Dow Futures Rise as Microsoft Surges on Earnings; Tesla Slides After Jefferies Downgrade

Before Wednesday's opening bell, Microsoft shares were up 7.6% in premarket trading, enough to pull Dow Jones futures out of early losses and push tech futures sharply higher. The software giant had beaten Wall Street's targets for its fiscal third quarter, helped by strong results in its cloud computing businesses, and it guided higher for the current period.

By morning, Dow futures were up 0.2% versus fair value and S&P 500 futures had gained 0.3%. Nasdaq 100 futures led with a 1% advance, with Microsoft among the top performers. Among exchange-traded funds, the Invesco QQQ Trust rose 0.85% and the SPDR S&P 500 ETF was up 0.15%.

The mood was less even elsewhere. Alphabet reported first-quarter earnings and revenue that topped estimates, and digital advertising revenue was flat from a year earlier, though still above expectations. Its shares lost 1.1%. Tesla, meanwhile, was downgraded by Jefferies from buy to hold, with the price target cut from 230 to 185. The stock inched higher in early trading anyway. It had slid 1.2% on Tuesday to its lowest level since Jan. 26, closing 55% below its 52-week high and well under its 50-day line, after triggering the 7%-8% loss rule from a 200.76 buy point.

Other earnings movers: Boeing rose 3% on strong first-quarter sales, and Chipotle Mexican Grill jumped 7.3%. Illumina gained almost 1%, Texas Instruments rose 1%, and Visa, which reported fiscal second-quarter results late Tuesday, moved up around 1%. Durable goods orders rose 3.2% in March, against an expected 0.9% gain, reversing February's 1% drop. Excluding transportation, orders rose 0.3% versus an expected 0.2%, improving on February's flat reading.

The backdrop is a rally under strain. On Tuesday the Dow Jones Industrial Average fell 1%, led lower by Dow Inc., which plunged 5.2% and broke below its 50-day moving average. The S&P 500 lost 1.6% and the Nasdaq composite fell 2%. IBD's Big Picture column advised that investors holding gainers consider taking partial or full profits, saying it was a time to play defense rather than offense.

Several names sit near buy points. JPMorgan, down 2.2% Tuesday, has a cup-with-handle entry at 141.88. Nike, off 1.9%, is about 3% from its 127.59 entry. Visa closed just below its 230.15 entry after a 1.4% drop and was trying to retake it. Crocs fell 3.8%, ending a seven-day winning streak, but held above its 143.60 buy point and reports Thursday. DraftKings, down 1.8%, slipped back below its 21.72 entry and reports May 4. Las Vegas Sands, after a 2.4% drop, sits in its buy range above 60.40; last week it posted earnings of 28 cents a share on revenue up nearly 125% to $2.12 billion. Lululemon fell 2.2% but held above its 371.36 entry.

Apple slipped 0.9% Tuesday and 0.3% early Wednesday, and reports May 4. Microsoft had given up its 276.86 flat-base entry during a four-day losing streak, but the premarket jump put it on track to regain it.

The 10-year Treasury yield was unchanged at 3.39%, after rebounding from its lowest level since mid-September and falling sharply Tuesday. West Texas Intermediate crude traded below $77 a barrel, down from an April 12 high above $83, with the EIA inventories report due at 10:30 a.m. ET. After the close, Meta Platforms reports first-quarter results.