Dow Jones futures rose modestly early Thursday, along with S&P 500 futures and Nasdaq futures, ahead of Thursday's CPI inflation report.
The stock market rally on Wednesday extended recent gains. Investors are betting on tame inflation data, raising the stakes for the Fed-critical report.
Amazon.com and Tesla stock led a megacap rally Wednesday, with Apple, Microsoft and Google parent Alphabet having solid sessions. Tesla and AMZN stock also reflected strong performance in auto/EV names and e-commerce plays, respectively.
Celsius Holdings heated up Wednesday, offering a buy signal.
CELH stock was added to SwingTrader on Wednesday and the IBD Leaderboard watchlist. Celsius was also Wednesday's IBD Stock Of The Day.
Key Earnings
KB Home reported earnings after the close, kicking off housing reports. KBH stock declined modestly as KB Home earnings fell well short of fiscal Q1 views, with revenue also missing. KB Home stock had rallied 3.2% on Wednesday to its best level since March 2022, up nearly 13% so far this year.
Homebuilder stocks, and housing-related names generally, have been rallying in recent weeks.
Taiwan Semiconductor earnings topped views early Thursday, but revenue fell short. Taiwan Semi, which makes chips for Apple, Nvidia and many others, guided low for Q1. TSMC also cut 2023 capital spending plans. TSM stock still rose solidly early Thursday, signaling a move above its 200-day moving average.
American Airlines gave bullish preliminary Q4 figures early Thursday, a day ahead of Delta Air Lines earnings. AAL stock rose solidly, with Delta up modestly. Airline stocks have trended higher in recent days.
Disney Taps Nike Veteran
Walt Disney named Nike Chairman Mike Parker as its new chair, replacing Susan Arnold. Parker has been on Disney's board for seven years.
Disney also recommended that shareholders vote for its board slate and not support activist investor Nelson Peltz, who is seeking to join the Dow Jones entertainment giant's board.
DIS stock rose modestly. Nike, a fellow Dow stock like Disney, Apple and Microsoft, was little changed after hours.
CPI Inflation Report
The December consumer price index will be released at 8:30 a.m. ET.
Economists expect flat consumer prices after November's 0.1% gain. Core CPI is seen rising 0.3% after November's 0.2% advance. The overall CPI inflation rate should continue to cool, to 6.6% from November's 7.1%. Core inflation is expected to slow to 5.7% from November's 6%.
The CPI inflation rate peaked at 9.1% last June, while the core CPI inflation rate hit 6.6% in September, both 40-year highs.
Other data this week, including New York Fed inflation expectations and small businesses with job opening and plans to hire, are pointing to cooling inflation and labor markets.
A tame inflation report should lock in a quarter-point Fed rate hike at the Feb. 1 policy meeting, slowing from 50 basis points and 75 basis points in the prior two meetings. More importantly, cooling inflation could raise expectations that the Fed will pause rate hikes, perhaps after the March meeting.
Dow Jones Futures Today
Dow Jones futures rose 0.3% vs. fair value. S&P 500 futures advanced 0.3% and Nasdaq 100 futures were up 0.3%.
The 10-year Treasury yield dipped 4 basis points to 3.51%.
Crude oil futures rose more than 1%. Natural gas prices climbed 3%.
The CPI inflation report is sure to swing Dow Jones futures and Treasury yields.
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 added to recent gains, with the major indexes closing near session highs for a second straight session. The Nasdaq led the advance thanks to Amazon and big-cap growth names.
The Dow Jones Industrial Average rose 0.8% in Wednesday's stock market trading. The S&P 500 index climbed 1.3%. The Nasdaq composite jumped 1.8%. The small-cap Russell 2000 gained 1.2%.
U.S. crude oil prices rose 3.1% to $77.41 a barrel, as China optimism outweighs a huge jump in U.S. crude stockpiles.
The 10-year Treasury yield fell 6 basis points to 3.55%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF climbed 1.3%. The iShares Expanded Tech-Software Sector ETF advanced 1.6%, reclaiming its 50-day line, with MSFT stock a major IGV holding. The VanEck Vectors Semiconductor ETF rose 1.2%, moving above its 200-day line. TSM stock is a top SMH component.
Reflecting more-speculative story stocks, ARK Innovation ETF popped 3.4% and ARK Genomics ETF 3.7%. Tesla stock remains a top holding across Ark Invest's ETFs. Cathie Wood's Ark has been loading up on TSLA shares in recent days and weeks.
SPDR S&P Metals & Mining ETF edged up 0.5% and the Global X U.S. Infrastructure Development ETF rose 1.3%. U.S. Global Jets ETF ascended 0.4%, with American Airlines and DAL stock key components. SPDR S&P Homebuilders ETF popped 2.6%. The Energy Select SPDR ETF nudged 0.3% higher and the Financial Select SPDR ETF climbed 0.9%. The Health Care Select Sector SPDR Fund added 0.6%.
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Megacap Stocks
Tesla stock rose 3.7% to 123.22, extending a bounce from Friday morning's bear market low of 101.81. Shares are still below their long-falling 21-day line. Tesla is planning a big Austin plant expansion and reportedly is near a preliminary deal for a new factory in Indonesia. The latter could complicate Tesla Shanghai demand issues.
China's government on Thursday delayed yet-another Tesla Shanghai expansion, which would lift annual production capacity to two million from a recently enlarged 1.2 million. Officials reportedly are concerned about Elon Musk's Starlink.
Amazon stock jumped 5.8% to 95.09, closing above its 50-day moving average for the first time in four months. AMZN stock also set a bear market low last Friday.
Apple stock popped 2.1%, back above its 21-day line. That came despite Barclays cutting its AAPL price target, citing weakening Apple demand across many product categories.
Google stock gained 3.5%, also retaking the 21-day line. Microsoft stock advanced 3%, just below its 21-day line after plunging last week.
Celsius Stock
CELH stock jumped 5.3% to 106.57 on Wednesday in heavy volume, after Tuesday's upside reversal. Shares rose from the 50-day line, broke a trendline and closed above the 21-day moving average. All that offered a buy signal. CELH stock did finish off intraday highs of 108.80, but had a strong close.
Market Rally Analysis
The stock market rally showed more strength Wednesday heading into the CPI inflation report.
The S&P 500 index moved further from the 50-day line and topped Tuesday's intraday high. While still below the 200-day line, the benchmark index did top its 10-week and 40-week lines. The Russell 2000 cleared its 200-day line after topping its 50-day Wednesday.
The Nasdaq, which has been a laggard in recent months, cleared its 50-day line for the first time in nearly a month.
Meanwhile, leading stocks showed positive action overall. CELH stock flashed a buy signal. Stocks that recently broke out generally held ground or kept climbing.
Apple, Tesla, Amazon and other megacaps are a long way from being actionable, but at least are not weighing on the major indexes.
Just looking at the major indexes and leading stocks, the stock market rally is showing healthy action, albeit with more resistance levels ahead.
But rallying into Fed-critical economic data or events has been dicey, at best, over the past several months. Yes, a tame CPI inflation report could send the market rally flying. But a hotter-than-expected reading could trigger a big sell-off. And the market is pricing in "good news."
Of course, it's not the news that matters, but the reaction to the news. The November CPI inflation report was cooler than expected on Dec. 13, pushing the major indexes to their best intraday levels in months. But that was the top for the October-December market rally. The indexes closed well off highs that day and skidded lower until almost year-end.
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What To Do Now
Investors may have added some exposure in recent days with the indexes moving higher and many stocks flashing buy signals.
Those recent buys could look great Thursday, but they could also all blow up, depending on the December CPI inflation report.
So investors shouldn't have been too exposed heading into the inflation reading.
But be ready to act if the major indexes show strong action beyond the opening bell. A lot of quality stocks are flashing buy signals or setting up.
Don't forget about earnings season. JPMorgan Chase and several other banking giants report Friday morning, along with Delta Air and UnitedHealth.
Microsoft and Tesla stock are due in two weeks, with Apple, Amazon and Google soon following.
Earnings results and guidance will be critical amid uncertain economic times.
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