Dow Jones Futures: Nasdaq Recovers Against Nvidia Resistance; All eyes on the PCE . inflation report
Dow Jones futures fell after hours, along with S&P 500 futures and Nasdaq futures. Booking Holdings, MercadoLibre and Square were notable earnings reports late Thursday, while Boeing airplanes (father) once again halted delivery of the 787 Dreamliner. All eyes will be on Friday to the Fed’s favorite inflation gauge, the PCE price index.
X
The stock market rally had an erratic day, but closed near the session high. Nvidia (NVDA) skyrocketed on earnings, and many other chips also rose in price.
The S&P 500 holds key support while the Nasdaq and Russell 2000 approach resistance.
The stock market rally remains under pressure and investors should act accordingly.
MercadoLibre (MELI), Reservations to hold (BKNG), Autodesk (ADSK), intuition (INTU), Floors & Decorations (FND) and Square-parent Block (SQ) was reported late on Thursday.
The FAA said Boeing is suspending deliveries of the 787 Dreamliner jet for “additional analysis of an fuselage component”. Deliveries will not resume until Boeing shows regulators the issue has been resolved. Aerospace giant Dow Jones resumed 787 deliveries in late 2022 after more than a year of pause. BA stock fell slightly late in the session, signaling a 50-day test line.
MELI and Floor & Decor shares are on sale 50 . IBD list. BKNG stock is on the floor IBD Large Hat 20.
Inflation rate PCE
The Commerce Department will release the January personal consumption spending index at 8:30 a.m. ET, as part of its earnings and spending report.
The PCE Price Index will increase by 0.4% from December. The core PCE index, which excludes food and energy, is also up 0.4%. PCE inflation rate will fall to 4.9% from 5% in December, with core PCE inflation falling to 4.3% from 4.4%.
Keep a close eye on non-energy service prices excluding housing. Fed Director Jerome Powell said he pays close attention to this hyper-core inflation measure.
Meanwhile, economists expect personal income to grow 1% with consumer spending up 1.2%.
Dow Jones Futures Today
Dow Jones futures are down 0.15% from fair value, with Boeing stock weighing on blue chips. S&P 500 futures fell 0.1% and Nasdaq 100 futures fell 0.1%.
The PCE inflation rate will certainly affect Dow Jones futures, Treasury yields, etc.
Remember that action overnight in future index and other places that don’t necessarily translate into actual transactions the next time stock market meeting.
Join IBD experts as they analyze stocks that could act in the stock market rally on IBD Live
Main income
MELI stock jumped nearly 6% in late trading as MercadoLibre earnings surpassed views with revenue also topping the Latin American e-commerce and payments giant. Shares rose 1.6% on Thursday to 1,136.26, above the 21-day moving average. MELI stock is technically between 1,095.44 buy points. But MercadoLibre stock is set to break a short trendline at the open on Thursday.
BKNG stock was flat after hours even as Earnings from Bookings topped the views. Shares crossed the 21-day line on Thursday but closed down just 22 cents at 2,426.49. Preorder stock, which has had a strong 2023, is now likely to consolidate over the long term with a 2537.10 buy point.
ADSK stock plummets in prolonged action as Autodesk’s earnings are slightly higher than views but design software people often give lower instructions. Autodesk shares rose 2.1% on Thursday to 221.16. Stocks with buy points handle 232.25 out of one double bottom sole.
INTU stock edged higher overnight. Online earnings easily beat Q2 views, but software maker TurboTax just reiterated its inline guidance for fiscal year 2023. Shares rose 1.35% Thursday to 411.88, back again. on line 200 days after getting back 50 days on Wednesday. Intuit stock has a consolidated buy point of 490.93, but there could be some early entry.
FND stock rallied after Floor & Decor earnings surpassed views while revenue only dropped. Floor & Decor shares rose 1.9% to 90.83, above 88.82 cup with handle buy points. FND stock wiped out double-digit gains on Tuesday, according to MarketSmith Analysis.
SQ stock soars in extended trading after Block missed earnings but top revenue. Block shares rose 1.6% to 76.11 on Thursday, slightly above the 50-day moving average. A decisive move in SQ stock from the 50-day line could provide an early entry point in the bottoming base.
Stock market recovers on Thursday
The stock market rally opened with solidly higher Nvidia earnings, reversing to a modest loss by midday before rebounding again.
The Dow Jones Industrial Average closed up 0.3% on Thursday stock market trading. The S&P 500 index rose 0.5%, with Nvidia stock performing the best. The Nasdaq composite rose 0.7%. The Russell 2000 small-cap index rose 0.7%.
US crude oil prices rose nearly 2% to $75.39 per barrel, ending a six-day losing streak. Natural gas rose 6.4%, the second solid gain in a row.
Copper futures fell 3.1%.
The yield on the 10-year Treasury note fell 4 basis points to 3.88%.
ETFs
Among the growth ETFs, the Innovator IBD 50 ETF (FFTY) increased by 1.1%. iShares Expanded Tech-Soft Sector Sector ETF (IGV) increased by 0.9%. VanEck Vectors Semiconductor ETF (SMH) increased by 3.5%. NVDA stock is a big one.
SPDR S&P Metals & Mining ETF (XME) gave up 1%. US X Global Infrastructure Development ETF (PAY THE ROAD RED) increased by 0.9%. US Global Jets ETF (jet plane) increased by 1.3%. SPDR S&P Homebuilders ETF (XHB) increased by 1%. Energy Select SPDR ETF (XLE) rose 1.5% and the Financial Select SPDR ETF (XLF) increased by 0.1%. SPDR Foundation for healthcare sector (XLV) increased by 0.3%.
Reflecting more speculative stocks, the ARK Innovation ETF (ARKK) fell 1.5% and the ARK Genomics ETF (ARKG) decreased by 1.35%.
The five best Chinese stocks to watch right now
Analysis of market recovery
The stock market rally ended well after a session of table tennis. Falling Treasury yields could contribute to the afternoon rally. In the end, the indices are still in the tight trading zone.
The Nasdaq composite rallied to the 21-day moving average near the open, falling back just above the 200-day line, before reversing again and nearing an intraday high in the morning. Nvidia is a major driver. NVDA stock soars 14% while fueling a slew of growth chips.
The S&P 500 fell below the 50-day moving line for most of the day before rising again.
The Russell 2000, like the Nasdaq, also hit resistance at the 21-day moving average.
Some stocks have higher earnings spreads like Nvidia. Overall, the top stocks closed well, but certainly followed the day’s swings in the overall market.
The stock market rally is under pressure, and acting like it is. The main indicators are trying to hold support but quickly hit resistance.
Just because the S&P 500 has held the 50-day line for the past two sessions doesn’t mean it will. The Dow Jones index tested its 50-day moving average for four weeks before falling lower on Tuesday. The Dow hit a two-month low on Thursday before rebounding.
Friday’s PCE inflation report looms large. A tame reading can be a positive catalyst. But a hot inflation rate that sent 10-year Treasury yields soaring to 4% could dampen the market’s fragile rally.
Market Timing with IBD’s ETF Market Strategy
What to do now
Thursday’s market action is why investors shouldn’t get too excited about the strong opening. Stocks that looked viable or promising in the first few minutes of trading quickly fell back, with a few exceptions.
Wait for the major indexes and leading stocks to show real strength, with Nasdaq definitively reclaiming its 21-day moving average alongside the large-cap S&P 500 and small-cap Russell 2000. Even then, investors should gradually increase their exposure again, not rush in.
In the meantime, update your watchlist to be able to buy and review your portfolio for possible changes.
If the market deteriorates further, get ready to take a more defensive stance.
Read Big picture every day to stay in sync with market trends and top stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
YOU MIGHT ALSO LIKE:
Why This IBD Tool Simplifies Sautéch For top stocks
Want to get quick profits and avoid big losses? Try SwingTrader
Best growth stocks to buy and watch
IBD Digital: Unlock IBD’s premium stock listings, tools and analysis today
Tesla vs. BYD: Electric car giants vying for the crown, but which is better to buy?
