After hours, Dow Jones futures, S&P 500 and Nasdaq were all little changed. Nike, a Dow giant, reported overnight earnings. The Fed's preferred inflation gauge, PCE price index is due on Friday.
After a mixed, but small advance on Wednesday, the stock market rallied modestly Thursday. Treasury yields reversed from new long-term highs, while crude oil declined.
Investors could be looking for a confirmation of the new trend if the rally continues to gain momentum. The PCE report on Friday and the likely shutdown of government loom large.
It's important to start building your watchlist now while the market is still in a correction. Meta Platforms, Nvidia, Arista Networks, Uber Technologies (UBER), CrowdStrike, Duolingo and Aehr Test Systems are all tech stocks worth monitoring.
Meta stocks Vertiv, Uber Arista Networks CrowdStrike Synopsys and Synopsys may have flirted, or flashed, with aggressive entries on Thursday.
Nvidia, Meta and Uber stock are on IBD Leaderboard. IBD's Long-Term Leaders include SNPS. IBD 50 includes ANET, Duolingo CrowdStrike, and Synopsys. IBD Big Cap 20 includes Nvidia, CRWD and CrowdStrike.
Dow Jones Futures Today
Dow Jones futures were lower than fair value even though NKE was a blue-chip stock. S&P futures increased a fraction, and Nasdaq futures grew by 0.1%.
The PCE report will have a significant impact on Dow futures, Treasury yields and other financial markets Friday.
Keep in mind that overnight trading in Dow futures or elsewhere may not necessarily translate to actual trading during the next regular session of the stock market.
NKE shares rose modestly after Nike's earnings surprised analysts by increasing, but sales growth was only slightly below expectations. Nike shares closed at 89.63, up 0.2% on Thursday. They had hit an intraday low of 89.64.
Carnival (CCL), reported Friday morning that it had made its first profit since the pandemic. CCL has been a major S&P 500 winner since 2023 but has been declining since early July. Shares rose by 3.3% on Friday.
The Commerce Department will announce the PCE August price index at 8:45 a.m. ET on Friday. The economists predict that the overall index will rise by 0.5% in comparison to July. This is due to higher gasoline prices. Inflation is expected to rise to 3.5% annually, up from July's rate of 3.3%. The core PCE index, however, is expected to rise 0.2% again. Core inflation will drop from 4.2% in July to 3.9%.
The PCE inflation figures follow the Fed's rate hike outlook from September 20, which was based on a relatively robust economy and high inflation. Fed predicted core PCE inflation at 3.7% for the year. This assumes a relatively high inflation rate in 2023's final months, despite recent cooling trends.
If core PCE inflation falls below Fed expectations over the next few month, policymakers have an excuse to not raise rates one more time this year.
Stock Market Rally
Stocks continued to rise Thursday despite the weaker guidance provided by Micron Technology (MU), Workday (WDAY) and other companies.
The Dow Jones Industrial Average rose 0.35% during Thursday's trading on the stock market, but it is still below its 200-day line. S&P 500 index rose 0.6%. The Nasdaq composite index rose by 0.8%.
The market was up across the board, and winners outpaced losers by a wide margin. Financials boosted the small-cap Russell 2000 by 0.8%. Invesco's S&P Equal Weight ETF, (RSP), climbed by 0.7%. Both remain well below their 200 day lines.
The biggest gains on Wednesday were in energy stocks, but also tech, insurers, and building-related companies.
The U.S. crude prices dropped 2.1% to $91.71 per barrel, after briefly reaching $95 on the previous night.
The yield on the 10-year Treasury fell by about 3 basis points, to 4.6%. It had previously reached a new intraday high of 4.69%.
The 10-year yield turned down and erased the gains.
Thursday was the second day of the rally attempt for the S&P 500, Nasdaq, and Dow Jones. If the trend continues, perhaps next week, it could be a sign that there is more to come.
The Innovator IBD ETF (FFTY), which is a growth ETF, gained 0.85%. The iShares Expanded Tech Software Sector ETF (IGV), which includes CRWD, rose by 0.8%. SNPS stocks are in IGV as well as SMH.
ARK Innovation ETF ARKK (ARKK), which tracks more speculative stocks, rose 1.1% while ARK Genomics ETF ARKG (ARKG) declined 0.5%.
Global Jets (JETS) increased by 1.2%. SPDR S&P homebuilders ETF XHB grew by 1.25%. Energy Select SPDR ETF XLE grew by 0.1%, and Health Care Select Sector SPDR Fund XLV grew 0.5%.
The Industrial Select Sector SPDR Fund XLI (XLI) increased by 0.4%.
Stocks to Watch
Meta stock gained 2.1%, to 303.96. After Wednesday's intraday turmoil, the stock moved back above its 50-day line. Investors can use the high of Thursday at 306 33 as a aggressive entry above the 50-day level. 312 87 is another option. Meta stock is a good buy as the relative strength line has already reached 52-week highs.
Nvidia's stock rose 1.5% to 430.89 and moved back towards its 50-day line. The AI chip maker broke below the 50 day line in mid-September but did not fall below August's lows. The NVDA stock could be aggressively entered if the 50-day is retaken decisively.
ANET's stock rose 1.6% to 184.43, moving from just above the 50-day trendline to just over the 21-day, and close to a downward-sloping tendency line. The volume was low, but the gain on Wednesday came from the most active trade of this month.
DUOL's stock jumped 3.2% to 159.14. The shares are working towards a handle of 167.35 from a base with a double bottom. After an initial breakout failed, the handle was formed. However, Duolingo found support on the 50-day line.
Uber's stock climbed 2.2% to $46.14, retaking its 50-day high and testing the short, steep trendline. MarketSmith reports that the ride-hailing giant and food-delivery company has an official buy point of 49.49 from a flat baseline.
SNPS's stock jumped 3.1% to 460.71. It is now back above the 50 day line, and has broken a short-term trendline. The buy point for the chip-design software company is 468.03, or 471.15.
CRWD rose 1.4%, to 165.25. This continued a rebound from the 50-day. CrowdStrike has been trading in a sideways fashion, and not at a clear base since May. However, the RS line has risen to 2023 highs.
AEHR stock is approaching the 50-day moving average after plummeting below it last week. Aehr Test Systems has a buy point of 53.05 from a cup-and-handle-like base. Investors may be able to get in early if the 50-day line is decisively cleared. The volume has been relatively low on AEHR’s rebound.
VRT's stock rose 2.3% to 37. This continued Wednesday's rebound from the 10-week level and retook the 21-day. If the stock moves above Thursday's peak, it would be a good time to enter from a trendline.
What to Do Now
You may find it difficult to watch the stock market make strong moves and not jump in. It's still just a correction. The rally effort has not yet proven itself. The weekend shutdown and Friday's PCE report raise the possibility of a new sell-off.
Start with a small pilot position if you must, but don't hesitate to leave quickly.
Waiting for more confirmations is likely the best option for most investors. It is important to update your watchlists. This article featured promising tech names such as Meta and Nvidia. However, the energy sector remains to be the most important. Even though homebuilders require more time for repairs, a variety of construction and building plays are interesting. Insurance companies and some discounters are also doing well.
The Big Picture is a daily read to keep up with market trends, leading stocks, and sectors.