Dow Jones futures fell modestly Monday morning, along with S&P 500 futures and Nasdaq futures. The current stock market rally churned near record highs last week amid big sector moves. Earnings season is in full force, with investors looking for key answers about the current stock market. Xilinx (XLNX) and Intel (INTC) will help answer if the big chip stock rally has legs. Microsoft (MSFT) and ServiceNow earnings highlight software as that leading sector starts to struggle. Can Facebook earnings grow in 2019? How costly will the Boeing 737 Max ultimately be?




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The answers will also address the ultimate question for the current stock market rally: Will the major indexes convincingly move past their old highs, signaling a new long-term bull market?

This week hundreds of companies report earnings, but only 19 boast an IBD Composite Rating of 95 or better. That includes Microsoft stock, Xilinx stock and Intel stock. Facebook (FB) just misses with a 93 CR. The Composite Rating combines key fundamental and technical factors into a single score. All-time stock winners often have a Composite Rating of at least 95 near the start of their big runs.

Several Dow Jones Industrial Average stocks report this week. They include Boeing (BA), Intel stock and Microsoft stock, as well as United Technologies (UTX), Verizon (VZ), Visa (V), Caterpillar (CAT), Chevron (CVX) and Exxon Mobil (XOM).

Dow Jones Futures Today

Dow Jones futures were 0.2% below fair value. S&P 500 futures fell 0.2%. Nasdaq 100 futures retreated 0.3%. Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session. Crude oil futures jumped 2% on reports that the U.S. will announced Monday that will not extend waivers for buying Iranian crude past May 2.

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Current Stock Market Rally

The Dow Jones and Nasdaq composite rose modestly last week while the S&P 500 index just edged lower, but all within 2% of record highs. The current stock market rally showed big sector moves, with chips continuing to power ahead while software stumbled and medicals crumbled.

Among the best ETFs, Innovator IBD 50 (FFTY) fell 1.3% last week. The iShares Expanded Tech-Software Sector ETF (IGV) lost 1.6%. But the VanEck Vectors Semiconductor ETF (SMH) shot up 3.3%.

Chip Leaders Report Earnings

Xilinx stock was the first chip name to break out in the current stock market rally. Xilinx, an IBD Leaderboard stock, spiked 18% on Jan. 24 after its last earnings report, and has kept rising strongly since. Xilinx earnings growth accelerated for a third straight quarter, with analysts expecting even-faster 68% growth in Wednesday’s report. Revenue growth also has accelerated for the past four quarters.

But Xilinx stock is the exception. Most chipmakers are expected to report flattish or sharply lower earnings. Investors are betting on stronger demand later this year.

Intel stock is at its best levels since 2000. But analysts expect flat Intel earnings Thursday night. Wall Street sees a 1% EPS drop for 2019.  Texas Instruments stock is in buy range from a 113.08 handle buy point in a consolidation going back to January 2018. Texas Instruments earnings should show a 7% per-share drop on Tuesday.

Can Software Stand Up?

Long-time market leaders, software stocks have shown some signs of weakness.

Microsoft stock is trading at record highs. Earnings are expected to rise just 5%, but investors have focused on its fast-growing cloud-computing services business. ServiceNow (NOW) and Proofpoint (PFPT) have been faster-growing names. But ServiceNow earnings are expected to fall 4% while cybersecurity stock Proofpoint should deliver a modest 13% gain. Still, ServiceNow and Proofpoint aren’t far from buy points.

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Keep in mind that Dow Jones futures and the stock market indexes don’t really show sector moves. So watch ETFs like SMH, IGV and FFTY.

Facebook Earnings

Facebook stock surged after its blowout Q4 earnings, but since then has moved in line with the stock market. Shares are working on a deep cup base.

Facebook earnings are expected to fall 4% vs. a year earlier, after rapidly decelerating over the last four quarters. Revenue growth has cooled over the last three quarters. For the full year, analysts expect flat Facebook earnings. Can Facebook reignite growth while navigating political and regulatory hurdles?

Boeing 737 Max Fallout

Boeing stock plunged in March after a second Boeing 737 Max crashed in six months. Shares have traded between the 50-day and 200-day lines for weeks. Earlier this month, the company cut Boeing 737 Max production to 42 a month from 52 a month. But the Boeing earnings report and guidance will provide the Dow industrial giant’s first clear guidance on how much of an impact the 737 Max crisis will have.

Analysts expect Boeing earnings will fall 8% in Q1 with revenue down 1%. Boeing 737 Max deliveries were halted in the last two weeks of March and likely won’t resume for several months.

Meanwhile, Boeing rejected a weekend New York Times report claiming that a South Carolina plant where the 787 Dreamliner suffers from “shoddy” production and safety standards.

Boeing stock fell 1.4% before the market open.

Boeing stock is the largest weight in the price-weighted Dow Jones. Positive Boeing earnings and guidance could drive the blue-chip index and the current stock market rally to all-time highs.

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

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