Dow Jones futures rose early Wednesday, along with S&P 500 futures and Nasdaq futures. Big Microsoft artificial intelligence news is on tap, while President Joe Biden will meet with China President Xi Jinping.
The stock market rally staged broad, powerful gains Tuesday after the October CPI inflation report cooled more than expected, sending Treasury yields plunging.
MercadoLibre, Cloudflare, Amazon.com, Super Micro Computer and Toll Brothers were among the many stocks breaking out or flashing buy signals. They join Microsoft and Nvidia stock, which rose in buy zones Tuesday.
Tesla stock rose solidly again, moving toward its 50-day line. Tesla archrival BYD flirted with aggressive entries Tuesday.
Microsoft AI News And Biden-Xi
Microsoft will announce its latest AI advancements at its Ignite 2023 event on Wednesday, with some buzz that it could unveil its own AI chip to ease its dependence on Nvidia. Nvidia unveiled a new AI chip earlier this week.
Meanwhile, Biden and Xi will meet on the sidelines of the annual APEC conference in San Francisco. It's unclear if the meeting will offer clear signals of easing U.S.-Sino tensions. China is expected to lift a ban on Boeing 737 Max sales to Chinese airlines.
Amazon, Microsoft and Nvidia stock are on IBD Leaderboard. Amazon stock and MercadoLibre are on SwingTrader. MSFT stock is on the IBD Long-Term Leaders list. MELI stock, Nvidia and Microsoft are on the IBD 50.
Cloudflare was Tuesday's IBD Stock Of The Day. Nvidia and MELI stock were selections last week.
Dow Jones Futures Today
Dow Jones futures rose 0.35% vs. fair value. S&P 500 futures advanced 0.4% and Nasdaq 100 futures climbed 0.7%.
The 10-year Treasury yield climbed several basis points to 4.47%.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Key News
Chinese retail sales rose 7.6% vs. a year earlier in October, up from September's 5.5% and views for 7%. Industrial output grew 4.6%, just above estimates. Fixed-asset investment grew 2.9% in the first 10 months of 2023, slightly below views.
At 8:30 a.m. ET, investors will get the October U.S. readings for the producer price index and retail sales.
The House OK'd a short-term funding bill Tuesday afternoon to avert a government shutdown until at least early 2024. It passed with broad, bipartisan support. The Senate is expected to pass the measure soon.
Earnings
After the close, Brazilian fintech Nu Holdings, backed by Warren Buffett, reported in-line Q3 earnings and revenue that slightly beat. NU stock fell modestly in premarket trading. Shares jumped 4.5% to 8.83 on Tuesday, a 20-month high and extended from a buy zone.
Early Wednesday, Chinese EV maker XPeng reported a third-quarter loss that was slightly less than expected, but revenue came in just below views. XPEV stock, close to an aggressive entry, edged lower early Wednesday.
Target reported Q3 EPS that was much stronger than expected, while sales also beat. TGT stock soared early Wednesday, though TGT stock is in a long downtrend. Rival Walmart, which reports Thursday, edged higher, already in a buy zone.
TJX Cos. reported better-than-expected Q3 results but guided lower on Q4 EPS. TJX stock fell modestly in premarket trade. Shares closed Tuesday near a buy point.
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Stock Market Rally
The stock market rally made big gains in heavy volume Tuesday on the tame October CPI report.
The Dow Jones Industrial Average rose 1.4% in Tuesday's stock market trading. The S&P 500 index popped 1.9% and the Nasdaq composite jumped 2.4%, both their best days since April.
The small-cap Russell 2000 gapped up 5.4% and the Invesco S&P 500 Equal Weight ETF 2.85%. Both jumped above their 50-day lines, still below their 200-day averages.
The First Trust Nasdaq 100 Equal Weighted Index ETF leapt 2.9%, now decisively above its 50-day while also clearing its October highs. The Nasdaq 100 gained 2.15%, closing in on its July 52-week high.
The overall Nasdaq composite cleared the 14,000 level and is approaching its Sept. 1 short-term high, which roughly coincides with a trendline going back to the November 2021 all-time high.
Leading stocks had a great day, with breakouts or buy signals from a wide array of sectors.
After the big gains from late October, a real pause in the major indexes and leading stocks wouldn't be a surprise. But the overall picture has been quite bullish.
The 10-year Treasury yield plunged 19 basis points to 4.44%, the lowest since late September. Markets see essentially no chance of further Fed rate hikes, and now see a May rate cut as likely.
U.S. crude oil prices closed flat at $78.26 a barrel.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF rose 2.7%. MSFT stock is a major IGV holding. The VanEck Vectors Semiconductor ETF popped just over 3%, with NVDA stock the largest component.
Reflecting more-speculative story stocks, ARK Innovation ETF soared 5.1% and ARK Genomics ETF surged 8.85%. Tesla stock is a huge holding across Ark Invest's ETFs. MELI stock, Cloudflare and BYD are also Cathie Wood holdings.
SPDR S&P Metals & Mining ETF ran up 5.1%. SPDR S&P Homebuilders ETF stepped up 5.9%, with TOL stock a member. The Energy Select SPDR ETF rose 0.9% and the Health Care Select Sector SPDR Fund climbed 0.7%.
The Industrial Select Sector SPDR Fund gained 2% and the Financial Select SPDR ETF 1.9%.
Five Best Chinese Stocks To Watch Now
Stocks In Buy Zones
MELI stock popped 3.8% to 1,430.51, clearing a 1,398.59 buy point from a cup-with-handle base. But shares closed well off morning highs of 1,466.92.
NET stock gapped up 10.5% to 70.61. Shares are still far from a 76.07 consolidation buy point. But Cloudflare stock cleared resistance around 66 and a downward-sloping trendline. Investors could have used 66.24 as an early entry.
Amazon stock rose 2.25% to 145.80, testing a 145.86 buy point. Shares on Nov. 1 had already cleared a 134.48 early entry, which investors could view as a short double-bottom base.
TOL stock leapt 8% to 85.98, surging out of an 82.39 cup-with-handle buy point, according to MarketSmith analysis. Toll Brothers and other housing stocks have roared back with Treasury yields tumbling.
SMCI stock skyrocketed 14.9% to 293.87, racing past the 50-day line and clearing or flirting with various early entries around 287-295. Super Micro stock has a 317.50 buy point from an awkward double-bottom base.
MSFT stock rose 1% to $370.27, in range from a 366.78 cup-base buy point. But shares are extended from the 50-day line. Microsoft stock offered early entries at the start of the month.
Nvidia stock climbed 2.1% to 496.56, its 10th straight advance and a record close. Shares are rising within a buy zone from a double-bottom base. In addition to the Microsoft AI news on Wednesday, Nvidia earnings are due on Nov. 21.
All of these stocks showed slight gains before the open.
Tesla Stock
Tesla stock leapt 6.1% to 237.41 on Tuesday, moving toward the 50-day line after rising 4.2% Monday to retake the 200-day line. TSLA stock is starting to build the right side of a double-bottom base with a 278.98 buy point. A downward-sloping trendline, currently above 255, might offer an early entry.
The EV giant outperformed the market Tuesday, after Tesla slightly raised China prices on the base Model 3 and Y, the most-popular variants. That could pull forward some demand. Weekly registrations in China so far have lagged Q3's pace, despite the start of Highland Model 3 deliveries.
Tesla rose nearly 2% early Wednesday, signaling a move above the 50-day.
Meanwhile, BYD stock climbed 2.7% on Tuesday to 31.96, rebounding from the 50-day line as well as topping a trendline entry and a very recent high. The China EV and battery giant faces further short-term resistance at 32.76, with an official buy point of 36.27.
Time The Market With IBD's ETF Market Strategy
What To Do Now
The market rally continues to flash a green light for adding exposure. The major indexes are powering higher, breadth is improving and a large number of leading stocks have been flashing buy signals.
If you've been adding exposure gradually from the Nov. 1 follow-through day, you should be significantly invested, with some solid gains in many cases.
That could cushion investors if and when the market stages a pullback or pause beyond one day.
Keep working on your watchlists and analyze your portfolio. Look for add-on entries in strong performers, and consider scaling out of laggards.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on X/Twitter at @IBD_ECarson, Threads at @edcarson1971 and Bluesky at @edcarson.bsky.social for stock market updates and more.
