The stock market today transitioned from seesaw action into a broader, stronger advance by the close. The Nasdaq composite — finishing up almost 1.7% — led the upside with the help of gains that set up a follow-on buy point for artificial intelligence bellwether Nvidia. Other large-cap indexes followed suit Thursday by erasing mild losses.
The Cboe Market Volatility Index, or VIX, sank nearly 5% to 15.05, down in four of the past five trading days. See the VIX and other key psychological market indicators here.
Meanwhile, bond prices continued to weaken Thursday, sending up yields and creating a near-term headwind for stocks. And the 10-year Treasury bond yield edged up another 3 basis points to 4.57%, the highest closing level since Nov. 13, according to Cboe data. The yield has spiked 19 basis points for the week going into Friday.
Nonetheless, most banks rebounded following tame producer level prices for March. The U.S. PPI index rose 2.1% year over year, below an Econoday forecast of 2.3% growth.
But Morgan Stanley shares got rocked on a Wall Street Journal report. The Journal said the Securities and Exchange Commission, the Office of the Comptroller of the Currency and other Treasury Department offices are investigating how the Wall Street advisory giant is vetting potential clients for its wealth management unit.
Concerns stem over the potential for money laundering through the veteran bank and influential player in both merger advisory services as well as private wealth management.
Wall Street Bank Taken To The Cleaners
Morgan Stanley, down more than 8% in two days, undercut both its 21-day exponential and 50-day simple moving averages, a sign of heavy institutional selling. The 57 Relative Strength Rating for Morgan Stanley means the bank is outperforming only 57% of all stocks in the Investor's Business Daily database over the past 12 months. That rating is likely to fall more.
The Dow Jones Industrial Average bore the brunt of morning selling, down as much as 0.6% to 38,221. The blue chip index turned those losses into gains by the afternoon, but ultimately ended the session nearly flat, down 2.43 points at 38,459. Dow stocks came close to topping the 38,600 level.
At least five of the 30 Dow components rose 2 points or more. Another five stocks slumped 1 point or more, including struggling health care play UnitedHealth, part of the IBD Long-Term Leaders, and Wall Street giant Goldman Sachs. Bloomberg reported that Goldman's treasurer left the brokerage to take a position at a large hedge fund.
On Friday, JPMorgan Chase, BlackRock and Wells Fargo are among the financial institutions that report first-quarter results.
Gold futures after the close traded at $2,390 per ounce, up nearly 0.8%. Silver futures ramped up 1% to $28.54, stretching its year-to-date rise to 18.8%.
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A New Buy Point For Nvidia
Nvidia, a mainstay on the Leaderboard portfolio for more than a year, tested the 10-week moving average near 841 and is trying to erase losses for the week. Shares in the AI processor powerhouse gained more than 3%. It also notched an intraday high of 907.38.
Read here for more details on whether Nvidia stock is a buy or sell now.
The megacap tech and true leader in the stock market holds a sterling 99 Composite Rating on a scale of 1 to 99.
This Investor's Corner highlights the benefit of buying powerful growth stocks on the first or second pullbacks to the 10-week line after a breakout. In Nvidia's case, the 5% buy zone from the new follow-on buy point goes from 841 up to 883. So the stock has gotten extended from that entry.
Stock Market Today
Along with Nvidia, other chip shares led the upside, with enterprise software firms also picking up steam for the tech-heavy Nasdaq index. The Nasdaq led all major indexes in afternoon action, surging nearly 272 points for a 1.7% gain.
Meanwhile, the S&P 500 posted moderate gains, as it moved ahead 0.7%. That stretched its year-to-date gain to 9%.
And the Russell 2000, which undercut its 50-day moving average Wednesday in the wake of a disappointing report on March consumer prices, initially eased nearly 0.4%. It later turned upward and closed 0.7% higher.
On Thinkorswim, losers topped winners early. But at the close, risers on the New York Stock Exchange roughly matched decliners at 1,436 vs 1,449. And Nasdaq exchange gainers led decliners by a 5-4 margin.
A Sell Signal Triggered By Fastenal
Some building-related firms suffered sharp declines.
Fastenal led the downside in the stock market. Shares, off 6.5% in volume running more than quadruple normal levels, gapped down at the open and briefly traded below 70, triggering a sell signal by collapsing below the 50-day moving average after a solid run-up.
Notice on a weekly chart how Fastenal has also pierced below its 10-week moving average for the first time in months, a bearish change in character. A few weeks ago, Fastenal saw its mid-October gain from a breakout past a trendline entry near 57 hit nearly 39%.
The building products supply chain reported flat first-quarter earnings at 52 cents a share. Sales inched 2% higher to $1.9 billion. That matched the slowest year-over-year gain in at least eight quarters.
Also on Thursday, savvy investors are keeping a close eye on the cost of money. In recent days, the yield on the 10-year U.S. Treasury bond has lifted from 4.3% to as high as 4.58%. As bond prices fall, their return, or yield, goes up, making them more appealing vs. equities.
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More Tech Stocks To Watch
Going back to tech stocks, Alphabet continued to move past a fresh buy point of 153.78 in a nine-week base. The web search titan is working on its own chips for cloud computing and accelerated computing.
The stock is in a buy zone up to 161.47. Google shares, up more than 2% to 159.41, have now risen in four of the past five sessions.
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Leading Retailer In The Stock Market
Elsewhere in the stock market, Costco Wholesale retook its 50-day line as shares moved more than 1.3% higher to 732.35, notching a third straight gain. The company announced a quarterly dividend hike of 14 cents to $1.16 per share. A new base is forming.
After the close Wednesday, the membership-based discount retail chain posted a 6.4% year-over-year jump in net sales for the first 31 weeks of its fiscal year, to $146.6 billion.
Costco is a stock market leader, rising as much as 41% since the key follow-through day on Nov. 1 that indicated a new tradable rally had begun. The S&P 500 has gained 24% over the same time frame.
On the downside, Regeneron Pharmaceuticals at one point dropped more than 2% to its lowest level since mid-January, then trimmed losses to 1.7% at 920.32. A big slide below the 50-day moving average last week did not come in heavy volume. However, loss of support at the key technical level suggests further weakness ahead.
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The biotech giant reportedly is under investigation by the Department of Justice for potential pricing fraud related to its Eylea medicine to treat wet age-related macular degeneration.
Regeneron shares hold a mediocre 73 Relative Strength Rating and could dive more. According to MarketSurge, Regeneron's RS Rating over the last three months is even worse at 33. In general, focus on growth stocks with an 80 RS score or higher.
Regeneron's RS line has been sloping lower since late February, raising another concern about the stock's health.
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