Dow Jones Futures: Market Rally Keeps Rising, But Here’s Why The S&P 500 Could

Dow Jones futures tilted lower changed early Wednesday, along with S&P 500 futures and Nasdaq futures, with Target earnings in focus. A strong stock market rally Tuesday morning faded, briefly turning mixed after Russian-made missiles hit Poland.

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Target (TGT) headlined Wednesday morning earnings, while chip giant Nvidia (NVDA) looms large Wednesday night.

The stock market rallied Tuesday morning on yet another tame inflation report. Walmart (WMT) earnings also helped. So did Warren Buffett’s Berkshire Hathaway disclosing that it took a big new position in Taiwan Semiconductor (TSM).

The major indexes pared gains somewhat, but then quickly turned mixed on the reported Russian missile news. But the Dow recovered to turn positive again.

Poland Missile Crash

In midafternoon Tuesday, stocks faltered on reports that Russian missiles hit Przewodow, a Polish village just across the border from Ukraine, killing two people. The crash was from a Ukrainian air-defense system, according to NATO’s chief Wednesday.

Setting aside the Poland missile crash, the market rally could be due for a pause after a strong run and the S&P 500 nearing key resistance.

Still, MercadoLibre (MELI) and Pure Storage (PSTG) cleared buy points on Tuesday, though PSTG stock backed off the official entry for a second straight session.

Retail Earnings

Target, Lowe’s (LOW) and TJX Cos. (TJX) report earnings early Wednesday, along with October retail sales. That follows Dow Jones giants Walmart and Home Depot (HD) earnings early Tuesday. WMT stock jumped 6.5% on strong earnings, guidance and a big buyback, breaking out from a handle buy point. HD stock climbed 1.6%, trying to forge a handle.

Target earnings came in well below views, though sales narrowly beat views. The discount giant warned on the holiday fourth quarter, saying spending patterns changed in October, at the end of fiscal Q3.

Target stock dived more than 10%. TGT stock rose 3.6% Tuesday, but hit resistance at the 200-day line, close to a bottoming-base buy point. WMT stock, which jumped on its results Tuesday, fell slightly.

Lowe’s earnings and sales topped views. The home improvement giant raised full-year EPS and revenue targets. LOW stock popped 2.5% early Wednesday. Lowe’s advanced 2.15% following Tuesday’s Home Depot earnings, working on a bottoming base.

TJX stock climbed 2.9%, still in range from a 10-month cup-with-handle base.

Nvidia reports Wednesday night. Nvidia stock rose 2.3% on Tuesday, adding to big gains over the past month, buoying the chip sector. Strong earnings and guidance from Nvidia, as well as from chip-equipment giant Applied Materials (AMAT) on Thursday night, will be important for the sector and broader market rally.

The video embedded in this article discussed Tuesday’s market rally and analyzed MELI stock, Pure Storage and Albemarle (ALB).

MercadoLibre stock has joined IBD Leaderboard and was Tuesday’s IBD Stock Of The Day. ALB stock is on the Leaderboard watchlist. MercadoLibre and PSTG stock are on SwingTrader. Pure Storage is on the IBD 50.

Dow Jones Futures Today

Dow Jones futures were just below fair value. S&P 500 futures edged lower and Nasdaq 100 futures fell 0.1%.

The 10-year Treasury yield dipped 2 basis points to 3.78%.

Amazon.com (AMZN) began cutting corporate and tech workers on Tuesday, according to LinkedIn posts from affected Amazon staff. The e-commerce and cloud-computing giant reportedly plans to cut 10,000 jobs. AMZN stock fell 1% overnight.

On Tuesday night, former President Donald Trump launched his 2024 candidacy for the White House.

October retail sales are due at 8:30 a.m. ET. Economists expect the Commerce Department to report a 1% gain, or just 0.2% excluding autos and gas.

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

The stock market rally opened strongly as the producer price index came in lower than expected, with core PPI flat vs. September. Walmart earnings also helped. TSM stock skyrocketed 10.5% on Tuesday night news that Warren Buffett had take a stake. Buffett’s Berkshire also took new positions in as well as new stakes in Louisiana-Pacific (LPX) and Jefferies (JEF).

But the major indexes pared gains, with the Dow briefly turning negative on the report of Russian missiles striking Poland.

The Dow Jones Industrial Average edged up 0.2% in Tuesday’s stock market trading, even with WMT stock and Home Depot providing a lift. The S&P 500 index climbed 0.5%. The Nasdaq composite popped 1.45%. The small-cap Russell 2000 gained 1.5%.

The 10-year Treasury yield fell 7 basis points to 3.8%. The U.S. dollar also declined.

U.S. crude oil prices rose 1.2% to $86.92 a barrel after briefly spiking more than 3% on the Russian missile news. Natural gas futures advanced 1.7%.

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