The stock market continued its rally on Wednesday morning, with the Dow Jones, S&P 500, and Nasdaq futures all edging higher ahead of the opening bell. However, Snap Inc.’s stock plunged 30% in premarket trading after missing revenue expectations, dragging down other social media stocks.
Despite Snap’s disappointing results, several other companies reported strong quarterly earnings that beat Wall Street’s estimates. Stocks like ELF Beauty, Chipotle Mexican Grill, Fortinet, and Tenable all rose in early trading on Wednesday following their earnings releases.
In particular, Fortinet and Tenable triggered buy signals, flashing opportunities for investors watching their technical setups. Other stocks like Ford Motor Company, Azek Building Products, and Freshworks also popped on earnings, potentially offering buying chances.
Let’s analyze the key stock market moves and earnings reports in more detail:
Dow Jones Futures Inch Higher Despite Snap’s Crash
As of 9:04 a.m. ET on Wednesday, February 7th 2024, Dow Jones futures rose 0.2%, while S&P 500 futures climbed 0.4% and Nasdaq 100 futures increased 0.55%.
The move in futures comes despite a significant 30% plunge in Snap Inc. shares ahead of the opening bell. Snap missed revenue expectations for the fourth quarter and issued disappointing guidance. However, the overall stock market has shown resilience, continuing its recent rally.
The Dow Jones Industrial Average increased 0.4% on Tuesday, while the S&P 500 edged up 0.2% and the Nasdaq composite barely moved. The small-cap Russell 2000 index outperformed with a 0.85% gain.
Now near all-time highs, the major indexes are extending their upward momentum. The rally comes despite ongoing concerns around inflation and the path of Federal Reserve rate hikes.
Snap’s Crash Drags Down Social Media Stocks
While the broader stock market has held up well, Snap Inc.’s shares crashed 30% in premarket trading after its weak quarterly results. Snap beat earnings expectations but fell short on revenue and issued poor guidance.
Snapciteded macroeconomic challenges that hurt advertiser demand. The results raised concerns for other social media platforms like Meta Platforms, Twitter, and Pinterest, which also rely heavily on digital advertising.
Snap’s crash weighed on these stocks in early trading, though the losses weren’t nearly as steep. For example, Meta Platforms, the parent company of Facebook, fell around 4% before the open.
Twitter and Pinterest both declined around 2%. Snap’s big miss added to ongoing economic uncertainty facing the online advertising industry.
Stocks Flashing Buy Signals on Earnings Beats
Beyond the social media wreckage, several other stocks popped on better-than-expected quarterly results. In particular, Fortinet and Tenable triggered technical buy signals.
Fortinet surged 9% after its earnings topped views. The cybersecurity company decisively broke above a 67.36 cup-with-handle buy point. This move signals a potential buying opportunity for investors watching the technical setup.
Similarly, Tenable jumped 10% after easily beating estimates. It is moving above a 48.51 handle buy point, signaling another opportunity.
Besides these technical setups, other stocks like Ford and Azek also jumped on earnings beats and guidance raises. Ford popped 6% in premarket trading, signaling a move above key levels including its 200-day moving average. Azek spiked 10% after accelerating past a 39.04 flat base buy point.
Even Freshworks gained 6% early Wednesday after slightly exceeding expectations. The software company is approaching an aggressive entry above its 50-day line.
These earnings movers potentially offer buying opportunities or add confidence to existing positions for investors focused on fundamentals.
The Bottom Line
While high growth names like Snap tumbled on weak results, the broader stock market continues trending upwards near all-time highs. Earnings beats from Ford, Fortinet, Azek and other companies further bolstered the rally early Wednesday.
For investors combining technical and fundamental analysis, these stocks flashing buy signals offer bullish setups to watch. But the market’s resilience despite Snap’s crash also reflects broad underlying strength.