Dow Jones futures fell slightly overnight, while S&P 500 futures and especially Nasdaq futures lost more ground, with Microsoft (MSFT) and Google parent Alphabet (GOOGL) headlining a heavy night of earnings.

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The stock market rally had another strong session, as Treasury yields and the dollar retreated. But the S&P 500 and Nasdaq are coming up to a key resistance level. Investors should be taking part in the confirmed uptrend, but not rushing in.

Intel (INTC) priced the IPO for its Mobileye (MBLY) self-driving-car unit Tuesday night, slightly above the expected range. Twitter (TWTR) moved closer to its takeover price on the latest signs that Tesla (TSLA) CEO Elon Musk will close the deal by Friday.

Microsoft and Google kicked off megacap tech earnings Tuesday night. Enphase Energy (ENPH) and Chipotle Mexican Grill (CMG) also reported.

Microsoft earnings and revenue beat, but MSFT stock fell sharply overnight on disappointing cloud revenue and weak guidance. Google stock tumbled after missing views. The news also sent many other tech stocks lower.

Enphase rallied on strong results and guidance. CMG stock initially rose, but then turned modestly lower.

Microsoft and Google stock are on the IBD Long-Term Leaders list. ENPH stock is on the IBD Big Cap 20.

Intel Set To Price Mobileye IPO

Intel sold 41 million Mobileye shares at $21 a pop, up from the expected range of $18-$20.That raised $861 million. That valued Mobileye at $16.7 billion, far below the $50 billion that Intel had once hoped for. The chipmaker paid $15.3 billion for Mobileye in 2017.

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Musk-Twitter Deal Latest

Equity investors in Tesla CEO Elon Musk’s planned Twitter takeover received paperwork today, CNBC reported Tuesday, the latest sign that Musk will close the $44 billion deal by Friday.

Bloomberg reported that Musk told banks he intends to close the Twitter takeover Friday. Twitter stock added to intraday gains, closing up 2.6% to 52.84, not far from the $54.20 deal price. Tesla stock briefly pared gains Tuesday afternoon, but finished 5.3% higher at 222.41.

Concerns that Musk will need to sell more shares to pay for the Twitter deal have weighed on TSLA stock.

The video embedded in this article discusses Tuesday’s market rally and analyzes Shockwave Medical (SWAV), Excelerate Energy (EE) and Dollar General (DG).

Dow Jones Futures Today

Dow Jones futures dipped 0.3% vs. fair value. S&P 500 futures fell 1%. Nasdaq 100 futures lost 2.1%. Microsoft stock is a Dow Jones, S&P 500 and Nasdaq giant. Google stock and Enphase are S&P 500 and Nasdaq components.

The 10-year Treasury yield fell 2 basis points to 4.09%.

Crude oil futures fell 1%, while natural gas prices climbed 1%.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live

Stock Market Rally

The stock market rally kept running Tuesday, with techs and small caps leading a strong session.

The Dow Jones Industrial Average rose 1.1% in Tuesday’s stock market trading. The S&P 500 index gained 1.6%. The Nasdaq composite popped 2.25%. The small-cap Russell 2000 jumped 2.7%.

The 10-year Treasury yield fell 13 basis points to 4.11%. Falling Treasury yields also weighed on the U.S. dollar. Still, the two-year Treasury yield, more closely tied to Fed policy, declined just 3 basis points to 4.47%.

U.S. crude oil prices rose 0.9% to $85.32 a barrel. Natural gas futures leapt 8%, continuing to bounce back after plunging 23% last week.

ETFs

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) edged up 0.55%. The iShares Expanded Tech-Software Sector ETF (IGV) rallied 2.5%. MSFT stock is a huge IGV holding. The VanEck Vectors Semiconductor ETF (SMH) advanced 1.6%.

SPDR S&P Metals & Mining (XME) climbed 1.8%. SPDR S&P Homebuilders (XHB) leapt 4.35%. The Energy Select SPDR ETF (XLE) edged up 0.1%. The Health Care Select Sector SPDR Fund (XLV) added 0.8%.

Reflecting stocks with more speculative stories, the ARK Innovation ETF (ARKK) jumped 6.7% and ARK Genomics (ARKG) popped 5.4%. Tesla stock is a major holding across Ark Invest’s ETFs.

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Key Earnings

Microsoft earnings and revenue modestly topped fiscal Q1 views. Cloud-computing revenue led the way but missed at least some targets. The software giant then warned on Q2 revenue on advertising, PC and currency headwinds.

MSFT stock sold off nearly 7% in overnight trade. Shares rose 1.4% to 250.66 on Tuesday, coming up to the 50-day line. But Microsoft stock is well below the 200-day line and still not that far from bear-market lows. Cloud software stocks tumbled on Microsoft’s results.

Google earnings and revenue both missed. YouTube revenue fell, while online advertising rose just 2.5%. Cloud-computing revenue topped estimates. GOOGL stock tumbled almost 7% in extended action. Shares rose 1.9% Tuesday to 104.48, also closing in on the 50-day line. But, like Microsoft, Google stock is not far from bear-market lows, with some distance to the 200-day.

Microsoft and Google cloud-computing results could foreshadow Amazon Web Services growth heading into Amazon.com (AMZN) earnings on Thursday night. AMZN stock fell more than 4% overnight.

Enphase earnings comfortably beat as revenue crushed views. The solar power firm also guided up for Q4 revenue. ENPH stock rose 3% overnight. Enphase stock popped 4.85% to 265.59 on Tuesday, moving back above the 21-day line. Shares could be starting to build the right side of a new base but are still below the 50-day line.

First Solar (FSLR), which reports Thursday night, dipped 1% following Enphase earnings.

Chipotle earnings beat, with same-store sales and margins impressing. Up initially, CMG stock fell 1.5% in extended trade amid concerns about future margins. Shares advanced 2.5% on Tuesday to 1,584.02. Chipotle stock is nearing the 50-day line as it works on the right side of a short base with a 1,754.66 buy point, according to MarketSmith analysis.

Boeing (BA), General Dynamics (GD), Waste Management (WM) and Hilton Worldwide (HLT) report early Wednesday.

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Market Rally Analysis

The stock market rally continued to gain momentum, with the falling Treasury yields and U.S. dollar providing a tailwind for equities.

The Nasdaq and small caps led Tuesday’s gains. The Dow Jones lagged Tuesday but remains the rally leader, pushing higher above the 50-day line. The S&P 500 and Russell 2000 are nearing that key level. The Nasdaq still has some distance to reach the 50-day. But the S&P, Russell and Nasdaq are all above their 10-week lines.

It’s still unclear if this is just another bear-market rally. Can the S&P 500 and then the Nasdaq move decisively above their 50-day moving averages. And if so, can the major indexes clear the 200-day?

On the plus side, a number of growth stocks showed bullish action, including Shockwave, DoubleVerify (DV) and Roblox (RBLX).

Those join medical leaders, including biotechs, health insurers and drug distributors. Auto parts retailers are doing well.

Energy stocks continue to act well.

Treasury yields, earnings and economic data could undermine that nascent rally.

Microsoft and Google reported Tuesday night, with Meta Platforms (META), Apple (AAPL) and Amazon earnings later this week.

It’s no coincidence that Microsoft, Google, Amazon and Apple stock all closed Tuesday right at or just below their 50-day lines. Even Meta stock, which nearly hit a bear-market low Friday, is getting back toward its 50-day.

Microsoft, Google and Amazon are all set to pull back from that key level. Futures signal the S&P 500 and Nasdaq also will do so at Wednesday’s open.

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What To Do Now

A confirmed stock market rally is making gains, with a number of leading stocks flashing buy signals or breaking out, including some high-growth names.

So investors should be cautiously involved in this market rally, taking positions in quality stocks or broad market ETFs. Step in slowly. If your positions and the market rally are working, you can gradually add exposure.

The major indexes facing a series of resistance levels is yet another reason to step in, not run in.

But be ready to take profits or cut losses quickly.

Keep working on watchlists. Several days of market gains are bringing more stocks into position.

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

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

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