Dow Jones futures edged higher Monday morning, while S&P 500 futures and Nasdaq futures rose modestly. Tesla, Nvidia, On Holding, Biogen, Oracle, Boeing and Caterpillar are stocks to watch. But the focus will be on the Federal Reserve meeting amid two big inflation reports.
The stock market rally broadened last week, though that faded somewhat after Wednesday. The major indexes rose slightly for the week, with the Nasdaq and S&P 500 right at 2023 highs. But small caps and midcaps had another solid gain, with market breadth trending higher, despite losers leading Friday.
With the Fed meeting on tap and the Nasdaq still close to being extended, investors have reasons to be cautious right now about new buys, especially in hot tech sectors. But some stocks continue to flash buy signals.
On Holding made a bullish move Friday. Chip giant and artificial intelligence leader Nvidia has forged a new buy point. Can Tesla continue its win streak? A pause or pullback would be normal for Tesla stock, and perhaps help the Nasdaq cool off.
ORCL stock is extended, but Oracle earnings late Monday will offer a gauge into business software and AI. Red-hot Adobe reports later in the week. Both Oracle and ADBE stock rose early Monday amid analyst price target hikes.
Dow Jones Futures Today
Dow Jones futures were 0.1% above fair value. S&P 500 futures climbed 0.3% and Nasdaq 100 futures rose 0.5%.
Crude oil futures fell more than 2%.
The price of Bitcoin stabilized and recovered somewhat Sunday after a quick tumble early Saturday, with smaller digital coins plunging.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Fed Meeting: Hawkish Pause Ahead?
Markets expects policymakers to leave interest rates unchanged at the end of its June 13-14 Fed meeting, but it's not a sure thing. The May CPI inflation report is due Tuesday morning, with the producer price out early Wednesday. Those could tip the scales just before the Fed meeting announcement.
Assuming the Fed stands pat, it may be a "hawkish" pause. The Fed meeting statement and Fed chief Jerome Powell would likely stress the possibility of renewed rate hikes at a subsequent meeting. Indeed, markets are leaning toward a Fed rate hike in late July.
Biogen's Alzheimer's Drug Wins Key Vote
Late Friday, an FDA advisory panel unanimously recommended approval for Biogen's Alzheimer's drug Leqembi.
BIIB stock rose 2% to about 316 early Monday after being halted during Friday's regular session. Late Friday, shares jumped more than 6%. That had signaled a breakout from a brand-new flat base, which is part of a base-on-base formation. But Biogen is now indicated to open below the 319.74 buy point.
Shares rose 2.9% to 308.88 in the week through Thursday, rebounding from the 50-day line and breaking a downtrend on hopeful signs for the advisory panel's vote. That offered an early entry.
Eli Lilly stock edged higher early Monday after not moving much Friday on the FDA advisory panel vote. FDA approval of Biogen's Leqembi should be good news for Lilly's experimental Alzheimer's treatment donanemab. LLY stock has been consolidating near highs in the past few weeks.
Meanwhile, investors should keep their eyes on industrial stocks. Many are setting up or in buy areas, including Dow giants Boeing and Caterpillar stock.
Tesla stock and Nvidia are on IBD Leaderboard, with ONON stock added to the Leaderboard watchlist on Friday. BA stock was added to SwingTrader. Tesla and ORCL stock are on the IBD Big Cap 20. On Holding was Friday's IBD Stock Of The Day.
The video embedded in this article reviews the market action over the past week and analyzed On Holding, Boeing and Nvidia stock.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally
The stock market rally showed a broad advance for the week, though the indexes and various sectors didn't move in lockstep during the week.
The Dow Jones Industrial Average rose 0.3% in last week's stock market trading. The S&P 500 index climbed 0.4%. The Nasdaq composite edged up 0.1%. The small-cap Russell 2000 popped 1.9%.
The 10-year Treasury yield rose 5 basis points to 3.74%.
U.S. crude oil futures fell 2.2% to $70.17 a barrel last week. Copper futures climbed 1.8%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF rose 1.1% last week, while the Innovator IBD Breakout Opportunities ETF popped 1.9%. The iShares Expanded Tech-Software Sector ETF closed a fraction higher, with Oracle stock a notable component. The VanEck Vectors Semiconductor ETF advanced 0.5%, with Nvidia stock a major holding.
SPDR S&P Metals & Mining ETF rose 1.7% last week. The Global X U.S. Infrastructure Development ETF rallied 2.4%. U.S. Global Jets ETF ascended 3.6%. SPDR S&P Homebuilders ETF popped 2.8% to the highest point since January 2022. The Energy Select SPDR ETF advanced 1.8%. The Health Care Select Sector SPDR Fund edged up 0.1%. The Industrial Select Sector SPDR Fund climbed 1.45%, hitting a three-month high. Boeing and CAT stock are both big XLI holdings.
The Financial Select SPDR ETF rose 1.% The SPDR S&P Regional Banking ETF rallied 3%.
Reflecting more-speculative story stocks, ARK Innovation ETF gained 2.1% last week and ARK Genomics ETF edged up 0.2%. Tesla stock is the top holding across Ark Invest's ETFs.
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ONON Stock
ONON stock climbed 5.4% to 30.24 on Friday. Shares got as high as 31.45, above its 50-day moving average, but closed just below that key level. Intraday, On Holding offered an early entry, but investors should now wait for a decisive move above the 50-day line, such as clearing Friday's peak. On Holding skyrocketed in late March on strong Q4 2022 earnings, continuing to rise into early May. Shares of the Swiss athletic shoe maker sold off hard in late May despite booming Q1 earnings, amid concerns about slowing growth later this year.
Nvidia Stock
NVDA stock fell 1.4% to 387.70 last week, continuing to consolidate after gapping higher on May 25 following strong earnings and blowout guidance on AI-fueled chip demand. The graphics-chip maker and AI giant now has a three-weeks tight, which offers the opportunity to add a few more shares. The official buy point is 419.38, at the top of the tight pattern, but a move above Friday's high of 397.11 could provide an entry. Even better, a pause for another week or two would let the 21-day line catch up.
Tesla Stock
Tesla stock surged 14% to 244.40 last week, an eight-month high, extending its win streak to 11 sessions. Even more impressive, TSLA stock is up 10 straight days in higher volume. A deal to let General Motors use Tesla charging stations, and the entry Model 3 once again being eligible for the full $7,500 IRA tax credit in the U.S., were key drivers. Yes, bears can point to rising U.S. and European inventories despite various discounts, but the market isn't listening to that now. TSLA stock is now greatly extended from a 207.79 buy point, according to MarketSmith analysis. After such a strong run, at least a short-term pause seems likely, but it doesn't have to happen right away.
Dow Stocks Boeing, Caterpillar
Boeing stock rose 1.9% to 217.31 last week, rebounding from the 50-day line on Wednesday and clearing a trendline on Thursday, offering an early entry. BA stock is just below a 221.33 buy point from a flat base.
CAT stock popped 3.7% to 235.03 last week and is up 14% so far in June. The heavy equipment giant broke a trendline going back to late January, offering an early entry. Caterpillar stock has an official buy point of 227.04.
Terex, Parker-Hannifin, Rockwell Automation and W.W. Grainger are among the many other industrial names showing some strength.
Market Rally Analysis
The stock market rally offered reasons to be bullish longer term, but also reasons to be cautious in the short run.
Market breadth has improved significantly over the past couple of weeks, though losers led winners on Friday. The small-cap Russell 2000 and the S&P MidCap 400 had solid gains to three-month highs, though they did pull back late in the week. The Invesco S&P 500 Equal Weight ETF climbed 1%.
The major indexes ended with slim weekly gains. The S&P 500 is right at 2023 highs, backing off Friday from just 3 points below the August peak during the week The Dow Jones found support at the 50-day line during the week and is moving toward 2023 highs.
The Nasdaq has now rallied for seven straight weeks, right at 52-week highs. The Nasdaq is 5.9% above its 10-week line with the Nasdaq 100 6.8% above that key level. Those are not extreme levels, but suggest that techs may have limited room to run before becoming stretched. So Friday's pullback from morning highs wasn't really a surprise. A pause would offer time for moving averages to catch up with the Nasdaq, and perhaps let some leaders forge new buying opportunities.
Ideally, the rest of the market would pick up the slack. That appears to be happening, though not on Friday.
Chips and software remain market leaders, generally holding recent gains. Industrials are joining building materials, homebuilders, medical products, travel plays as well as some biotechs and various restaurants as other leading groups.
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What To Do Now
This may be a time to be cautious about new purchases, especially on techs, with the Nasdaq close to stretched and the Fed meeting on tap. If you do make new buys, be sure to have your exit strategies ready.
But the outlook appears bullish for the stock market rally. Improving market breadth is helping a wider array of stocks set up. Some have been flashing buy signals while others are moving into position.
Will this trend last? Don't try to predict where this market will go. Pay attention to what the market is doing right now.
So definitely get your watchlists ready. Make sure to cast a wide net, so you catch industrial stocks and other reemerging areas of strength.
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