Dow Jones futures rose early Friday, along with S&P 500 futures and Nasdaq futures, as Dow giant Nike rallied on earnings and Treasury yields retreated. The Fed's favorite inflation gauge, the PCE price index, is due before the open.
The stock market rally attempt had modest gains Thursday after Wednesday's slim, mixed advance. Treasury yields reversed lower from fresh long-term highs while crude oil retreated.
If the market rally attempt continues to gain momentum, investors could look for a follow-through day starting next week to confirm the new uptrend. But Friday's PCE inflation report and a likely government shutdown loom large.
For now, it's still a market correction, but this is a critical time to build your watchlist. Meta Platforms, Nvidia, Arista Networks, Uber Technologies, CrowdStrike, Duolingo, Aehr Test Systems, Synopsys and Vertiv are nine tech stocks that are worth watching.
Meta stock, Vertiv, Uber, Arista Networks, CrowdStrike and Synopsys arguably flashed or flirted with aggressive entries Thursday.
Nvidia stock, Meta and Uber are on IBD Leaderboard. SNPS stock is on IBD Long-Term Leaders. ANET stock, Duolingo, CrowdStrike and Synopsys are on the IBD 50. Nvidia and CRWD stock are on the IBD Big Cap 20.
Dow Jones Futures Today
Dow Jones futures rose 0.4% vs. fair value, with NKE stock offering a lift. S&P 500 futures climbed 0.4% and Nasdaq 100 futures advanced 0.6%.
The 10-year Treasury yield fell several basis points to 4.56%.
Crude oil rose 1%.
The PCE inflation report is sure to swing Dow futures and Treasury yields Friday morning.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
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Earnings
NKE stock surged in premarket trading after Nike earnings unexpectedly edged higher, though sales growth just trailed views. Nike stock closed up 0.2% to 89.63 on Thursday after hitting an 11-month low intraday.
Carnival reports Friday morning, with the first quarterly profit seen since the pandemic. CCL stock has been a big S&P 500 winner in 2023, but has been sliding since early July. Shares rose 3.3% on Thursday.
PCE Inflation
The Commerce Department will release the August PCE price index at 8:30 a.m. ET on Friday. Economists expect the overall index to rise 0.5% vs. July, fueled by higher gasoline prices. The annual PCE inflation rate is forecast to climb to 3.5% vs. July's 3.3%. But the core PCE price index is seen up 0.2% once again, with core inflation cooling to 3.9% from July's 4.2%.
The PCE inflation data follows the Fed's hawkish rate-hike outlook on Sept. 20, which reflected relatively robust economic growth and sticky inflation. The Fed forecast core PCE inflation for the year at 3.7%. But that assumes relatively hot inflation in the final months of 2023, despite the recent cooling trend.
So if core PCE inflation undershoots Fed expectations in the next few months, policymakers will have an easy excuse not to go ahead with one more rate hike this year.
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Stock Market Rally
The stock market rally attempt shrugged off weak guidance from Micron Technology and Workday, with further gains Thursday.
The Dow Jones Industrial Average climbed 0.35% in Thursday's stock market trading, though still below the 200-day line. The S&P 500 index advanced 0.6%. The Nasdaq composite rose 0.8%.
Market gains were broad-based, with winners comfortably outpacing losers. The small-cap Russell 2000 gained 0.8%, buoyed by financials. The Invesco S&P 500 Equal Weight ETF climbed 0.7%. Both are still well below their 200-day lines.
Energy stocks largely held Wednesday's big gains, while tech stepped up, along with insurers and various building-related groups.
U.S. crude oil prices fell 2.1% to $91.71 a barrel after briefly topping $95 on Wednesday night.
The 10-year Treasury yield fell about 3 basis points to 4.6% after hitting a fresh long-term high of 4.69% intraday.
Stocks took off as the 10-year yield erased gains and turned lower.
Thursday's was day two of the stock market rally attempt on the S&P 500 and Nasdaq and day one for the Dow Jones. A follow-through day, possibly next week, would signal the uptrend could have legs.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF gained 0.85%. The iShares Expanded Tech-Software Sector ETF rose 0.8%, with CRWD stock a component. The VanEck Vectors Semiconductor ETF climbed 1.6%, with Nvidia stock the No. 1 holding. SNPS stock is in both IGV and SMH.
Reflecting more-speculative story stocks, ARK Innovation ETF rallied 1.1% and ARK Genomics ETF fell 0.5%.
SPDR S&P Metals & Mining ETF advanced 1.8%. U.S. Global Jets ETF ascended 1.2%. SPDR S&P Homebuilders ETF stepped up 1.25%. The Energy Select SPDR ETF edged up 0.1% and the Health Care Select Sector SPDR Fund rose 0.5%.
The Industrial Select Sector SPDR Fund advanced 0.4%.
The Financial Select SPDR ETF rose 0.7%. The SPDR S&P Regional Banking ETF finished 1.1% higher.
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Stocks To Watch
Meta stock rose 2.1% to 303.96, moving back above the 50-day line after Wednesday's intraday shakeout. Investors could use Thursday's high of 306.33 as an aggressive entry just above the 50-day line, with 312.87 as another early entry. The relative strength line is right at 52-week highs already, a bullish sign for Meta stock.
Nvidia stock climbed 1.5% to 430.89, moving back up toward its 50-day line. The AI chip leader broke below the 50-day in mid-September, but never undercut August lows. A decisive retaking of the 50-day could offer an aggressive entry as NVDA stock works on a new base.
ANET stock advanced 1.6% to 184.43, bouncing from the 50-day to just above the 21-day and near a downward-sloping trendline. Volume was light, but Wednesday's gain came in the heaviest trade this month.
DUOL stock popped 3.2% to 159.14. Shares are working on a 167.35 handle buy point from a double-bottom base. The handle formed after an initial breakout fizzled, but Duolingo stock found support at the 50-day line.
Uber stock rose 2.2% to 46.14, retaking the 50-day and testing a short, steep trendline. The ride-hailing and food-delivery giant has an official 49.49 buy point from a flat base, according to MarketSmith.
SNPS stock popped 3.1% to 460.71, back above the 50-day line and breaking a short trendline. The chip-design software maker has a buy point of 468.03 or 471.15.
CRWD stock rose 1.4% to 165.25, continuing a bounce from the 50-day. CrowdStrike doesn't have an obvious base, trading sideways in a messy fashion since the end of May, but the RS line is right at 2023 highs.
AEHR stock advanced 1.8% to 46.23 and is coming up to the 50-day after plunging below that level last week. Aehr Test Systems stock has a 53.05 buy point from an awkward cup-with-handle base. Investors could have an early entry with a decisive clearing of the 50-day line. Volume has been rather light on AEHR's bounce.
VRT stock popped 2.3% to 37, continuing Wednesday's bounce from the 10-week line and retaking the 21-day. A move above Thursday's high would offer an early entry from a short trendline.
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What To Do Now
It can be hard to watch stocks making strong moves without jumping in. But it's still a market correction. The rally attempt has yet to prove itself. Friday's PCE inflation report and the weekend shutdown raise the risk that stocks will sell off again.
If you can't help yourself, take small pilot positions to start, but be ready to get out fast.
For most investors, waiting for more confirmation is probably the best course of action. This is a vital time to update your watchlists. While this article highlighted promising tech names like Meta and Nvidia, energy remains the leading sector. A variety of building and construction plays look interesting, even though homebuilders need more repair time. Insurers are doing well, along with some discounters.
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