Stock indexes reversed lower at midday Friday as they faced a new obstacle, even after strong earnings from Amazon.com (AMZN) triggered a breakout past a buy point.
The Nasdaq composite, which opened more than 1% higher, was down 0.1% and meeting resistance at the 50-day moving average. The Nasdaq 100-tracking PowerShares QQQ Trust (QQQ) ETF came within a penny of its 50-day average before turning back. If the market is to continue to rebound, it needs indexes to climb back above their 50-day averages.
The S&P 500 fell a fraction. The Dow was 0.35% lower despite a rally in Intel (INTC) shares. The Russell 2000 dipped 0.3%.
The Dow and S&P 500 remain below the 50-day moving average, but the Nasdaq approached its 50-day average. Volume was tracking lower compared with the same time Thursday.
Amazon.com shares soared as high as 1638.10, but pulled back to a 5% gain. The stock was still above the 1,568.62 buy point of a cup-with-handle base. The stock, a member of IBD Leaderboard, also topped a previous high of 1,617.54 momentarily. Citigroup and several other firms raised their price targets on Amazon.
Amazon’s revenue of $51 billion topped estimates of $49.9 billion and was up 43% from the year-ago period. Adjusted earnings of $3.27 per share were way above expectations of $1.26. Amazon also said it is raising the annual cost of its Prime memberships to $119, from $99.
Restaurant stocks are emerging as a new area of leadership, even though the group was down about 2% so far today. It climbed to the top 20 of 197 groups from No. 49 six weeks ago. Dine Brands (DIN) broke out past the 79.76 buy point of a cup-without-handle base today, but volume was average.
Chipotle Mexican Grill (CMG) is up more than 28% this week after soaring Thursday on superb earnings. EPS smashed estimates and same-store sales growth of 2.2% also topped views.
Tech, Bank And Oil Stocks
Technology stocks were fading. Intel broke out of a base with a 53.88 buy point but soon eased below the entry. The chipmaker late Thursday beat first-quarter sales and earnings expectations and raised its full-year outlook.
Microsoft (MSFT) poked above the 97.34 buy point of a flat base, but retreated back into the base. The technology titan beat quarterly sales and profit views late Thursday. Shares were up 1% at midday.
Regional banks have been streaking higher, and SVB Financial (SIVB) gapped up to a record high, soaring 18% in big volume. The holding company of Silicon Valley Bank broke out past a cup-without-handle base after earnings topped expectations.
But Seacoast Banking (SBCF) fell back under its 28.54 buy point. The stock had broken out after the bank’s earnings report Thursday.
Exxon Mobil (XOM) fell more than 3% after the oil giant missed profit expectations. The loss contributed to the Dow’s flagging action. Chevron (CVX), another Dow component, missed sales estimates but the stock climbed 1.6% in today’s market.
Although earnings are the market’s main focus, there was also good news on the economic front. Gross domestic product climbed to a 2.3% annualized rate in the first quarter, down from a 2.9% increase in the prior quarter. But that still beat forecasts for a 2% rise.
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