Dow Jones futures fell modestly early Thursday, while S&P 500 futures and Nasdaq futures rose. Broadcom jumped overnight on strong earnings and a big stock split. Tesla popped as Elon Musk says he expects to win his $56 billion pay vote.
The stock market rally surged Wednesday morning on tame CPI inflation data, with the S&P 500 and Nasdaq hitting fresh all-time highs. They largely held those gains even after the Federal Reserve forecast just one rate cut in 2024. But stocks faded somewhat into the close.
Apple rose again Wednesday with Nvidia and Tesla up solidly. Small caps jumped but closed near session lows.
Oracle, Booking Holdings, ASML, Reddit and ELF Beauty and Mr. Cooper Group cleared new buy points.
On Thursday, Tesla will be in focus as it holds its annual shareholder meeting, with investors voting on Elon Musk's huge pay deal.
Nvidia, ELF Beauty and ASML stock are on IBD Leaderboard. Booking stock is on SwingTrader. ELF stock and Nvidia are on the IBD 50. Nvidia stock is on the IBD Big Cap 20 index. Booking Holdings was Wednesday's IBD Stock Of The Day.
The video embedded in this article discusses Wednesday's market action and analyzed BKNG stock, Fair Isaac and KB Home.
Dow Jones Futures Today
Dow Jones futures fell 0.4% vs. fair value. S&P 500 futures climbed 0.1%. Nasdaq 100 futures climbed 0.6%. Tesla and AVGO stock buoyed the S&P 500 and Nasdaq 100, along with a still-rising Nvidia.
The 10-year Treasury yield rose to 4.31% from Wednesday's 3 p.m. ET close of 4.29%, but it's actually where it was trading Wednesday's 4 p.m. ET stock market close.
Crude futures fell slightly.
At 8:30 a.m. ET, the Labor Department will release the producer price index. Key PPI components feed directly into the Fed's favorite inflation gauge, the core PCE 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.
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Stock Market Rally
The stock market rally jumped Wednesday on surprisingly tame inflation before the open. It held those gains despite the somewhat-hawkish Fed rate outlook and as Powell spoke, but wilted somewhat in the final half hour as Treasury yields kept paring losses.
The Dow Jones Industrial Average dipped 0.1% in Wednesday's stock market trading, sitting out the broad market advance even with strong gains from Apple and Microsoft. The S&P 500 index climbed 0.85%. The Nasdaq composite popped 1.5%.
The small-cap Russell 2000 jumped 1.6%, gapping back above the 50-day line, but closing near session lows. The Invesco S&P 500 Equal Weight ETF climbed 0.5%, also retaking the 50-day. The First Trust Nasdaq 100 Equal Weighted Index ETF advanced 0.8%, nearing all-time levels.
Leading stocks generally had a strong session, but many faded late.
The Nasdaq closed 7.4% above its 50-day line, above the 5-6% level that starts looking extended. The tech-heavy composite could keep getting more extended, but the risks of a pullback would increase as well. Nvidia stock is 31% above its 50-day line, though it's gotten above 40% a couple of times in the past year. Apple stock is 17% above its 50-day.
U.S. crude oil prices rose 0.8% to $78.50 a barrel.
The 10-year Treasury yield 11 basis points to 4.29%, though it crept up to 4.32% after the official 3 p.m. ET close. The yield hit a two-month low of 4.25% before the slightly hawkish Fed rate outlook.
Megacap Winners
Apple stock jumped 2.9% Wednesday after soaring 7.3% on Tuesday. Nvidia stock gained 3.55%. Microsoft stock rose 1.9%, moving within a buy zone. Microsoft remains the most-valuable company at $3.277 trillion. AAPL stock is close behind at $3.267 trillion and Nvidia is at $3.086 trillion.
Nvidia stock rose 2% early Thursday while Apple and Microsoft were little changed.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF gained 2.3%, with MSFT stock a major holding. The VanEck Vectors Semiconductor ETF leapt 3%. Nvidia is the No. 1 SMH holding, with ASML and Broadcom stock also key components.
Reflecting more-speculative story stocks, ARK Innovation ETF rose 2.1% and ARK Genomics ETF popped 2.6%. Tesla stock is the No. 1 holding across Ark Invest's ETFs.
SPDR S&P Metals & Mining ETF edged up 0.4%. The SPDR S&P Homebuilders ETF leapt 3.55%. The Energy Select SPDR ETF fell 1.1% and the Health Care Select Sector SPDR Fund dipped 0.2%.
The Industrial Select Sector SPDR Fund gained nearly 0.95%. The Financial Select SPDR ETF edged down 0.1%.
Time The Market With IBD's ETF Market Strategy
Elon Musk Expects To Win Pay Deal
Tesla CEO Elon Musk late Wednesday said shareholders are set to approve his $56 billion pay package and a move to reincorporate the EV maker to Texas from Delaware.
He said both resolutions are passing by "wide margins."
The final tally will come Thursday night at Tesla's shareholder meeting.
There has been concern that Musk would leave or step-up his moves to shift Tesla efforts and resources to his other companies.
Delaware courts, which struck down his 2018 pay deal earlier this year, could still block a reapproved package.
Separately, Tesla says it'll hike Model 3 prices in the European Union, which plans to impose new tariffs of up to 38.1% on China-made EVs starting in July. That's on top of the current 10% tariff. Tesla ships the Model 3 from its Shanghai plant to Europe.
Tesla Stock
Tesla stock jumped 6.5% in premarket trade, clearing several weeks of tight trading, but below the 200-day line.
On Wednesday, Tesla stock popped 3.9% as Cathie Wood's Ark Invest set a new 2,600 price target. The EV giant retook its 50-day line but is still well below the 200-day. TSLA stock has a $565.4 billion market cap.
Federal Reserve Sees Just One Rate Cut In 2024
Federal Reserve policymakers guided to just one Fed rate cut this year, defying expectations for two cuts. Four members predicted no moves at all in 2024. In March, Fed officials narrowly supported three rate cuts.
CPI Inflation Tame
Early Wednesday, the Labor Department reported the May consumer price index was flat vs. April, slightly below views. CPI inflation came in at 3.3%, with the annual gain unexpectedly cooling slightly for a second straight month.
Core CPI rose 0.2%, also lighter than expected. Core inflation was 3.4% vs. a year earlier, the smallest advance since April 2021.
Broadcom Earnings
Broadcom beat fiscal Q2 earnings views late Wednesday and guided up on full-year revenue. The the chip-and-software giant announced plans for a 10-for-1 stock split.
AVGO stock soared 14% early Thursday. Shares climbed 2.4% to 1,495.51, rising within a 5% buy zone from a 1,438.17 flat-base entry.
What To Do Now
The stock market rally is looking strong, with the Nasdaq and S&P 500 hitting fresh highs. The Fed meeting is out of the way, though there could still be a day-two reaction.
The Nasdaq is looking extended, buoyed by Nvidia and Apple, even as small caps and the Dow fight around their 50-day lines.
Investors can be adding exposure, but do so gradually. If you have heavy exposure, you can stand pat or simply reshuffle your portfolio.
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