The Dow Jones Industrial Average closed higher Monday ahead of a key inflation report. AI stock Microsoft was a top blue chip, with Meta Platforms also strong. A trio of Warren Buffett stocks are near buy points, including General Motors.
Breakouts were thin on the ground, but Immunocore tested a buy point while Meritage Homes and Arista Networks are nearing entries.
Stocks were recouping some of last week's losses despite the fact that the latest CPI report, a measure of key inflation, looms large Tuesday morning.
Oanda senior market analyst Edward Moya said investors "should not be surprised" if the inflation report is very hot amid a rebound in used-car and energy prices last month.
"Risky assets could struggle if the bond market sees more traders place bets for much more Fed tightening," he said in a note to clients. "If tomorrow's report is too hot, Fed swaps could start to fully price in two quarter-point rate hikes and be on the fence about a third one."
Meanwhile, the yield on the benchmark 10-year Treasury note slid 3 basis points to 3.71%. Oil inched lower, with West Texas Intermediate crude falling less than 1% to trade at just over $79 per barrel.
Nasdaq Shines, IBD 50 Excels
The Nasdaq fared best out of the major indexes, closing up 1.5%. Illumina shined brightest in the index as it soared 9.8%.
The S&P 500 also flexed its muscles, rising 1.1%. Former Leaderboard stock Generac was among the highlights here as it rose 4.8%. The generator maker reports earnings this week.
The S&P 500 sectors were nearly all closed higher. Technology and consumer discretionary fared best while energy was the only area to fall.
Small caps also rose, with the Russell 2000 finishing the day up 1.1%. Growth stocks fared best, with the Innovator IBD 50 ETF gaining 1.6%.
Dow Jones Today: Microsoft Stock Leads Amid AI Interest
The Dow Jones Industrial Average had a solid session as it popped nearly 400 points, or 1.1%.
Microsoft stock continued to move higher. MSFT, which has been bolstered by excitement surrounding AI, rose 3.1%. Microsoft is integrating the technology behind the viral chatbot ChatGPT into its Bing search engine and Edge web browser.
The software stock is now clear of all its moving averages, MarketSmith analysis shows. Microsoft stock is an IBD Long Term Leader.
Its old ally Intel also fared well as it gained 2.7%
Downside action was limited. Chevron and Walt Disney struggled most, falling 0.6% and 0.4% respectively.
These 3 Warren Buffett Stocks Are Near Entries
Investors are always keen to track the performance of big names in the investing field and few are bigger than Warren Buffett.
A trio of stocks owned by the billionaire's firm, Berkshire Hathaway, are currently trading near potential entries.
General Motors is trading in a buy zone after rising above a consolidation entry of 41.68. It ended the session up 1.6%.
Overall solid performance is reflected in its IBD Composite Rating of 79 out of 99. Price performance is currently lagging earnings, though the stock is now clear of its major moving averages.
Insurance play Aon currently sits in a buy zone after clearing a cup-with-handle buy point of 314.74. It ended the day up 1.1%.
Both stock market and earnings performance are strong here. It is in the top 16% of stocks in terms of price performance over the last 12 months.
Security software stock VeriSign is also eying an entry. It is trading just below a cup-with-handle entry of 224.66. It closed up 1.3%.
Institutional investment has been rising of late, which is reflected in an Accumulation/Distribution Rating of B-.
Meta Stock: Facebook Parent Pops Amid More Layoffs
Tech stocks have been bolstered of late amid rising layoffs, and the trick was working again Monday.
Meta Platforms vaulted 3% amid reports that more workers are set to be jettisoned at the social media giant.
The Financials Times reported the firm has delayed finalizing the budgets of multiple teams as it prepares for a fresh round of job cuts. It already announced in November that it was letting more than 11,000 employees go.
CEO Mark Zuckerberg boasted during the firm's most recent earnings call that "reducing layers of management" had improved the flow of information. He believes this will lead to better products and better staff retention.
Outside Dow Jones: Biotech Stock Tests Buy Point
There was a lack of breakouts despite the encouraging market action, though a number of stocks are near entries.
Immunocore is trading in a buy zone after clearing a cup-with-handle entry of 65.10.
Volume jumped, an encouraging sign. In addition, this is a first-stage pattern, which counts as early stage. IMCR is the IBD Stock of the Day for Monday as it expands its drug pipeline.
Meritage Homes is closing in on a cup-with-handle buy point of 117.22. With homebuilder stocks faring well of late, this could be one worth watching.
Arista Networks has formed a cup base with a 140.91 potential entry. It could yet go on to form a handle from here. Excellent all-around performance is reflected in an IBD Composite Rating of 98.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
