Dow Jones Futures Rise As Apple Earnings Top, DraftKings Soars; PacWest Slams Market Again

Dow Jones futures, S&P 500 and Nasdaq were all up slightly after-hours. Apple's (AAPL), which is due to report its earnings on Friday, was the highlight of this quarter.

Stock market gains are threatened by further sell-offs as fears of bank contagion grow. PacWest Bancorp and Western Alliance Bancorp were again among the worst losers, despite releasing deposit updates over night. Even giants like Bank of America (BAC), Wells Fargo(WFC)and JPMorgan Chase(JPM) suffered a new setback.

Dow Jones has turned slightly negative in 2023 after testing its 50-day line. S&P 500 and Nasdaq are both close to reaching the 50-day line. The Russell 2000 is at 2023 lows, with bank stocks weighing down the index.

Gold stocks shone amid bank woes, recession fears and worries about the economy. Bitcoin and Bitcoin-related stocks also performed well

The stock of AMD soared on a report that Microsoft is assisting AMD in its move to artificial intelligence chips. This will create competition for Nvidia.

Shopify (SHOP), Lantheus, and other companies had big gains on Thursday. But there were also many losers.

Apple Earnings

Apple's earnings were modestly higher than expected, thanks to iPhone and service revenue. The tech giant announced a $90 Billion AAPL stock purchase and a small dividend increase.

Apple's shares rose modestly during extended trading. The shares fell 1% to 165.79 on Thursday, after reaching an intraday high of eight months Wednesday. Support was found near a rising line for the 21st day.

Fortinet, Floor & Decor, Booking Holdings and Insulet all reported on Thursday night.

DKNG, DoorDash, and Coinbase all had big wins. DASH is about to break from a base of a cup with handle, while DraftKings aims to retake the cup-base buying point. Insulet is looking to move the PODD stock into a buying zone. Fortinet was the top pick, while FTNT edged higher. BKNG's stock dropped modestly, indicating a test of the 50-day. FND, which flirted for weeks with a buying point, could gap below the 50-day and 21-day lines.

Dow Jones Futures Today

Dow Jones futures rose 0.2% in comparison to fair value. AAPL is a Dow Jones component, as well as a S&P 500 or Nasdaq stock.

Economists predict that non-farm payrolls will rise by 178,000 compared to April's 236,000. The unemployment rate should rise to 3.6%. Hourly wages are expected to rise by 0.3% in comparison with March, and 4.2% when compared with a year ago.

Keep in mind that overnight trading in Dow futures or elsewhere may not necessarily translate to actual trading during the next regular session of the stock market.

Bank Stocks

PACW fell 51% Thursday, 3.17. It reached a new low. Bloomberg reported Wednesday night that PacWest could be put up for sale. The California-based lender has confirmed that "ongoing" discussions are being held with "multiple potential partners and investors."

Western Alliance has said that deposits have been increasing in recent months. It then denied reports of a possible sale. WAL stock recovered from intraday lows but plunged 38%, to 18.20. This is a new nine-year low.

Toronto-Dominion Bank canceled its $13.4 billion merger with Tennessee-based First Horizon, citing concerns over regulatory issues. FHN's stock plummeted 33%.

Zions Bancorp has hit a low point. Superregional companies Comerica, KeyCorp (KEY), PNC Financial and Truist also hit a long-term low.

BAC and WFC stocks both fell by 3.1%, which is relatively mild compared to regional banks but still near their recent long-term bottoms. JPM stock fell 1.4% after it reversed hard from Monday's brief breakout attempt.

Regional banks are hoping to weather the storm, and avoid the deposit flight which destroyed SVB Financial Signature Bank and First Republic Bank. The regulators are clear in their commitment to protect all deposits. Bank stocks are not covered. Stocks could crash on fears of a bank run, and this could self-fulfill. Bank profitability over the long term, particularly regional banks, could be affected by paying more for deposits.

SEC Chairman Gary Gensler appeared to warn Thursday short sellers of misinformation or misconduct relating to regional bank shares, stating that "the SEC has a particular focus on identifying any misconduct which might threaten investors or capital formation or the markets in general."

The KRE ETF and PacWest stock rose modestly but recovered a small portion of their recent losses.

Microsoft-AMD AI Alliance

Bloomberg reported on Thursday afternoon that Microsoft is assisting AMD in its move to AI chips. Dow Jones Tech titan provides financial support and works with AMD to develop an AMD processor code-named Athena for AI tasks.

AMD shares soared 6.1% following a 9.2% plunge on Wednesday due to weak guidance. The shares briefly regained the 50-day itraday line. AMD's stock could be aggressively entered if the 50-day line is decisively retaken. Nvidia the leader in AI chip technology, edged down by 0.9%%. NVDA is holding the 21-day trend line but the stock is down a little for the week, after soaring 4.2% to a 16 month high on Monday.

The MSFT stock rose 0.3% and is now near its 52-week high.

Stock Market Rally

Stock market rallies saw losses for the fourth consecutive day, although major indexes closed off their lows.

In Thursday's stock exchange trading, the Dow Jones Industrial Average dropped 0.9%. The S&P 500 index fell 0.7%. The Nasdaq composite fell 0.5%. The Russell 2000 small-cap index fell 1.2%

The U.S. crude prices dropped 4 cents, to $68.56 per barrel. This represents a 10.7% decline so far in this week.

Gold futures rose by 1%, to $2,048 a troy ounce. This is a 52-week record and the second best close in history. Gold is up 3.3% in just three days. Silver also rose 2.2% to a new 52-week high.

The yield on the 10-year Treasury fell 5 basis points, to 3.35%. The yield on the 2-year Treasury fell 21 basis points, to 3.73%.

ETFs

Innovator IBD ETF (FFTY), a growth ETF, has retreated by 1.2%%. The iShares Expanded Tech Software Sector ETF (IGV), which holds Microsoft as a major holding, fell 0.4%. VanEck Vectors Semiconductor ETF SMH slipped 0.3%. AMD stock and Nvidia is a key component.

ARK Innovation ETFs (ARKK) and ARK Genomics ETFs (ARKG), which reflect more speculative stories, gained 2.8% each. Ark Invest's top 10 holdings include DraftKings, COIN and Shopify.

Global Jets (JETS) fell 2.9%. SPDR S&P homebuilders ETF XHB fell 1.6%. Energy Select SPDR Fund (XLE), which tracks the energy sector, fell by 1.1%. Health Care Select Sector SPDR Funds (XLV), which track the health care sector, lost 0.8%.

Financial Select SPDR ETF XLF fell 1.3%. It was dominated by financial titans like JPM stock, Bank of America, and Wells Fargo. The SPDR S&P Regional Banking ETF KRE, which includes PACW, Western Alliance, and First Horizon stock, fell 5.45%. ZION is included in both ETFs.

Market Rally Analysis

The stock market appeared to be poised for a rally that would take it above the 2023 highs. The major indexes have fallen four sessions in a row.

The Nasdaq Composite, which has little exposure to banks, did not lose much ground, but is moving towards the 50-day moving mean. The S&P 500 almost tested its 50-day. The Dow Jones briefly turned negative for the entire year before closing above this key level.

Major indexes are still not far off their 2023 highs. They don't look good, but they are better than other metrics.

Apple could boost major indexes on Friday, but the tech giants have been masking weak market breadth since weeks.

Invesco's S&P Equal Weight ETF, which had already fallen below its moving averages at the beginning of the week, has now reached its lowest level since March. It lost 0.95%.

First Trust Nasdaq 100 Equal Weighted Index ETF, without bank exposure, slipped 0.15%. But, it is below its 50-dayline and near recent lowests.

The market leader remains small, with few stocks available in the buy area.

Earnings have been treacherous. Shopify, Lantheus and Green Brick Partners all soared on Thursday. However, many other leaders at buy points tumbled, fell or reversed their lower levels.

Homebuilders remain strong. The building materials and installers looked strong, although some saw their earnings fall on Thursday.

Not all restaurant stocks and footwear stocks are performing well. Recently, several of the winners in these groups have declined.

Booking Holdings is one of the travel stocks that has shown some promise. It's hit or miss.

While gold stocks shine amid uncertainty, it's not good news for the rally. Agnico-Eagle Mines, or AEM as it is also known, has broken out. Several gold or silver ETFs or plays are also flashing buy signals.

Fed chief Jerome Powell stated on Wednesday that the banking system was fine, and denied market expectations of rate cuts in later this year. After Thursday's plunge in bank stocks, the markets now favor Fed rate cuts beginning in July. This is up from September. The market expects a 100 basis point reduction by year end. Either the Fed, or the markets -- or even both -- must change their course.

What to Do Now

The earnings season is over and it's clear that the Federal Reserve has stopped raising rates. Banking fears and recession risk are major headwinds.

Many stocks will continue to rise, but then fall. Investors should consider taking some profits at any time.

The overall exposure should be low. The market is under pressure.

Investors can start increasing their positions when the leading indexes show real momentum. Do it gradually. Prepare your watchlists so that you can react quickly. On the other hand, you should have exit plans prepared based on market conditions and individual stocks.

The Big Picture