Dow Jones futures edged higher early Friday, while S&P 500 futures and Nasdaq futures rose after President Joe Biden faltered in Thursday night's debate with former President Donald Trump. The Fed's favorite inflation gauge is on tap early Friday.
The stock market rally showed slim gains on the major indexes Thursday while small caps led. Software stocks stood out with powerful moves, continuing their monthlong rebound.
Monday.com, Zeta, CyberArk Software, Datadog, ServiceNow, AppLovin and AppFolio flashed buy signals.
Meanwhile, Meta Platforms broke out Thursday. Amazon.com and Tesla extended Wednesday's breakouts.
Nike topped earnings views Thursday night. But sales fell short and Nike cut revenue growth forecasts. Nike stock plunged 15% early Friday. The Dow component has been struggling since late 2021.
Presidential Debate: Trump Vs. Biden Rematch
Heading into the first presidential debate of 2024, polls suggested former President Trump was the modest favorite to return to office, ousting the current incumbent, President Biden.
Biden's Thursday night debate performance was widely panned, with stumbling and mumbling in his answers. Even a number of sympathetic commentators argued that the president should exit the race. Trump was largely seen as making no mistakes.
Biden's odds of winning the Democratic nomination tumbled overnight in prediction markets.
Fed Inflation Gauge
The Commerce Department releases the May PCE price index at 8:30 a.m. ET as part of its income and spending report. The overall PCE price index is seen rising 0.1% vs. April, with the PCE inflation rate cooling slightly to 2.6% vs. a year earlier.
The core PCE price index, the Fed's favorite inflation gauge, is also seen rising 0.1% vs. April. The core PCE inflation rate should slow to 2.6% from April's 2.8%.
Dow Jones Futures Today
Dow Jones futures were slightly above fair value, even with Nike stock a drag. S&P 500 futures rose 0.4%. Nasdaq 100 futures climbed 0.5%.
The 10-year Treasury yield edged up to 4.31%.
Crude oil futures rose slightly, above $82 a barrel.
Dow futures erased slim losses Thursday night during the Trump-Biden debate. The core PCE inflation data is likely to swing futures and Treasury yields before the open.
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 shrugged off a post-earnings tumble in Micron Technology and a modest decline in Nvidia.
The Dow Jones Industrial Average and S&P 500 rose 0.1% in Thursday's stock market trading. The Nasdaq composite advanced 0.3%.
Market breadth was modestly positive.
The small-cap Russell 2000 jumped 1%, closing just above its 50-day line for the first time since June 13.
A few days ago, the market appeared to be rotating out of Nvidia and AI plays and into financials and industrials. The former seem to be trying to find their footing while financials and industrials have backed off, slightly. Now software and megacaps are taking the lead.
U.S. crude oil prices rose 1% to $81.74 a barrel.
The 10-year Treasury yield declined three basis points to 4.29%.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF popped 2.1% with ServiceNow, CrowdStrike and many others in IGV. The VanEck Vectors Semiconductor ETF fell 0.8%.
Reflecting more-speculative story stocks, ARK Innovation ETF advanced 1% and ARK Genomics ETF dipped 0.2%. Tesla stock is the No. 1 holding across Ark Invest's ETFs.
SPDR S&P Metals & Mining ETF retreated 0.6%. SPDR S&P Homebuilders ETF and the Energy Select SPDR ETF edged up 0.2%. The Health Care Select Sector SPDR Fund lost 0.2%.
The Industrial Select Sector SPDR Fund inched up 0.1%. The Financial Select SPDR ETF dipped 0.1%.
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Megacap Stocks In Buy Range
Meta stock rose 1.3% to 519.56, clearing a 514.01 cup-with-handle buy point. Shares have been actionable since earlier in the week from breaking the downtrend of the handle.
Amazon stock climbed 2.2% to 197.85, moving up in the buy zone after Wednesday's 3.9% pop cleared the 191.70 flat-base buy point.
Tesla stock edged up 0.5% to 197.42. The EV giant leapt 4.8% on Wednesday, breaking out from a 191.08 handle buy point. TSLA stock is still below its 200-day line.
Software Stocks
Software struggled from early February before finally bottoming at the end of May after a Salesforce-led sell-off. Since then, the software sector has been on the rebound, with big gains Thursday.
Monday.com stock jumped nearly 3% to 236.28, clearing a downtrend in what appears to be a mini-double bottom next to another consolidation. That extends a recent bounce from the 50-day line. MNDY stock has a 239.54 official buy point, which roughly coincides with the prior base entry of 239.22.
Zeta stock also broke a downtrend in an emerging mini-double bottom base, while extending a 50-day bounce. Shares leapt 5.5% to 17.32. Investors could use 17.58 as a buy point as well.
AppLovin stock climbed 3.3% to 83.12, clearing a tight trendline and a short-term high of 82.66. The official flat-base buy point is 88.50.
AppFolio stock popped 3.8% to 248.89, above a 243.04 early entry and extending a 50-day line bounce. It's working on a 256.73 flat-base buy point.
CyberArk stock climbed 2.9%, ServiceNow 2.7% and Datadog 4.3%, all breaking trendlines in consolidations going back to early February.
Leaders like CrowdStrike showed strength while a number of laggards such as Salesforce.com rebounded.
Meanwhile, IGV stock looks a lot like ServiceNow, CyberArk and Datadog. That's one way to play the broad sector move with a lot of names out of position. SwingTrader added IGV as a holding on Thursday.
The Amplify Cybersecurity ETF and Global X Cybersecurity ETF also look actionable, with the latter more focused on cybersecurity pure-play stocks.
What To Do Now
The stock market rally continues to act well, with weekly charts showing little change or fractional gains on the key indexes.
Despite lackluster-at-best market breadth, investors have quality names from a variety of sectors to consider. While this article focused on software and some megacaps, also pay attention to leaders in the discount retail, financial, travel, industrial, medical sector and more.
Investors could be making new buys, either adding exposure or swapping out losers and laggards in your portfolio. But if you are heavily invested, holding steady is a sound strategy as well.
The Fed's inflation gauge will be key Friday, with the Biden-Trump presidential debate a wild card.
Nvidia, Amazon and Meta stock are on IBD Leaderboard. Amazon stock, Meta Platforms and CrowdStrike are on SwingTrader. Nvidia stock is on the IBD 50, along with AppFolio, Monday.com and ServiceNow. Amazon was Thursday's IBD Stock Of The Day.
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