Dow Jones futures rose early Thursday, along with S&P 500 futures and especially Nasdaq futures, following Wednesday's positive market reaction to a steady Fed rate-cut outlook. Micron Technology soared overnight on earnings with a Microsoft AI event on tap Thursday.
The stock market rally saw solid gains Wednesday, almost all in the afternoon as Federal Reserve policymakers indicated they still see three rate cuts in 2024. Fed Chief Jerome Powell once again said it's appropriate to start easing "at some point this year."
The Nasdaq and small caps led while the S&P 500 and Dow Jones hit record highs.
Arista Networks, DraftKings, PVH Corp., JFrog and Royal Caribbean flashed buy signals.
Broadcom was on the cusp of a buy signal Wednesday, and appeared to carrying through on Thursday following its AI event.
Dow giant Microsoft reaffirmed a recent entry ahead of its AI event on Thursday.
Meanwhile, the Justice Department reportedly will sue Apple as soon as Thursday for violating antitrust laws related to the iPhone.
DraftKings stock is on IBD Leaderboard. DraftKings and PVH stock are on SwingTrader. Microsoft stock is on IBD Long-Term Leaders. Microsoft, DraftKings, Arista Networks, JFrog and Royal Caribbean stock are on the IBD 50. Nvidia, Arista Networks and SMCI stock are on the IBD Big Cap 20. PVH was Wednesday's IBD Stock Of The Day.
Dow Jones Futures Today
Dow Jones futures were 0.3% above fair value, with Apple stock as slight drag. S&P 500 futures rose 0.4%. Nasdaq 100 futures climbed 0.95%, suggesting that the Nasdaq composite will open at a record high. Micron stock and Broadcom areS&P 500 and Nasdaq 100 components.
The 10-year Treasury yield fell a few basis points to 4.23%, continuing to back off from just below 2024 highs.
The Swiss National Bank unexpectedly cut rates by 25 basis points on Thursday, moving ahead of the Federal Reserve and European Central Bank.
The Bank of England left rates steady Thursday morning.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Micron Earnings
After the close, Micron reported a surprise fiscal second-quarter profit with revenue also topping. The memory-chip giant also gave bullish Q3 guidance. MU stock soared 17% early Thursday, signaling a record high. Shares rose 2.4% to 96.25 on Wednesday.
Fed Rate-Hike Outlook
As expected, the Fed took no action Wednesday afternoon. But policymakers, via their "dot plot" projections, see a median year-end fed funds rate of 4.6%, down from the current 5.25%-5.5%. That's unchanged from the late 2023 forecast of three quarter-point Fed rate cuts this year. There had been some speculation that the Fed could curb its plans to just two rate cuts amid sticky inflation.
The Fed did raise its 2024 GDP and core PCE inflation estimates slightly.
Policymakers also now see the Fed funds rate at 3.9% at the end of 2025 vs. the December projection of 3.6%, indicating one fewer rate cut.
Fed chief Powell said the central bank is making good progress in fighting inflation. He said rate cuts should start "at some point" in 2024, but gave few specifics. Powell also said there were no discussions about the balance sheet, indicating policymakers aren't ready to scale back quantitative tightening quite yet.
Notably, Powell seemed unconcerned with the stock market rally and generally easy financial conditions.
The odds of a June rate cut rose to 75% vs. 59.2% on Tuesday.
The central bank appears willing to take a wait-and-see approach on rate cuts. There are still several key inflation and economic reports before the June 11-12 meeting.
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Stock Market Rally
The stock market rally gained momentum into the close as the Federal Reserve stayed the course on rate-cut plans and Fed chief Powell didn't say anything to undercut that.
The Dow Jones Industrial Average popped 1% in Wednesday's stock market trading while the S&P 500 index gained 0.9%, both setting all-time highs. The Nasdaq composite advanced 1.25% to a record close. The small-cap Russell 2000 jumped 1.9%, back above the 21-day line and near 23-month highs.
Financial markets often have a day two reaction to Fed meetings that reverse course.
But on Wednesday, the market rallied, with a number of stocks flashing buy signals as well as other leaders rebounding and setting up.
The window of opportunity may not last long. The S&P 500 is 4.6% above its 50-day moving average, while the Nasdaq is 4.2% above its 50-day.
Both are not far from the 5%-6% level that would start to be extended, raising the risk of set another pause or pullback. Both could top those levels at Thursday's open.
Bullish sentiment remains excessive, something that is a concern.
U.S. crude oil prices fell 2.1% to $81.68 a barrel.
The 10-year Treasury yield fell 2.5 basis points to 4.27%.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF rose 1%, with Microsoft stock a major holding. The VanEck Vectors Semiconductor ETF gained 1.6%. Micron stock is a big SMH holding, along with Broadcom.
Reflecting more-speculative story stocks, ARK Innovation ETF jumped 3.5% and ARK Genomics ETF advanced 1.85%.
SPDR S&P Metals & Mining ETF ran up 2.4%. The SPDR S&P Homebuilders ETF rallied 1.8%. The Energy Select SPDR ETF edged down 0.1% and the Health Care Select Sector SPDR Fund dipped 0.2%.
The Industrial Select Sector SPDR Fund and Financial Select SPDR ETF climbed 1.2%.
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Stock In Buy Areas
Arista stock rose 3.4% to 296.58, clearing a 292.66 flat-base buy point. On Tuesday, shares tumbled to their 10-week line soon after the open, but slashed losses. The relative strength line hit a new high on the breakout, a bullish sign marked by a blue dot at the end of the RS line on a MarketSurge chart.
Broadcom climbed 3.1% to 1,276 on Wednesday as the chip and software giant held an AI event. Shares rebounded from the 50-day/10-week line for the first time since clearing an ascending base in January. That could have been actionable, though shares closed just below the 21-day line. Early Thursday, AVGO stock gained nearly 3% on positive analyst comments about the AI event. That's also good news for Arista, which uses a lot of Broadcom products.
DraftKings stock jumped 5.7% to 46.27, clearing a short consolidation that wasn't quite long enough to be a flat base. Earlier Wednesday, shares topped a short trendline. DKNG stock has rebounded from the 21-day and 10-week lines this week as March Madness gets underway, fueling sports betting.
PVH stock popped 3.7% on Wednesday to 137.40, rebounding from the 21-day line and breaking a short downtrend. That extended Tuesday's bounce from the 10-week line modestly above a prior consolidation.
JFrog stock gained 3.9% to 44.65, bouncing from the 21-day line and breaking a downward-sloping trendline. Volume was below average. FROG stock is in an emerging consolidation following an earnings gap-up on Feb. 15.
Royal Caribbean stock rallied 4.7% to 135.53, clearing a 133.77 cup-base buy point. That came hours before RCL stock would have completed a handle, though that would have only lowered the entry by a fraction.
Microsoft Stock
Microsoft stock edged up 0.9% on Wednesday to 425.23, just making a record close. Shares flashed a buy signal on March 13 as they cleared a not-quite flat base, but then briefly backed off the 420.90 entry. Shares are up slightly early Thursday, signaling an all-time high.
The Dow giant will hold its "New Era of Work" event on Thursday, starting at noon ET. Microsoft will discuss AI innovations, along with what's new with Windows and Surface computers.
What To Do Now
The stock market rally made a bullish move following the Fed meeting and Powell's comments. The major indexes are at or near highs while a number of leading stocks flashed buy signals.
That offered opportunities for investors to add some exposure. There could be more opportunities on Thursday, assuming the market doesn't have second thoughts.
But with this week's gains pushing the S&P 500 close to extended and bullish sentiment high, investors might want to add exposure incrementally, especially after Wednesday.
But look for those stocks that are actionable or setting up. Have your watchlists up to date.
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