The Dow Jones Industrial Average rallied after new inflation data. Tesla edged up despite reported China fears over an Elon Musk project. Meme stocks AMC Entertainment and Bed Bath & Beyond were in comeback mode. Walt Disney popped amid a possible proxy fight.
A number of promising stocks staged breakouts amid the encouraging action. Oil stocks Hess and Valaris passed buy points, with Illinois Tool Works also testing an entry.
The yield on the benchmark 10-year Treasury note fell 13 basis points to 3.43%. West Texas Intermediate crude rose 1.1% to just over $78 per barrel.
Stocks Whipsaw After Inflation Data, Jobs Update
While the consumer price index fell faster than expected in December, core inflation — which strips out food and energy — only slowed in line with forecasts. Stubborn services inflation continued to be a bugbear.
Oanda senior market analyst Edward Moya said the inflation data is giving Wall Street more confidence in another downshift in tightening by the Fed. He said "disinflation trends are clearly intact" with cheaper energy costs a highlight.
"Inflation isn't broadly coming down, but it is cooling as the economy starts to feel the impact of the Fed's earlier rate hikes," he said in a note to clients.
Meanwhile, the Labor Department's initial unemployment claims rose to 205,000 vs. 204,000 in the previous week, below expectations for a rise to 215,000.
With the market entering earnings season, investors would be wise to limit market exposure and only take positions in the best stocks making good breakouts.
Nasdaq Gains As Small Caps Excel
The Nasdaq managed to claw its way out of the red to close the session up 0.6%. Mercado Libre performed well here, rising 9.3%.
The S&P 500 lagged relatively but still rose 0.3% after paring gains. Royal Caribbean Cruises was among the winners as it rose 5.5%.
The S&P 500 sectors were mostly positive. Energy and real estate fared best, while health and consumer staples lagged.
Small caps were top performers, with the Russell 2000 up 1.6%.
Growth stocks also moved higher, with the Innovator IBD 50 ETF rallying 0.5%.
Dow Jones Today: Disney Stock Leads Amid Proxy Challenge
The Dow Jones Industrial Average impressed by rallying out of negative territory to close the day up 0.6%.
Walt Disney was the top performer on the Dow Jones today as it popped 3.6%. The entertainment giant announced that Nike Chairman Mark Parker will become its own new chairman.
The House of Mouse is also facing a possible proxy battle as Nelson Peltz of Trian pushes for a seat on the board. Disney is resisting the move.
Peltz told CNBC that Disney "lost its way," causing a "rapid deterioration in its financial performance." He said the firm's takeover of Fox had turned what had been a "a pristine balance sheet into a mess."
Boeing and Caterpillar were among the other Dow outperformers. Coca-Cola lagged as it dipped 1.3%.
Tesla Stock Gains Despite China Report
Tesla has mounted a mighty comeback over the past five sessions and rallied out of the red Thursday. It ended the session up 0.3%.
It had come under pressure early after Bloomberg reported that its plans to expand capacity in its Shanghai factory could be put on ice.
The Chinese government is reportedly worried about the implications of the internet-from-space project, Starlink. Tesla CEO Elon Musk also runs SpaceX, which operates the system. Musk is also billed as the chief engineer at SpaceX.
Tesla has been gunning to start the third phase of expansion of its Chinese factory midyear. It would double its output capacity to about 2 million cars per year.
It isn't the first time an Elon Musk project has affected Tesla stock. His takeover of Twitter has led to fears that he will be distracted from the EV giant.
Tesla stock remains rooted below its major moving averages despite rallying more than 20% over the past five sessions.
AMC Stock Lags APE, BBBY Stock Soars
Meme stocks are in comeback mode following the Bed Bath & Beyond bankruptcy beatdown.
AMC, historically one of the most powerful meme stocks, rose 2%. It is now up 26.1% over the past five sessions.
But it was the AMC Preferred Equity (APE) units that were among the top performers on the stock market today. They vaulted 9.9%.
Bed Bath & Beyond left both in the dust, however, as it rocketed 50%. It is now up a dizzying 261% over the five past sessions.
Nevertheless, BBBY stock remains down 83% on the 30 peak it reached on Aug. 17.
Last week, the firm warned investors that it may consider a bankruptcy filing, making the stock an extremely risky proposition.
American Airlines Guidance Boosts Airline Stocks
Airline stocks were given a boost after American Airlines lifted its guidance. The carrier hiked its adjusted EPS range to $1.12 to $1.17, from 50 cents to 70 cents.
American Airlines stock soared 9.7% following the news, adding room above its 200-day moving average in the process.
Other airline plays rose in sympathy. Delta Air Lines climbed 3.7%, Southwest Airlines popped 2.8%, and United Airlines jumped 7.5%.
Alaska Air closed with a 3.5% gain. Spirit Airlines lifted 3.3%.
It was welcome news for the space, which has been hit by delayed or canceled flights amid problems with a pilot-alert system.
Futures: Tesla Slashes U.S., European Prices; Earnings Ramp Up
Outside Dow Jones: Oil Stocks Test Entries
With the market strengthening, now is a good time to be exploring breakouts.
International oil exploration play Hess is in a buy zone after breaking out of a flat base with a 149.93 buy point, according to MarketSmith analysis.
Overall performance is outstanding, which is reflected in its IBD Composite Rating of 99.
Oil and gas drilling stock Valaris is actionable after rising above a consolidation pattern entry of 70.27. The relative strength line hit a fresh high as it staged the move, an encouraging sign.
Illinois Tool Works has broken out of an enormous cup-with-handle base. The ideal entry point here is 231.79.
The firm, which produces products including engineered fasteners and components, has accelerating earnings. EPS jumped 30% in the most recent quarter.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
