Dow Jones futures fell modestly early Thursday, while S&P 500 and Nasdaq futures rose. Broadcom (AVGO) bounced overnight from strong earnings and a big stock split. Tesla ( TSLA ) emerged as Elon Musk says he expects to win his $56 billion payday vote.
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Stock market gains were boosted Wednesday morning by softening CPI inflation data, with the S&P 500 and Nasdaq hitting all-time highs. They largely held on to those gains even after the Federal Reserve forecast just one rate cut in 2024. But stocks faded somewhat of late.
Apple ( AAPL ) rose again on Wednesday with Nvidia ( NVDA ) and Tesla rise strongly. The minors bounced back but closed near session lows.
The burden (ORCL), Reservations Holdings (BKNG), ASML (ASML), Reddit (RDDT) and The beautiful ELF (ELF) and Mr. Cooper Group (COOP) deleted new buy points.
On Thursday, Tesla will be in the spotlight as it holds its annual shareholder meeting, with investors voting on Elon Musk’s big pay deal.
Shares of Nvidia, ELF Beauty and ASML are on IBD’s leaderboard. Stock booking is on SwingTrader. Shares of ELF and Nvidia are in the IBD 50. Shares of Nvidia are in the IBD Big Cap Index 20. Booking Holdings was the stock of the day on Wednesday’s IBD.
The video embedded in this article discusses Wednesday’s market action and analyzes BKNG stock, Dear Isaac (FICO) and KB Home page (KBH).
Dow Jones Futures Today
Dow Jones futures fell 0.4% against fair value. S&P 500 futures rose 0.1%. Nasdaq 100 futures rose 0.6%. Shares of Tesla and AVGO boosted the S&P 500 and Nasdaq 100, along with a still-rising Nvidia.
The 10-year Treasury yield rose to 4.31% from Wednesday’s 3 p.m. ET close of 4.29%, but that’s actually where the stock market was trading Wednesday’s close at 4 p.m. .
Crude futures fell slightly.
At 8:30 a.m. ET, the Labor Department will release the manufacturing price index. The main PPI components feed directly into the Fed’s preferred gauge of inflation, the core PCE price index.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
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Stock market rally
Stock market gains jumped on Wednesday after surprisingly subdued inflation ahead of the open. It held on to those gains despite a somewhat weak Fed rate outlook and as Powell spoke, but faded somewhat in the latter half of the hour as Treasury yields continued to pare losses.
The Dow Jones Industrial Average was down 0.1% in early Wednesday trading, capping the market’s broader advance even with strong earnings from Apple and Microsoft (MSFT). The S&P 500 index rose 0.85%. The Nasdaq composite rose 1.5%.
The small-cap Russell 2000 jumped 1.6%, moving back above its 50-day line but closing near session lows. The Invesco S&P 500 Equal Weight ETF ( RSP ) rose 0.5%, also retracing its 50-day. The First Trust Nasdaq 100 ETF (QQEW) advanced 0.8%, near all-time highs.
Major stocks generally had a strong session, but many faded late.
The Nasdaq closed 7.4% above its 50-day line, above the 5-6% level that is starting to look stretched. The tech-heavy composite could continue to expand, but the risks of a pullback would also increase. Nvidia stock is 31% above its 50-day line, though it has reached above 40% several times over the past year. Apple stock is 17% above its 50-day.
U.S. crude oil prices rose 0.8% to $78.50 a barrel.
The 10-year Treasury yield was up 11 basis points at 4.29%, though it climbed to 4.32% after the official close at 3pm ET. The yield hit a two-month low of 4.25% ahead of a mildly hawkish Fed rate outlook.
Megacap winners
Apple shares rose 2.9% on Wednesday after rising 7.3% on Tuesday. Nvidia shares gained 3.55%. Microsoft shares rose 1.9%, moving within a buy zone. Microsoft remains the most valuable company at $3.277 trillion. AAPL stock is close at $3.267 trillion and Nvidia is at $3.086 trillion.
Shares of Nvidia rose 2% early Thursday while Apple and Microsoft were little changed.
ETFs
Among rising ETFs, the iShares Expanded Tech-Software ETF ( IGV ) gained 2.3%, with MSFT shares a big holding. The VanEck Vectors Semiconductor ETF ( SMH ) rose 3%. Nvidia is the no. 1 of SMH, with ASML and Broadcom shares also major components.
Reflecting the more speculative story stocks, the ARK Innovation ETF ( ARKK ) rose 2.1% and the ARK Genomics ETF ( ARKG ) rose 2.6%. Tesla stock is the #1 holding in all of Ark Invest’s ETFs.
The SPDR S&P Metals & Mining ETF ( XME ) rose 0.4%. The SPDR S&P Homebuilders ETF ( XHB ) rose 3.55%. The Energy Select SPDR ETF ( XLE ) fell 1.1% and the Healthcare Select Sector SPDR Fund ( XLV ) fell 0.2%.
The Select Industrial Sector SPDR Fund ( XLI ) gained about 0.95%. Financial Choice SPDR ETF (XLF) fell 0.1%.
Time the market with IBD’s ETF Market Strategy
Elon Musk expects to win a payment deal
Tesla CEO Elon Musk late Wednesday said shareholders will approve his $56 billion pay package and a move to reincorporate the Texas EV maker from Delaware.
He said both resolutions are passing by “wide margins.”
The final figure will come Thursday night at Tesla’s shareholder meeting.
There have been concerns that Musk would leave or accelerate his moves to shift Tesla’s efforts and resources to his other companies.
Delaware courts, which ended his 2018 pay deal earlier this year, could still block a renegotiated package.
Separately, Tesla says it will raise Model 3 prices in the European Union, which plans to impose new tariffs of up to 38.1% on electric vehicles made in China starting in July. This is on top of the current 10% fee. Tesla ships the Model 3 from its factory in Shanghai to Europe.
Stock Tesla
Tesla shares jumped 6.5% in premarket trading, clearing several weeks of tight trading but below the 200-day mark.
On Wednesday, Tesla shares rose 3.9% as Cathie Wood’s Ark Invest set a new price target of 2,600. The EV giant retook its 50-day line, but is still well below the 200-day. TSLA stock has a market cap of $565.4 billion.
The Federal Reserve sees only one rate cut in 2024
Federal Reserve policymakers steered toward just one Fed rate cut this year, defying expectations for two cuts. Four members predicted no move at all in 2024. In March, Fed officials narrowly backed three rate cuts.
Smoothing CPI inflation
Early Wednesday, the Labor Department reported that the consumer price index in May was flat from April, slightly below the numbers. CPI inflation came in at 3.3%, with annual earnings unexpectedly cooling slightly for the second month in a row.
Core CPI rose 0.2%, also softer than expected. Core inflation was 3.4% from a year earlier, the smallest advance since April 2021.
Broadcom’s earnings
Broadcom beat fiscal second-quarter revenue views late Wednesday and rose to full-year revenue. The chip and software giant announced plans for a 10-for-1 stock split.
Shares of AVGO rose 14% early Thursday. Shares rose 2.4% to 1,495.51, rising within a 5% buy zone from a flat-based entry of 1,438.17.
What should you do now?
Stock market growth is looking strong, with the Nasdaq and S&P 500 hitting new highs. The Fed meeting is out of the way, though there could still be a second day of reaction.
The Nasdaq is looking extended, supported by Nvidia and Apple, even as small caps and the Dow struggle around their 50-day lines.
Investors can add exposure, but do so gradually. If you have large exposure, you can stay calm or just rearrange your portfolio.
Read the Big Picture daily to stay in sync with market direction and key stocks and sectors.
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
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