Dow Jones futures were little changed Thursday morning, along with S&P 500 futures and Nasdaq futures, paring losses after the European Central Bank said it would begin reducing asset purchases. Lululemon, RH and GME stock were among the big overnight movers. The stock market rally retreated Wednesday, with growth names among the hardest hit, but housing, industrial, steel and retail names also retreated.

The major indexes fell amid semi-hawkish comments from a Fed official on reining in monetary signs, as well as signs that further fiscal stimulus could be far less than forecast. But IBD Long-Term Leaders such as Microsoft stock and Idexx Labs held up well.

Key Earnings

RH, Lululemon Athletica, Copart and original meme stock GameStop reported earnings after the close.

Academy Sports reported before Thursday's open.

Academy Sports, RH and Lululemon beat views and raised guidance. GameStop reported a wider-than-expected loss but beat on sales. Copart earnings and sales topped.

RH stock rose 2% overnight after recently undercutting its 50-day line. RH closed up 1.3% after falling more than 2% intraday.

LULU stock shot up 12% in extended trade, signaling a record high, after closing down for a sixth straight session.

GME stock tumbled 9% in premarket action. GameStop stock has been consolidating since its early June peak and more broadly since its late January surge to 483. Before the close, AMC Entertainment, another "traditional" meme stock, said it's working on a possible partnership with GameStop. AMC stock fell modestly after closing down 1% Wednesday.

ASO stock sank 2% in premarket trade. Shares fell 3.85% to 43.40 on Wednesday, but closed above the official 42.85 buy point.

CPRT stock edged higher following better-than-expected Copart earnings. Shares rose 1.2% to 144.67 on Wednesday. Copart stock is finding support at its 50-day line. The official buy point is 149.16 from a flat base. But a rebound from the 50-day line, perhaps getting above some short-term resistance, would offer an early entry.

Long-Term Leaders

CPRT stock is on IBD Long-Term Leaders. Buying off the 50-day/10-week line is a good place to start a position in a Long-Term Leader.

Fellow Long-Term Leaders Idexx Labs and Pool Corp. rose Wednesday, rebounding from around their 50-day or 10-week lines.

Microsoft, another Long-Term Leader, rose 1 cent to 300.21, rebounding from its 21-day line as it drifts off highs. MSFT stock effectively has a three-weeks tight with a 305.94 buy point. Ideally, Microsoft stock would trade tight until the 10-week line catches up, perhaps forming a new flat base.

Domino's Pizza, a former Long-Term Leader that still shares a lot of those traits, rose modestly from its 50-day line Wednesday and broke a short downtrend, offering an early entry. DPZ stock is working on a flat base.

In addition to Long-Term Leaders, Microsoft stock is on IBD Leaderboard. Domino's was Wednesday's IBD Stock Of The Day.

The video embedded in this article reviewed Wednesday's market action and analyzed Crocs, Shopify and DPZ stock.

In other overnight news, United Airlines cut its Q3 revenue target due to Covid concerns and said it expects a loss in Q4 if current trends continue.

Sea Ltd. proposed selling 11 million American depository shares as well as $2.5 billion in convertible debt. SE stock fell modestly.

U.S.-listed Chinese stocks, especially internet and gaming firms, retreated amid continued crackdowns by the Chinese government. China reportedly is halting approval of new online games.

Dow Jones Futures Today

Dow Jones futures were just below fair value. S&P 500 futures edged lower and Nasdaq 100 futures were slightly lower.

Dow Jones futures pared modest losses after the European Central Bank said it would start to scale back asset purchases, making a decision ahead of Fed.

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

Stimulus Concerns

St. Louis Fed President James Bullard told the Financial Times that he still favors beginning a bond taper program this year. Fed chief Jerome Powell, Bullard and several other Fed policymakers in late August backed a tapering program by year-end. But last week's weak jobs report raised expectations that the Fed would not agree on such a plan at the September policy meeting.

Bullard, one of the more hawkish policymakers recently, is not an FOMC voting member this year. Wednesday's afternoon lukewarm Beige Book report from the Federal Reserve reinforced views that the economic outlook has downshifted. The IBD/TIPP Economic Optimism Index, released Wednesday morning, tumbled 5.1 points in early September to a 12-month-low 48.5.

Meanwhile, Sen. Joe Manchin, a centrist Democrat from West Virginia, said late Tuesday that he supports only $1.5 trillion in spending out of President Biden's proposed $3.5 trillion package. Democrats need his vote to pass their latest big tax-and-spending plan. Further, if House progressives aren't happy, they could try to sink a bipartisan $1 trillion infrastructure bill. So while the odds still favor hefty, if scaled-back, new spending, there's now a more-than-zero chance that nothing passes by year-end.

Stock Market Rally

The stock market rally fell back amid those monetary and fiscal stimulus concerns, though a mild retreat didn't need any trigger. The major indexes did close off lows.

The Dow Jones Industrial Average fell 0.2% in Wednesday's stock market trading. The S&P 500 index dipped 0.1%. The Nasdaq composite dipped 0.6%. The small-cap Russell 2000 slumped 1.1%.

The 10-year Treasury yield fell four basis points to 1.33% after rising eight basis points in the prior two sessions.

A lot of stocks that had been running up fell back, including recent IPOs. But several growth stocks that had struggled to make progress suffered notable losses.

DocuSign fell 3.4%, and is starting to lose sight of its 50-day line. DOCU stock tumbled 6% on Tuesday, more than wiping out Friday's bullish gain. Meanwhile, SHOP stock sank 3.8% and SQ stock 4.2%, both knifing below their 50-day lines.

Meanwhile, Pulte Group cut guidance, citing supply chain woes. PHM stock tumbled 6%, with Lennar, Toll Bros. and others selling off.

Why This IBD Tool Simplifies The Search For Top Stocks

Top ETFs

Among the best ETFs, the Innovator IBD 50 ETF fell 1.6%, while the Innovator IBD Breakout Opportunities ETF gave up 1.1%.  The iShares Expanded Tech-Software Sector ETF dipped 0.6%, with MSFT stock a top holding. The VanEck Vectors Semiconductor ETF retreated 1.3%.

SPDR S&P Metals & Mining ETF skidded 2.3% and Global X U.S. Infrastructure Development ETF lost 0.3%. U.S. Global Jets ETF retreated 1.5%. SPDR S&P Homebuilders ETF shed 0.9%, with RH stock a major component. The Energy Select SPDR ETF fell 1.3% and the Financial Select SPDR ETF edged down 0.2%.

Reflecting more-speculative story stocks, ARK Innovation ETF declined 2.8% and ARK Genomics ETF 2.4%. ARKK fell back below its 50-day and 200-day lines. ARKG undercut its 50-day line. Square stock is a notable ARK Invest holding.

Five Best Chinese Stocks To Watch Now

Market Rally Analysis

After rebounding over the prior three weeks, the stock market rally had a setback Wednesday. The Dow Jones and small-cap Russell 2000 tested their 50-day lines on Wednesday. The Nasdaq retreated, though from all-time highs. The S&P 500, just above its 21-day line, is not far from record levels either.

There were notable losses among growth, housing and commodity-related stocks.

What exactly is working? Microsoft stock and some Long-Term Leaders such as Copart are acting well. Shipping stocks are looking strong.

Tesla was little changed, holding in a buy zone. Fellow giants Apple, Facebook, Google and Nvidia still look solid, despite Wednesday's slim losses. Hot IPOs had a down day, but generally remain in strong uptrends.

Still, market leadership remains narrow.

What To Do Now

The stock market rally hasn't set off any alarm bells. But with the major indexes near highs, some leading stocks taking losses and few buying opportunities available, investors may want to be somewhat defensive in the short run. Investors might be cutting exposure automatically by exiting losing trades or taking partial profits in some recent winners, while largely avoiding new buys.

A market pause or pullback could quickly offer new buying opportunities. So keep working on watchlists. Beyond Long-Term Leaders and tech giants, make sure to keep an eye on a variety of sectors. Some areas that are struggling right now could quickly turn into winners, including chips, housing, industrial and financial plays.

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.