Dow Jones futures rose modestly early Friday, along with S&P 500 futures and Nasdaq futures. Broadcom and Lululemon Athletica headlined earnings late Thursday with the jobs report on tap before the open. Tesla is looking to continue Thursday's breakout attempt.
The Senate passed debt-ceiling legislation Thursday night, sending it to President Biden for his signature. That will avoid a first-ever U.S. default.
The stock market rally had a solid session Thursday. After starting off mixed, the major indexes should rebounded and moved higher, though they pared gains near the close. Market breadth was strong. Several stocks made bullish moves while some early earnings losers roared back. Falling Treasury yields and a weaker dollar provided a boost.
Tesla stock is trying to break out, while archrival BYD is just below a buy point. Wingstop, Fluence and Uber Technologies are all near entries.
In addition to Broadcom and LULU stock, Zscaler, Asana, Samsara, SentinelOne, MongoDB reported late.
Lululemon. Samsara and especially MDB stock were big overnight earnings winners. ASAN stock and Zscaler rose as well, with AVGO stock edging higher. SentinelOne stock crashed overnight. ZS stock, Asana and Samara all closed near buy points or early entries.
WING stock was added to IBD Leaderboard on Thursday. MDB stock, Fluence, Wingstop and Uber are on the IBD 50. Wingstop was Thursday's IBD Stock Of The Day. FLNC stock was Tuesday's selection.
Jobs Report
Economists expect the May jobs report to show nonfarm payrolls up 190,000, down from 253,000. The jobless rate should tick up from a long-term low to 3.5%. Average hourly earnings should climb 4.4% vs. a year earlier, steady with April.
Other labor data this week have been robust, including April job openings and the May ADP Employment Report. But there are other indications that the labor markets haven't been as tight as previously thought.
The jobs report will influence expectations for the June Fed meeting. Rate hike odds plunged Wednesday as two Fed officials signaled they favored a pause this month. Markets now see a 77% chance of a pause.
Dow Jones Futures Today
Dow Jones futures rose 0.5% vs. fair value. S&P 500 futures advanced 0.5% and Nasdaq 100 futures climbed 0.5%. AVGO stock is a notable S&P 500 and Nasdaq 100 holding. So is Tesla.
Crude oil rose 2%. Copper futures climbed nearly 2%.
China's State Council is meeting Friday to discuss ways to boost the flagging economy. One option, according to a Bloomberg report, is to extend the purchase tax exemption for electric vehicles that cost less than 300,000 yuan ($42,400). The purchase tax exemption for all new energy vehicles was set to expire this year. That would be good news for many EV makers, including Tesla and BYD.
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 strengthened for most of the session, before backing off in the final 45 minutes.
The Dow Jones Industrial Average rose 0.4% in Thursday's stock market trading. The S&P 500 index climbed 1%. The Nasdaq composite popped 1.3%. The small-cap Russell 2000 climbed 1.05%.
U.S. crude oil prices rebounded nearly 3% to $70.10 a barrel. Copper prices bounced 2.1%. Commodity prices were helped by a stronger Chinese economic data and a weaker U.S. dollar.
The 10-year Treasury yield fell 3 basis points to 3.61%, down 21 basis points so far this week.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF rose 1.3%. The iShares Expanded Tech-Software Sector ETF lost a fraction. Sentinel One, Asana and ZS stock are in IGV. The VanEck Vectors Semiconductor ETF gained 1.5%. AVGO stock is a big SMH component.
Reflecting more-speculative story stocks, ARK Innovation ETF climbed 1.5% and ARK Genomics ETF popped 2.9%. Tesla stock is the No. 1 holding across Ark Invest's ETFs. Cathie Wood's Ark also owns some BYD stock.
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Tesla Stock
Tesla stock rose 1.8% to 207.52. Intraday, shares hit 209.80, briefly clearing a 207.89 buy point from what's either a cup or double-bottom base. Notably, TSLA stock has advanced on above-average volume for four straight sessions, after few such days in the prior three months.
Shares rose slightly early Friday, signaling a continuation of the breakout attempt.
There had been speculation that Elon Musk would unveil a revamped Model 3 at the Shanghai plant on Thursday, but he did not. Meanwhile, Tesla is increasing discounts on U.S. inventory, choosing not to cut official prices for now.
Meanwhile, BYD stock climbed 2% to 30.80 on Thursday, getting back toward a 31.17 cup-with-handle buy point initially cleared on May 10. On Thursday, BYD reported record deliveries in May, exceeding its late 2022 peak after a Tesla-led China EV price war took a toll earlier in 2023.
Other Stocks Near Buy Points
FLNC stock fell 2.4% to 24.20. Shares are slightly below a 24.87 handle buy point, but have been trading this week above an early entry from breaking the downtrend of the handle. Fluence Energy is in utility-scale storage. Much like Tesla's Megapack business, Fluence uses CATL batteries. Not yet profitable, but revenue growth is booming.
WING stock dipped 0.3% to 198.44. Wingstop found support at its 10-week line this week, just above a prior buy point. Shares would be actionable above Wednesday's high of 202.43. That would also get WING stock above its 21-day line and break a downtrend in a short consolidation. Wingstop stock is on track to have a flat base by Friday's close.
UBER stock rose 1.45% to 38.48, rebounding from the 21-day line. Technically, the ride-hailing giant is in range from a cup base with a 37.68 buy point, according to MarketSmith analysis. Investors could buy Uber stock here, or wait for a little more strength to break a short downtrend. Uber is an example of a stock that ran up straight from the bottom of its base. The pause over the past month has been constructive.
Market Rally Analysis
Big-cap techs led Thursday's stock market rally, but it was a broad advance. The Nasdaq rose to just below Tuesday's nine-month high, and closed at its best level since mid-August. The S&P 500 set a fresh 2023 high.
The Dow Jones tested its 200-day line but rebounded higher. It's still below its 50-day line. The Russell 2000 reclaimed its 50-day but must work back to its 200-day average.
Market breadth was strongly positive on Thursday, with winners leading losers by more than 2-to-1. However, new lows comfortably exceeded new highs.
The First Trust Nasdaq 100 Equal Weighted Index ETF advanced 0.7%, lagging the Nasdaq 100's 1.2% gain but match a 52-week closing high.
The Invesco S&P 500 Equal Weight ETF rallied 0.75%, but is still below key moving averages. RSP, along with the Russell 2000, reflects Thursday's broad advance but also the longer-term weak breadth.
A few stocks broke out, but aside from Tesla they were extended from moving averages. There were a few add-on buys or swing trades such as Celsius, but you had to be quick.
A lot of the AI, chip and software names that have been leading the market could use a rest. Some are greatly extended, while others have run straight up from the bottom of bases, but could use some tight action around buy points.
Hopefully, other sectors can rejoin and expand market leadership, such as biotechs, medical products, travel and homebuilders. For that to happen, the market rally needs to see a steady diet of broad advances.
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What To Do Now
Thursday's market action was positive, but it was just one day. Leadership remains narrow and breadth weak.
There weren't a lot of buying opportunities Thursday. Some stocks need to rest, while others need to push higher. Let those setups develop. Don't try to force your way into higher exposure by buying extended stocks or others that are not yet in position.
Instead, you should be tracking these leaders and potential leaders. Keep your watchlists up to date, focusing in on stocks that are close to being actionable and have high potential.
Market exposure should still be modest. If a broad market rally takes hold, there will be plenty of opportunities to gradually bulk up your portfolio. On the flip side, be ready to scale out if individual holdings or the broader market weaken.
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.
