Dow Jones Futures: Intel Warning Is Bad Sign For Stock Market; Amazon Earnings Soar

Dow Jones futures fell Thursday night, along with S&P 500 futures and Nasdaq futures, after the current stock market rally hit resistance Thursday. Amazon.com (AMZN), Intel (INTC), Starbucks (SBUX), Proofpoint (PFPT) and Columbia Sportswear (COLM) reported earnings late. Amazon stock and Columbia Sportswear stock rose after hours while Starbucks stock was little changed. Intel stock and Proofpoint stock tumbled on guidance.

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The Intel warning is worrisome. Intel stock is a member of the Dow Jones, Nasdaq Composite and S&P 500 index. But it’s a bad sign for chip stocks. Semiconductors have been leaders in the current stock market rally on expectations of stronger demand later this year. Many chip stocks sold off with Intel, including Broadcom (AVGO), Texas Instruments (TXN), Nvidia (NVDA) and Micron Technology (MU). The sector already was among Thursday’s big stock market losers as Xilinx (XLNX) plunged 17%.

Cybersecurity stock Proofpoint boasts a best-possible IBD Composite Rating of 99. Intel and FANG stock Amazon have 98 Composite Ratings. Starbucks stock has a 93 CR and Columbia Sportswear stock a 91. IBD research shows that all-time stock winners tend to have Composite Ratings of at least 95 near the start of big runs.

Amazon stock is an IBD Leaderboard member.

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Dow Jones Futures Today

Dow Jones futures fell 0.1% vs. fair value. S&P 500 futures slid 0.2%. Nasdaq 100 futures retreated 0.5%. Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Current Stock Market Rally

For a second straight day, the Nasdaq composite briefly hit a record high but pulled back, closing up 0.2%. But that was largely driven by tech titans Facebook (FB) and Microsoft (MSFT). The S&P 500 index edged lower while the Dow Jones slid 0.45%.

It’s not surprising that the current stock market rally is facing resistance now. The Nasdaq is at record highs while the S&P 500 index and Dow Jones are just below all-time levels. It’s an obvious area for a stock market rally test, especially after a rapid run-up.

If the current stock market rally convincingly clears all-time highs, it would be a strong signal that we’re at the start of a long-term bull market. But that hasn’t happened yet.

With the current stock market rally hitting resistance, and many top stocks tumbling on earnings, be quick to take losses and remember to take profits.

Top ETFs

Among the best ETFs, VanEck Vectors Semiconductor (SMH) tumbled 2%. The SMH ETF skidded 2% late.

The Innovator IBD 50 ETF (FFTY) closed down 0.9%. On the upside, iShares Expanded Tech-Software Sector (IGV) gained 0.9%, thanks to Microsoft and ServiceNow (NOW).

Amazon Stock

Amazon earnings soared 117%, crushing estimates. Revenue just topped views at $59.7 billion, but growth slowed for a fourth straight quarter to 17%. Amazon sees further slowing in Q2. Amazon stock rose 0.6% late. Shares had climbed 50 cents to 1,902.25 in Thursday’s session.

Amazon stock is extended from a 1,736.51 buy point from a flat base within a larger cup base. Amazon stock is moving toward an alternate entry of 2050.60 above the top of that larger consolidation.

Intel Stock

Intel earnings and revenue cleared estimates. But the Dow Jones chip giant gave weak Q2 and full-year guidance, citing weakness in data centers and China. Intel stock fell 7% to 53.52 late. That’s after retreating 1.9% Thursday. Intel stock is on track to fall below a 54.20 cup-with-handle buy point. That would wipe out a 9.9% rally from the entry. That, and a likely move below the 50-day line, are sell signals.

Starbucks Stock

Starbucks earnings rose 13%, modestly beating views. But revenue and same-store sales growth was slightly below estimates. Starbucks stock edged up 0.8% late. Shares closed up 0.9% at 77.11, hitting record highs. Starbucks stock is extended from any potential buy point.

Columbia Sportswear Stock

Columbia Sportswear earnings shot up 39% to $1.07 a share, beating views by 23 cents. Revenue also topped. Columbia Sportswear stock climbed 2.9% late to 107.50. Shares of the outdoor apparel maker and retailer are targeting a 109.84 flat-base entry.

Columbia Sportswear stock gapped out of a prior consolidation on Feb. 8, following strong earnings.

Proofpoint Stock

Proofpoint earnings cleared estimates. But Q2 and full-year EPS guidance was at best in line with views. Proofpoint stock tumbled 7.5% late. Shares had closed up 2.9% to 131.32, hitting a record high. Proofpoint had rallied 8.2% for the week, reclaiming a 125.78 buy point from a 41%-deep cup base. Bases that are 40% or more deep are less likely to have successful breakouts.

Proofpoint’s outlook is not great news for the software sector and especially the cybersecurity group.

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

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