Dow Jones futures, along with S&P 500 futures and Nasdaq futures, experienced a slight decline overnight.
The stock market rally demonstrated resilience in the face of a higher-than-expected core CPI inflation reading on Tuesday. Oracle saw a gap up in response to earnings, while Nvidia also rebounded. Big-cap tech stocks propelled the S&P 500 to achieve a new all-time closing high, although market breadth appeared weak. Several companies including ServiceNow, Shockwave Medical, Archrock, Symbotic, and Microsoft showed buy signals on Tuesday, albeit intraday.
Investors seized an opportunity on Tuesday to make incremental purchases, but this window of opportunity may close swiftly once again.
Early Wednesday, Dollar Tree and Williams-Sonoma are scheduled for attention. Nvidia stock and ServiceNow are part of IBD Leaderboard, with ServiceNow stock also featured on SwingTrader. Microsoft stock is included in IBD Long-Term Leaders. Nvidia, Symbotic, and Shockwave stock are listed on the IBD 50. Archrock was highlighted as Tuesday’s IBD Stock Of The Day.
As for Dow Jones futures today:
- Dow Jones futures showed a slight decrease compared to fair value.
- S&P 500 futures experienced a marginal decline.
- Nasdaq 100 futures fell by 0.1%.
It’s important to note that overnight movements in Dow futures and other indices may not necessarily reflect actual trading activity in the upcoming regular stock market session.
The stock market rally showed strength in Tuesday’s session despite generally high CPI data, potentially due to some details hinting at a more subdued reading for the Fed’s preferred inflation gauge, the core PCE price index. Nvidia and Oracle stock led a rebound in big techs, joined by ServiceNow, Microsoft, and Meta Platforms.
Here’s a breakdown of key market indices:
- The Dow Jones Industrial Average climbed 0.6% in Tuesday’s stock market trading, bouncing back from the 21-day and 10-week moving averages to surpass the 39,000 level.
- The S&P 500 index gained 1.1%, setting a new closing high while retreating slightly from the 10-day line.
- The Nasdaq composite surged 1.5%, rebounding from near the 21-day line and nearly achieving a new closing high.
Despite the notable gains in major indexes, decliners narrowly outnumbered advancers.
- The small-cap Russell 2000 experienced a slight decline, marking its third consecutive decrease, albeit off session lows.
- The Invesco S&P 500 Equal Weight ETF advanced 0.3%, achieving a record close but trailing the S&P 500’s pace.
- The First Trust Nasdaq 100 Equal Weighted Index ETF rose by a solid 0.8%, although it lagged behind the Nasdaq 100’s 1.5% leap. However, RSP and QQEW exhibited slightly better performance in the previous two sessions.
Notably, Nvidia and various AI chip stocks have been leading the rally but are currently significantly or greatly extended. Meanwhile, several big-cap software companies, including AI-oriented firms such as ServiceNow and Microsoft, have been consolidating for some time. Oracle’s earnings and bullish comments, along with its gap up to a buy point, provided a boost to the sector. Medical products companies like Shockwave stock and Dexcom, as well as numerous energy services firms like Archrock stock, are also showing promise. Additionally, banks and payment stocks are performing well.
While the Nasdaq and S&P 500 are not yet extended, they are once again nearing that point after a strong day. This underscores a downside of the market’s reluctance to experience a significant pause or pullback.
In other market news:
- U.S. crude oil prices experienced a 0.5% decline, reaching $77.56 a barrel.
- The 10-year Treasury yield rose by 5 basis points to 4.15%.
ETFs:
- Among growth ETFs, the iShares Expanded Tech-Software Sector ETF rebounded 2.2%, led by major holdings like Microsoft, Oracle, and ServiceNow.
- The VanEck Vectors Semiconductor ETF rallied 3.2%, driven by strong performance from its top holding, Nvidia.
- Reflecting more speculative story stocks, ARK Innovation ETF fell 0.8%, while ARK Genomics ETF slumped 1.6%.
- The SPDR S&P Metals & Mining ETF retreated 1.7%, while the Global X U.S. Infrastructure Development ETF rose 0.6%.
- The U.S. Global Jets ETF descended 2.15%, and the Health Care Select Sector SPDR Fund advanced 0.5%.
Stocks in Buy Zones:
- ServiceNow stock rose 4.3%, rebounding from around the 50-day line and breaking a downtrend, offering an early entry opportunity.
- Shockwave stock climbed 2.7%, breaking the trendline of a short consolidation, with investors eyeing an early entry point.
- Symbotic stock continued its bounce from around the 50-day line, flirting with a trendline entry.
- Microsoft stock advanced 2.7%, rebounding from the 10-week line and retaking the 21-day line, offering an early or add-on entry.
- Archrock stock extended its bounce from the 21-day moving average, topping a short trendline, with an ascending base and an official buy point at $19.42.
- Nvidia stock jumped 7.2%, bouncing from the 10-day moving average in above-normal volume, though remaining significantly stretched above the 50-day line.
Market Outlook:
- The market rally continues to exhibit resilience, making it challenging for new bases to form, particularly for high-flying sectors like AI chip names.
- However, sectors such as software, medical products, and energy are showing signs of quality bases forming, presenting potential opportunities for investors.
- With the market rally nearing extended levels, investors should work on their watchlists to identify emerging opportunities before they become overextended.
- Staying informed about market direction and leading stocks and sectors through resources like The Big Picture is essential for navigating market conditions effectively.