
Reflecting stocks with more speculative histories, ARK Innovation ETF (ARKK) fell 3.5% and the ARK Genomics ETF (ARKG) lost 3.2%. Coinbase is the number one holding among Ark Invest ETFs. Tesla shares are Cathie Wood's second holding.
SPDR S&P Metals & Mining ETF (XME) fell 1.4% and the GlobalTO PAVE) decreased by 0.9%. US Global Jets ETF (JETS) was flat. SPDR S&P Homebuilders ETF (XHB) lost 1.1%. The Energy Select SPDR ETF (XLE) gained 0.7% and the Healthcare Select Sector SPDR Fund (XLV) fell 0.75%.
The SPDR Select Industrial Sector Fund (XLII) fell 0.8%.
The Financial Select SPDR ETF (Four. Five) increased a fraction. The SPDR S&P Regional Banking ETF (CREATE) jumped 4%.
Time the Market with IBD's ETF Market Strategy
What to do now
The market rally has retreated and many software names have broken key levels. Several recent income gaps, including Duolingo and Auto Li (L.I.), have quickly failed. This is because earnings gaps largely worked well during the market rally.
More generally, there aren't many stocks to buy, especially in the technology sector. Instead, investors should probably look to reduce exposure, at least in technology.
While the Nasdaq and S&P 500 have held support at the 21-day line throughout the market rally, at some point they will stop doing so. And even if the market recovers, its stocks may not. So keep that in mind.
Bank stocks are showing strength. That could be a way to maintain overall exposure while reducing AI/tech concentration.
Be sure to run watchlists to spot leaders and emerging sectors.
Read the big picture every day to stay in sync with the market direction and leading stocks and sectors.
Follow Ed Carson on Threads at @edcarson1971 and X/Twitter in @IBD_ECarson for stock market updates and more.
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