Dow Jones Futures: Netflix jumps on subscribers, Google cuts 12,000 jobs after market rally breaks key levels

Dow Jones futures fell slightly early Friday, while S&P 500 futures moved higher and Nasdaq futures rose modestly. Netflix (NFLX) benefited from strong subscriber growth, with energy giant SLB (SLB) on tap. Google older Alphabet (GOOGL) will cut 12,000 jobs as major tech layoffs continue.


The stock market rally retreated for a second straight day on Thursday, with major indices testing or undermining further key levels. The Dow Jones turned negative for 2023.

New economic reports pointed to weaker economic activity, with one major exception: Initial jobless claims matched their lowest level since last April. The overall picture points to rising recession risks, but tight labor markets keep the Federal Reserve aggressive.

Leading stocks are pulling back to varying degrees. Investors will have to wait and see if this pullback is temporary or something more serious.

MELI stock, Medpace Holdings (MEDP), Axon Enterprise (AXON), Vertex Pharmaceuticals (VRTX) and Exxon Mobil (XOM) are names that are holding up relatively well so far.

MEDP shares and Axon Enterprise are on IBD Leaderboard. MercadoLibre and XOM stocks are on the IBD 50. VRTX and SLB stocks are on the IBD Big Cap 20. GOOGL stocks are on the IBD Long-Term Leaders list.

Free market (MELI) was the IBD stock of the day on Thursday. VRTX stock was Wednesday’s.

Dow Jones Futures Today

Dow Jones futures lost 0.1% from fair value. S&P 500 futures rose 0.1%. Nasdaq 100 futures rose 0.5%. NFLX Stocks Boost Nasdaq Futures.

The yield on 10-year Treasury bills rose 4 basis points to 3.44%.

Crude oil futures were up about 1%, about $81 a barrel.

Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.

Strong growth of Netflix subscribers

Netflix’s revenues fell well short of fourth-quarter views, while revenue growth of 2% was in line. But Netflix subscribers rose by 7.66 million, much more than the 4.57 million expected. The streaming giant launched a cheaper ad-supported subscription option on November 3. Netflix no longer offers subscriber guidance.

Meanwhile, co-founder Reed Hastings stepped down as co-CEO to become executive chairman. Ted Sarandos will remain co-CEO, along with Greg Peters, currently chief operating officer.

NFLX shares jumped in afterhours trading. Shares fell 3.2% to 315.78 during Thursday’s regular session.

The growth in the number of Netflix subscribers is a positive sign for many other streaming games, including Walter Disney (dis), Paramount Global (FOR), Discovery of Warner Bros (WBD) and Year (ROKU). But DIS stock, Roku and the others had small gains on extended action.

Google job losses

Google parent Alphabet will lay off 12,000 employees or 6% of its workforce. This is evident from a company memo. That follows Microsoft’s plans to cut 10,000 jobs or 4.5% of its workforce earlier this week. (AMZN), Salesforce. com (CRM) and many other tech giants are reducing staff.

Late Thursday, Google said it would delay 20% of bonus payments until at least March.

GOOGL shares rose modestly in premarket trading.

Google shares rose 2.1% to 93.05 on Thursday, breaking above the 50-day mark for the first time since early December. The 50-day line has been an area of ​​resistance for the internet giant since late 2021. Still, GOOGL stock remains far from the 200-day line.

Eli Lilly falls on the FDA’s rejection of Alzheimer’s

The FDA rejected Eli Lilly’s expedited submission for approval of his Alzheimer’s treatment donanemab, seeking more data. Eli Lilly (LLY) fell modestly overnight. biogen (BIIB), which recently reported positive results on a similar drug for Alzheimer’s disease, rose modestly.

SLB income

SLB earnings are expected early Friday. SLB, formerly known as Schlumberger, will provide insight into the oilfield services market. The Oil&Gas-Field Services ranks #1 of IBD’s 197 industry groups.

SLB shares rose 0.4% to 57.38 on Thursday, after falling to the top of a recent base. But it’s slightly extended from a buy point of 53.97.

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Stock market rally

The stock market rally extended Wednesday’s losses into Thursday morning, recovered somewhat in the afternoon but faded again towards the end.

The Dow Jones Industrial Average fell 0.8%. in Thursday’s stock trading, along with the S&P 500 index. The Nasdaq composite fell nearly 1%. The small-cap Russell 2000 lost 1%.

Solar stocks were big losers amid growing concerns about the residential solar market.

US crude oil prices rose 1.1% to $80.33 a barrel and continued to trade around the $80 level. Gasoline futures rose 2.9% to a two-month high.

The yield on 10-year Treasury bills rose 3 basis points to 3.4%.


Among growth ETFs, the Innovator IBD 50 ETF (FFTY) fell nearly 2%, while the Innovator IBD Breakout Opportunities ETF (BOUT) fell 1.2%. The iShares Expanded Tech-Software Sector ETF (IGV) lost 0.8%. The VanEck Vectors Semiconductor ETF (SMH) lost 2.45%.

Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) lost 3.2% and ARK Genomics ETF (ARKG) lost 3.3%.

SPDR S&P Metals & Mining ETF (XME) fell 0.2%, along with US Global Jets ETF (JETS). SPDR S&P Homebuilders ETF (XHB) sold 3%. The Energy Select SPDR ETF (XLE) was up 1.2%, with XOM stocks number 1 and SLB also a major component. The Financial Select SPDR ETF (XLF) fell 1.2%. The Health Care Select Sector SPDR Fund (XLV) gained 0.2%.

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Stocks to watch

MELI share rose 0.4% to 1,072.74, pausing this week after a big run to start 2023. The Latin American e-commerce and payments giant is just below a buy point of 1,095.44, but really needs a handle to catch up with the big averages. MercadoLibre stock has held up really well, but use some depth on each handle to shake out weak holders.

MEDP stock fell 1.5% to 228.84, near an official buy point of 235, according to MarketSmith’s analysis. Shares shot above the 50-day mark on Jan. 10, offering early entry. Now Medpace stock could use a handle.

XOM shares tested their 50-day line but closed 0.6% to 111.32. Shares are not far off a buy point of 114.76 from a flat base.

VRTX shares fell 0.6% to 307.94, still above the 50-day line. Shares dipped above the 50-day mark on Tuesday, then offered an early entry. Investors will have to wait and see if the biotech can get past Tuesday’s high of 312.35. The official flat-base buy point is 324.85.

AXON stock was up 1% to 184.06 and continued to work for a handle on a cup basis that would lower the buy point slightly from the current 193.95. Axon, which makes tasers, body cameras and digital storage for law enforcement, cleared an early entry Jan. 9 when it crossed the 50-day mark.

Analysis of the market rally

After Wednesday’s sharp downturn, the stock market rally showed further weakness. As the major indices recovered from their late-morning lows, they faded toward closing.

The S&P 500 index, which fell below the 200-day line during the previous session, broke below the 50-day line on Thursday. The Nasdaq also broke its 50-day line but bounced off its 21-day line. The Russell 2000, which nearly hit its late 2022 high on Wednesday morning, tested its 200 days on Thursday but closed above that line.

The Dow Jones had its third consecutive significant drop, testing the follow-up day low of Jan. 6. Closing below the FTD low would be a bearish sign for a market rally, although the S&P 500 and Nasdaq are currently well above their Jan. 6 lows.

The indices closing lows offer hope that the current pullback is just a healthy pause, allowing leading stocks to forge handles and other new buying opportunities. But this can be more serious. Breaking below Thursday’s lows would be worrisome.

Some leading stocks, such as Axon, MercadoLibre and MEDP, are holding up quite well. But others suffer greater losses. Deere (DE), which flashed an early entry Tuesday morning, undermined the low of its flat base on Thursday.

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What to do now

With the market rally winding down, many leading stocks are cutting recent gains or even falling below entries.

Investors will have to wait with new purchases for the time being. They want to at least reduce the modest exposure, if only because of the action in individual companies.

Despite some recent losses, a large number of stocks have accumulated. One or two good days could significantly improve the technical picture of the market rally and provide many new buying opportunities. So have your watchlists ready.

But just because a stock is setting up doesn’t mean it will break out or send a buy signal, or that such a move will work.

Earnings season appears to be entering the market with individual stocks and the overall upside trending at a weak point. Tread carefully.

Read The Big Picture every day to stay in sync with market direction and leading stocks and sectors.

Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.


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