Dow Jones futures were little changed early Thursday, along with S&P 500 futures and Nasdaq futures.
The stock market rally saw modest-to-solid gains Wednesday on the major indexes while small caps powered higher amid robust breadth.
But it was a rough day for growth stocks. Nvidia fell modestly for a second straight session. Fellow AI chip plays Arm Holdings, Broadcom and recent IPO Astera Labs retreated along with software names like ServiceNow and CrowdStrike.
DraftKings tumbled as recent gambling scandals involving pro athletes raises concerns.
However, most of these growth names only pulled back to support levels, if that.
Eli Lilly continues to set up. East West Bancorp and Norwegian Cruise Line moved into buy zones.
Early Thursday, Home Depot said it would acquire SRS Distribution for $18.25 billion, aiming to win a bigger share of the growing pro market of contractors and other housing professionals. Shares of the Dow giant edged lower before the open.
Nvidia stock, Arm and DraftKings are on IBD Leaderboard. Nvidia, DraftKings, ServiceNow and Arm stock are on the IBD 50. Nvidia, CrowdStrike, Broadcom and Super Micro stock are on the IBD Big Cap 20. Eli Lilly was Wednesday's IBD Stock Of The Day.
Dow Jones Futures Today
Dow Jones futures rose 0.1% vs. fair value. S&P 500 futures edged higher. Nasdaq 100 futures lost a fraction.
The 10-year Treasury yield edged up to 4.22%.
Crude oil futures rose more than 1%.
Fed Gov. Christopher Waller said late Wednesday that there is "no rush" to cut rates. The hawkish policymaker said recent inflation data "has made me uncertain about the speed of continued progress."
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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Stock Market Rally
The stock market rally advanced Wednesday, with the major averages ending short losing streaks while the Russell 2000 ran up.
The Dow Jones Industrial Average popped 1.2% in Wednesday's stock market trading. The S&P 500 index advanced 0.9%, with Nvidia and ServiceNow stock among the bigger losers. The Nasdaq composite climbed 0.5%.
Market breadth was strong, with winners outpacing losers by more than 4-to-1 on the NYSE and by 8-to-3 on the Nasdaq.
The small-cap Russell 2000 jumped 2.1% to a 23-month closing high.
The Invesco S&P 500 Equal Weight ETF leapt 1.6 to a record high, easily outpacing the S&P 500.
The First Trust Nasdaq 100 Equal Weighted Index ETF climbed 0.9% vs. the Nasdaq 100's 0.4% advance.
The sector ETFs below showed strength outside of tech as well.
U.S. crude oil prices dipped 0.3% to $81.35 a barrel.
The 10-year Treasury yield fell 4 basis points to 4.195%, below the 200-day line and testing the 50-day.
Growth Stocks Struggle
Amid strong market breadth, leading growth stocks were weak.
Nvidia stock sank 2.5% after Tuesday's 2.6% retreat from Monday's closing high. ARM stock slipped 1.8% after Tuesday's 7.5% tumble. Broadcom stock gave just under 1%. Astera Labs stock sank 4.15%, but came off lows after Tuesday's downside reversal from record highs.
Nvidia is still above its 21-day while Broadcom is holding that key level. ARM stock has undercut the 21-day but is within its recent base. ALAB stock has doubled since last week's IPO, and needs to forge some sort of short consolidation.
DraftKings stock tumbled 6.8%, back to the top of a short consolidation. But DKNG stock still found support at its 21-day.
CrowdStrike stock sank 2.35%, to just below its 21-day line. ServiceNow stock, which was flirting with aggressive entries Tuesday, slumped 2.5%, below its 50-day line. But it wouldn't take much for NOW stock and CrowdStrike to move into position again.
The recent action could be a brief shakeout or the start of something more.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF fell 0.5%, with ServiceNow and CrowdStrike stock both components. The VanEck Vectors Semiconductor ETF lost a fraction. Nvidia stock is a massive SMH holding, with Broadcom also a key component.
Reflecting more-speculative story stocks, ARK Innovation ETF edged up 0.2% and ARK Genomics ETF rallied 2.4%.
SPDR S&P Metals & Mining ETF leapt 3.3% and the Global X U.S. Infrastructure Development ETF gained 1.5%. U.S. Global Jets ETF ascended 2.5%. The SPDR S&P Homebuilders ETF climbed 1.2%. The Energy Select SPDR ETF advanced 0.9% and the Health Care Select Sector SPDR Fund climbed 1.3%. LLY stock is a big XLV holding.
The Industrial Select Sector SPDR Fund rallied 1.6%. The Financial Select SPDR ETF rose 1.2%. The SPDR S&P Regional Banking ETF jumped 3.7%.
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Stocks Near Buy Points
Eli Lilly stock edged up 0.4% to 778.18 on Wednesday. Shares are working on a de facto flat base with an 800.78 buy point. LLY stock has been trading tightly for the past few weeks, gradually rising with the 21-day line. Investors could use Wednesday's high of 785.26 as an early entry.
East West Bancorp stock climbed 3.8% to 79.25, regaining a 76.88 buy point and setting a 52-week closing high. Volume was weak though. A number of regional banks are trading just above or below buy points.
Norwegian Cruise Line stock jumped 5.85% to 21.34, just clearing a 21.26 buy point from a huge cup-with-handle base. Investors could view the handle as its own base. NCLH stock jump following earnings from rival Carnival before Wednesday's open. CCL stock reversed higher for a 0.9% gain, but isn't actionable now. Royal Caribbean, the group leader, climbed 2% to the top of a buy zone.
What To Do Now
Investors who took new positions or add-on buys in the past few days may have had to exit those positions if they triggered sell rules. If you're going to be aggressive with taking positions and exposure, you have to be quick to step back.
The past couple of days shows the downside of being too concentrated in a particular sector or theme. Investors with the bulk of their portfolios in AI stocks would have suffered some notable losses Wednesday while the broader market had a decent day. In truth, that's a fair trade given the huge gains in AI stocks in 2024. But one can imagine the AI carnage if, say, Nvidia corrects to the 50-day line over the next couple of weeks.
Keep working on watchlists, looking for potential setups. Definitely look beyond AI and tech names to financials, energy, industrials and various consumer plays.
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