Dow Jones futures climbed slightly early Thursday, along with S&P 500 futures and Nasdaq futures. Meta Platforms, Arm Holdings and Carvana were key earnings movers overnight.
The stock market rally had a strong Wednesday, with the S&P 500 and Nasdaq surging to reclaim a key level. Credit AI optimism following big tech earnings, followed by Federal Reserve chief Jerome Powell saying a September Fed rate cut is "on the table."
Advanced Micro Devices, Nvidia, Arista Networks and ARM stock were among the winners.
Nvidia stock is on IBD Leaderboard, with AMD on the Leaderboard watchlist. Microsoft stock is on IBD Long-Term Leaders.
The video embedded in the article discusses Wednesday's strong market action and analyzes Arista stock, Dycom Industries and TransDigm.
Fed Chief Powell Pivots To Rate Cuts
The Federal Reserve left rates steady Wednesday, as expected. Fed chief Jerome Powell said a rate cut could come as soon as the September policy meeting. He even hinted that some policymakers favored a cut on Wednesday.
Heading into the Fed announcement and Powell's comments, markets had fully priced in at least a quarter-point cut at the Sept. 17-18 meeting, with at least two and probably three cuts for the year. The odds for three rate cuts strengthened after Powell spoke.
Dow Jones Futures Today
Dow Jones futures rose 0.1% vs. fair value. S&P 500 futures advanced 0.4%. Nasdaq 100 futures climbed 0.5%.
Crude oil futures edged higher. The 10-year Treasury yield fell several basis points to 4.05%.
The Bank of England cut its key interest rate by a quarter-point to 5%, in a 5-4 split decision. Economists had been divided over whether the BoE would cut.
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 had a strong, tech-led advance Wednesday. The indexes largely gave up their Powell-related gains in the final hour as Iran vowed retaliation vs. Israel.
The Dow Jones Industrial Average climbed 0.2% in Wednesday's stock market trading, moving back toward recent record highs. The S&P 500 index jumped 1.6%, back above its 50-day line and retaking its 21-day. The Nasdaq composite soared 2.6%, just retaking its 50-day line.
The small-cap Russell 2000 climbed 0.5%, hitting a new high intraday.
The Invesco S&P 500 Equal Weight ETF advanced 0.5%, also setting a record high.
The First Trust Nasdaq 100 Equal Weighted Index ETF leapt 1.7%.
Microsoft reported weaker-than-expected cloud growth, but its capital spending outlook was bullish for suppliers. Advanced Micro Devices reported booming data-center sales. Together, that fueled a big rally in AI chip and hardware plays. Nvidia spiked nearly 13%, though it's still below its 50-day moving average. Arista, which had a beat-and-raise report Tuesday night and is a big Microsoft and Meta supplier, leapt 11.3%, back above its 50-day and 21-day lines.
AMD stock climbed 4.4% but came well off morning highs as it hit 200-day-line resistance. Microsoft stock fell 1.1%.
There were a number of breakouts and buy signals from a variety of sectors, including Arista Networks, T-Mobile US, ServiceNow, Dycom, Parsons, Spotify, Northern Oil & Gas, TransDigm and Teva Pharmaceutical.
U.S. crude oil prices jumped 4.3% to $77.91 a barrel, buoyed in part by Mideast fears.
The 10-year Treasury yield fell 4 basis points to 4.11%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF edged up 0.1%. The iShares Expanded Tech-Software Sector ETF rose 1.4%, even with Microsoft stock a major holding. The VanEck Vectors Semiconductor ETF spiked 7.6%, with Nvidia stock and AMD major holdings.
Reflecting stocks with more speculative stories, the ARK Innovation ETF advanced 1.3% and ARK Genomics rose 0.8%.
The SPDR S&P Metals & Mining ETF popped 2.65%, and the Global X U.S. Infrastructure Development ETF gained 1.6%. SPDR S&P Homebuilders rose a fraction. The Energy Select SPDR ETF gained 0.4%.
The Health Care Select Sector SPDR Fund retreated 0.4%. The Industrial Select Sector SPDR Fund gained 1.1%. The Financial Select SPDR ETF sank 0.25%.
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Meta Earnings
Meta earnings topped views with the Facebook and Instagram parent guiding higher on revenue while also signaling strong capital spending through 2025.
Meta stock rose solidly in overnight action, signaling a move above its 50-day line. Shares rose 2.5% to 474.83 on Wednesday.
Arm Earnings
Arm earnings beat fiscal Q1 views but the U.K.-based wireless chip design leader guided lower for fiscal Q2. Shares of the big AI play plunged in extended trade. ARM stock spiked 8.4% to 144.17 on Wednesday but finished July down 11.9%, below its 50-day line.
Notably, Nvidia stock rose slightly overnight, taking its cue from Meta's capex plans over Arm's guidance.
Other Earnings
Carvana earnings topped forecasts. CVNA stock spiked over 10% early Thursdsay, signaling a move out of a buy zone. Shares rose 5% to 133.10 on Wednesday, back above a cup-base buy point of 129.
TransMedics shot up, signaling a possible entry, on strong earnings for the organ transplant play.
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What To Do Now?
With the market rebounding and with the Fed meeting and some key earnings out of the way, investors could have taken advantage of buying opportunities Wednesday.
Keep in mind that there are still major earnings to come this week. Remember that markets often have a day-two reaction to Fed meetings that can reverse the initial move. In this case, Friday's jobs report means there could be a day-three reaction.
So it's also understandable if you stood pat Wednesday, especially if you have solid to heavy exposure already.
But it's definitely important to be working on watchlists.
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