Dow Jones futures and S&P 500 futures rose slightly early Thursday, while Nasdaq futures were stronger.
The stock market rally cleared its June highs Wednesday as the CPI inflation report came in lighter than expected, easing Treasury yields and Fed rate hike fears. Headline CPI inflation tumbled to 3% from May's 4%. Core CPI inflation slowed to 4.8% from 5.3%.
Nasdaq and S&P 500 hit fresh 52-week highs, while many stocks flashed buy signals.
Nvidia and Microsoft, two giants capitalizing on artificial intelligence, flashed buy signals Wednesday. So did AI-exposed chipmakers Taiwan Semiconductor, Monolithic Power Systems and STMicroelectronics. Other AI plays triggering buys included China internet giants Alibaba and Baidu as well as Arista Networks.
Some cybersecurity plays fell hard as Microsoft expanded its security offerings this week.
Delta Air Lines beat Q2 views and raised guidance, kicking off airline results after giving bullish preliminary figures a few weeks ago. DAL stock, greatly extended, rose solidly, with other carriers also climbing. PepsiCo also climbed on solid Q2 results. Fastenal reported in-line EPS and missed on revenue. FAST stock fell.
Trade Desk rose early Thursday on news that it'll join the Nasdaq 100 before Monday's open replacing Activision, which is being acquired by Microsoft.
Nvidia stock is on IBD Leaderboard. ANET stock and Monolithic Power are on SwingTrader. Microsoft stock and Monolithic Power are on IBD Long-Term Leaders. MPWR stock is on the IBD 50. Taiwan Semiconductor was Wednesday's IBD Stock Of The Day.
The video embedded in the article discussed Wednesday's bullish market action and analyzed Cava Group, Shopify and MPWR stock.
Dow Jones Futures Today
Dow Jones futures rose 0.2% vs. fair value. S&P 500 futures climbed 0.4% and Nasdaq 100 futures advanced 0.75%.
The 10-year Treasury yield fell 3 basis points to 3.83%.
At 8:30 a.m. ET, the Labor Department will release weekly jobless claims and the June producer price index.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally
The stock market rally rose solidly on weaker-than-expected inflation data.
The Dow Jones Industrial Average rose 0.3% in Wednesday's stock market trading. The Dow briefly hit a 2023 high but closed near session lows. The S&P 500 index climbed 0.75% and the Nasdaq composite popped 1.15%, both at their best levels in more than a year. The small-cap Russell 2000 climbed 1.1%, its fourth straight gain of at least 1%.
The Invesco S&P 500 Equal Weight ETF climbed 0.5% to the highest since mid-February. The First Trust Nasdaq 100 Equal Weighted Index ETF advanced 0.6% to a 52-week high.
The 10-year Treasury yield tumbled 12 basis points to 3.86% after briefly hitting a 2023 high of 4.09% on July 9. A Fed rate hike is a near-lock for later this month, but markets are pricing out the chances for yet another quarter-point move this year.
With yields sliding, the U.S. dollar sold off hard, retreating for a fifth straight session. That gave a boost to stocks and especially commodities.
U.S. crude oil prices rose 1.2% to $75.75 a barrel. Copper prices popped 2.4%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF rose 0.4%. The iShares Expanded Tech-Software Sector ETF climbed 0.55%. MSFT stock is a major IGV component. The VanEck Vectors Semiconductor ETF jumped 2.1%. NVDA stock and Taiwan Semi are SMH's two-largest holdings, while STM and MPWR stock also in the ETF.
Reflecting more-speculative story stocks, ARK Innovation ETF advanced 0.9% and ARK Genomics ETF popped 3.6%.
SPDR S&P Metals & Mining ETF advanced 1.2%. U. S. Global Jets ETF fell 0.8% as the June CPI report showed airfares declining. DAL stock is a major JETS component. SPDR S&P Homebuilders ETF stepped up 2.15. The Energy Select SPDR ETF was up 0.9% and the Health Care Select Sector SPDR Fund fell 0.3%.
The Industrial Select Sector SPDR Fund slipped 0.2%.
The Financial Select SPDR ETF rose 0.6%. The SPDR S&P Regional Banking ETF deposited a 2% gain.
Five Best Chinese Stocks To Watch Now
AI Stocks In Buy Zones
Nvidia stock rallied 3.5% to 349.02, a fresh closing high and getting above the bulk of a four-weeks-tight pattern. The official buy point is 439.90. Nvidia will invest $50 million into Recursion AI models used for drug discovery. The AI chip giant reportedly may be an anchor investor in an upcoming Arm Holding IPO.
Microsoft stock climbed 1.4% to 337.20, extending a bounce from the 10-week line and reclaiming the 21-day line. Investors could nibble here, though MSFT stock hit resistance at a short trendline and some short-term highs. The Dow tech is on track for a three-weeks tight within an emerging flat base.
Taiwan Semi stock rose 2.6% to 103.90, extending a bounce from the 21-day and 10-week lines as well as the top of a prior base. TSM stock also broke a short downtrend in a new consolidation. The chip foundry giant is an indirect AI play by making chips for Nvidia, Broadcom, AMD and others. Taiwan Semi earnings for the second quarter are due early on July 20.
Artificial Intelligence News And AI Stocks To Watch
BABA stock rose 2.4% to 94, breaking a downtrend going back to late January. Alibaba has risen in above-average trade for four straight sessions, reclaiming the 200-day line on Friday.
BIDU stock gained 3.8% to 148.83, breaking the downtrend of a handle as well as a trendline going back to late March. Baidu stock has a 151 handle buy point.
ANET stock broke a trendline within a 17%-deep consolidation, rising 2.4% to 164.04. Volume was below average, but was the highest so far this month. Arista is a big supplier to Microsoft and Meta Platforms.
MPWR stock stepped up 3.4% to 561.04, clearing a 553.64 flat-base buy point, extending a bounce from the 21-day line.
STM stock popped 4.6% to 51.66, breaking out past a 50.30 cup-with-handle buy point, according to MarketSmith analysis. STM has a range of customers, including Tesla and Alibaba.
Market Rally Analysis
The stock market rally is seeing new highs for the Nasdaq composite and S&P 500 indexes, with Nvidia stock among those entering new buy areas Wednesday with many others extending bullish moves. Market breadth has improved dramatically by a variety of measures.
All of these are highly positive sign. The one concern is that the Nasdaq is back to 6.6% above its 50-day line, with the Nasdaq 100 7% above that key level. That isn't extreme, but it wouldn't take much for them to do so. That could mean another pullback that stalls or undercuts recent buys.
Time The Market With IBD's ETF Market Strategy
What To Do Now
This week has offered many chances for investors to add to exiting holdings or stake out new positions. Doing so gradually on a given day can quickly add up if the market and your purchasers are working. If conditions falter, even if only temporarily, you're protected against a sudden drawdown in your portfolio.
If you're an active investor, you're not just letting your money work for you, you're working for your money. A huge amount of that work is running through screens and keep your watchlists up to date.
While macroeconomic headwinds are waning for the moment, earnings season is about to start ramping up. So pay attention to earnings results for your holdings and key rivals, suppliers and customers.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
