Dow Jones futures fell modestly Wednesday morning, along with S&P 500 futures and Nasdaq futures. The stock market rally powered higher Tuesday on hopeful signs from Russia-Ukraine peace talks and as Moscow pulled some troops away from Kyiv. Crude oil and commodity prices fell, though they pared losses.
Apple stock, Dutch Bros, Microsoft, Fortinet and Tesla are stocks to watch. Apple and BROS stock broke out Tuesday, while Microsoft and FTNT stock are offering early entries. Tesla stock continues to run up the right side of its base.
Concentrix, Micron Technology, RH and Lululemon Athletica were among the notable earnings reports after the close.
Russia-Ukraine Talks
A Russian negotiator called Ukraine talks "constructive." Russia said it will "radically" cut military activity around Kyiv and the nearby northern city Cherniv to "build trust." That seems cover for a military retreat, with some units moving back into Russia ally Belarus. Ukrainian forces have been reclaiming territory around Kyiv — and elsewhere — in the past several days, as Russia has taken heavy losses in troops and equipment in its Ukraine invasion. Russia continued to shell the Kyiv area and other key Ukrainian cities hard.
Russia said a peace deal would require Ukraine staying out of NATO, but doesn't object to Ukraine joining the European Union.
Ukraine and Western officials expressed skepticism that Russia is serious about peace talks. U.S. officials signaled the troops may be redeploying to the Donbas area in the southeast, where Russia continues to press attacks.
While the major indexes continued to move higher, oil, agriculture, mining and other commodity plays sold off with the underlying commodity prices. But the commodity prices and stocks came off lows as some of the optimism faded over Russia-Ukraine talks. Defense names also retreated.
Earnings
Concentrix earnings were slightly better than expected. CNXC stock was not yet active overnight. Shares rose 1.1% on Tuesday to 196.75, bouncing from the 50-day line. Concentrix stock is working on a flat base, or base-on-base formation, with a 208.58 buy point.
Micron earnings topped Q2 views, with the memory-chip giant also offering bullish guidance. MU stock rose modestly in extended trade. Shares climbed 2.7% to 82.05 on Tuesday, rebounding from the 200-day line. Micron stock is well off buy points after tumbling in early March.
Lululemon earnings topped forecasts while sales just missed. But the yoga apparel maker and retailer gave upbeat Q1 guidance and announced a $1 billion LULU stock buy back. LULU stock jumped in overnight action. Shares popped 3.7% on Tuesday, continuing to rebound from the 50-day line. Lululemon stock has a long way to go to reach its late 2021 peak.
RH earnings topped while Q4 sales missed. RH stock fell solidly in premarket trade despite plans for a 3-for-1 stock split. Shares had climbed nearly 5% Tuesday, moving just above the 50-day line but far off highs.
Tesla stock and Microsoft are on IBD Leaderboard and the IBD 50. MSFT stock and Fortinet are on IBD Long-Term Leaders. Dutch Bros was Tuesday's IBD Stock Of The Day.
The video embedded in this article reviews Tuesday's market action while also analyzing Apple, Marriott Worldwide and BROS stock.
Dow Jones Futures Today
Dow Jones futures fell 0.4% vs. fair value. S&P 500 futures retreated 0.4% and Nasdaq 100 futures sank 0.7%.
Crude oil futures rose 3%. The 10-year Treasury yield rose 1 basis point to 2.41%.
The ADP Employment Report estimated private payrolls rose by 455,000 in March vs. a revised 486,000 in February. That was slightly stronger than expected. The Labor Department releases its March employment report on Friday.
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 extended gains, closing near session highs with techs and small caps leading the way.
The Dow Jones Industrial Average rose 1% in Tuesday's stock market trading. The S&P 500 index jumped 1.2%. The Nasdaq composite popped 1.8%. The small-cap Russell 2000 leapt 2.7%.
U.S. crude oil prices sank 1.6% to $104.24 a barrel on the Russia-Ukraine talks, after briefly undercutting $100. April gold fell 1.4% to $1,912.20 an ounce after sinking below $1,900 intraday. Wheat futures fell solidly, but also pared losses.
The 10-year Treasury yield fell 8 basis points to 2.4%. The two-year Treasury yield dipped 2 basis points to 2.365%. The 2-year to 10-year yield spread is now below four basis points, after briefly inverting intraday. Fed chief Jerome Powell has signaled that he's more interested in the yield spread from the short end of the curve. The three-month to 10-year yield spread remains wide.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF climbed 0.7%, while the Innovator IBD Breakout Opportunities ETF edged up 0.3%, reflecting a number of commodity-related components. The iShares Expanded Tech-Software Sector ETF popped 2.4%. Microsoft is a major IGV component, with FTNT stock also in the ETF. The VanEck Vectors Semiconductor ETF rallied 2.3%.
SPDR S&P Metals & Mining ETF fell 1.4% and Global X U.S. Infrastructure Development ETF rose 0.8%. U.S. Global Jets ETF ascended 3.5%. SPDR S&P Homebuilders ETF popped 3.2%. The Energy Select SPDR ETF edged down 0.3% and the Financial Select SPDR ETF tilted 0.2% higher. The Health Care Select Sector SPDR Fund climbed 0.6%.
Reflecting more-speculative story stocks, ARK Innovation ETF rallied nearly 4% to just below its 50-day line. ARK Genomics ETF leapt 6.5%, reclaiming its 50-day line for the first time in 2022. Tesla stock remains the No. 1 holding across Ark Invest's ETFs.
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Key Stocks
Apple stock rose 1.9% to 178.96, clearing a 176.75 double-bottom buy point. After rising for 11 straight sessions, AAPL stock could be due for a break. That might provide an opportunity to buy into the iPhone giant. The relative strength line is right around record highs again, reflecting Apple stock's performance vs. the S&P 500 index. The RS line is the blue line in the charts provided.
BROS stock leapt 12.4% to 62.77, breaking out past a 62.11 buy point from a cup-with-handle base within a larger consolidation. The Dutch Bros stock buy zone runs to 65.22. On Tuesday morning, BROS stock broke the downtrend of its handle, offering an early entry. The Dutch Bros coffee chain is in the midst of a big expansion.
Microsoft stock climbed 1.5% to 315.41, gaining a little more distance from its 200-day line. Investors could buy the software and cloud-computing giant now as an early entry or as a Long-Term Leader. MSFT stock is now just above the midpoint of its base and just above its Feb. 2 short-term high of 315.12. The official buy point is 349.77, according to MarketSmith analysis.
Fortinet stock climbed 2.6% to 347.48, the highest close of 2022. FTNT stock broke a trendline entry Tuesday and is nearing another actionable point of 351.61. The official buy point is 371.87. Since a big spike in heavy volume on March 18, FTNT stock has moved higher in below-average trade.
Tesla stock edged up 0.7% to 1,099.57. Shares are approaching a 1208.10 cup-base buy point, with an early entry around 1,150. TSLA stock has surged 43% since March 14, so ideally the EV giant would pause and form a handle before flashing buy signals.
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Market Rally Analysis
The stock market rally continued to advance Tuesday on Russia-Ukraine talks and Russian troop movements, closing near session highs even as U.S. and Ukrainian officials tempered optimism.
The S&P 500, Nasdaq composite and Russell 2000 moved above their February short-term highs. The Dow Jones reclaimed its 200-day line. The Nasdaq's 200-day line is the next big resistance level for the market rally.
Advancers led decliners overwhelmingly in Tuesday's broad-based advance.
It wouldn't be surprising to see the market pause or pull back. Of course, that's been true for a while. That would be healthy, letting the major indexes digest gains. That could allow stocks such as Tesla and Apple stock to form handles, creating new or less-risky buying opportunities.
The market rally remains headline driven. It's hard for Wall Street to price in major news shifts — war vs. peace — especially when the news may quickly change.
Market Leadership
Which stocks and sectors will lead?
The winners during the correction — energy and other commodity plays — had a rough morning, but pared losses and don't seem finished yet. Energy stocks in particular came off intraday lows as crude oil prices slashed losses.
Defensive growth names, notably medical stocks such as UnitedHealth, HCA Healthcare and Eli Lilly, are holding around buy points but aren't charging higher in the past several sessions.
A lot of the big winners during the recent rally have been beaten-down, highly valued growth leaders. Many are still well off highs. One notable exception is Tesla stock. BROS stock is well off all-time highs, but did break out of a legitimate base Tuesday.
Apple stock, Microsoft and Google parent Alphabet are megacap tech leaders with relatively modestly price-earnings ratios that are flashing buy signals.
While the stock market rally powers ahead, the Treasury yield spread suggests that bond traders are more concerned about the economic outlook, from the Russia-Ukraine war to Fed rate hikes. A Russia-Ukraine cease-fire or peace deal could give the Fed more of a free rein to enact 50-basis point hikes to combat inflation.
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What To Do Now
The stock market rally continues to move higher, clearing key resistance levels. Leadership remains in flux. In the best-case scenario, the market rally will be broad-based. Or narrow leadership may reassert itself in the coming weeks.
Either way, investors should be looking to have a diversity of leadership right now, continuing to slowly add exposure.
Keep working on those watchlists. The strong market gains are repairing a lot of broken charts.
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.
