The stock market closed mostly higher Thursday but trimmed some gains in afternoon trading after the Federal Reserve cut interest rates by a quarter point, as expected.
The Nasdaq rose 1.5% and the S&P 500 added 0.7% as both made record highs again. The Dow Jones Industrial Average ended flat.
Small caps underperformed. The Russell 2000 lost 0.4% and slid into the close. The S&P MidCap 400 reversed 0.2% lower. Those declines seem minor compared with the prior day's robust gains.
Fed Cuts The Cost Of Money Again
The Fed did what everyone expected: It lowered the fed funds rate by 25 basis points to a range of 4.50% to 4.75%. In a statement, Fed policymakers said its employment and inflation goals are "roughly in balance."
The rate cut comes after a half-point reduction in September, when the U.S. central bank engaged in monetary easing for the first time in more than four years.
"Even with this cut, monetary policy is still restrictive," Federal Reserve Chair Jerome Powel told the media during a news conference.
Making his first comments after the U.S. election, Powell avoided talking about politics, saying the Fed will act based on economic data. Also, during the news conference, when asked if Powell would resign if President-elect Trump were to make such a request, the former lawyer and Wall Street banker responded flatly, "No."
The yield on the benchmark U.S. Treasury 10-year note sank eight basis points to 4.34%. The yield has now fallen in three of the past four sessions, yet remains up sharply from 3.80% at the start of the fourth quarter.
3:32 p.m. ET
Techs Help Lead Stock Market
Techs still led the way Thursday. AppLovin led the upside among IBD 50-style growth stocks, and Zeta Global was the day's second biggest gainer in the IBD 50, up more than 6%. But IBD Sector Leaders member MakeMyTrip of India fell sharply after a long and strong upward run.
In the MarketSurge Growth 250, Alkami Technology and East West Bancorp led the downside. Both stocks lost more than 4% but didn't make any sell signals. Alkami announced a share offering.
Clear Secure was another stock market leader that sold off. The airport security and traveler identification provider dropped 23% in massive turnover after earnings. Profit grew 43% to 30 cents a share on a 24% revenue boost.
Clear Secure shares also undercut the 50-day line for the first time since the small-cap growth stock broke out of an elongated double bottom showing a 21.88 entry on Aug. 6. Among leaders in the stock market today, you'd like to see such stocks bounce off the 50-day line, not crash right through it.
Gains are still solid from that breakout, but the slide below the 50-day moving average indicates heavy profit-taking by fund managers.
Zeta Rebounds Bullishly
Going back to strong growth stocks, Zeta has made an enormous gain since it surged out of a seven-week base with an 18.58 proper buy point in July. Recently, the cloud-based platform that provides automated marketing and business intelligence services for clients dipped below its 50-day moving average before rebounding fast.
A base is forming, but the cup pattern in Zeta Global is less than four weeks long, or way too narrow for a normal healthy one.
Zeta is expected to report Q3 results on Monday. Sales in the past three quarters grew 20%, 24% and 33%. Zeta incurred net losses of 22 cents, 23 cents and 16 cents a share over that period.
Updated 2:19 p.m. ET
AppLovin, which helps software developers incorporate ads into their apps and websites, rallied more than 40% and briefly shot past 250. That works out to an enormous 172% gain past a recent breakout past a 91.91 buy point. However, at the session high of 257.43, AppLovin traded as much as 170% above its rising 200-day moving average.
It is highly rare for even leading stocks to jump that far above the 200-day line and not pull back in the short term, if not hit an ultimate top. At this point, investors should not chase AppLovin, now a large cap with an $81 billion market cap, but simply watch for a new base to develop.
AppLovin Overheated?
Is the AppLovin run climactic? Not yet, according to panelists on Thursday's IBD Live show, since the stock's most recent breakout and rally have not reached at least 18 weeks in time. A climax run usually takes place after a top stock has advanced over such a time period.
AppLovin is also trading 78% above the fast-climbing 50-day moving average.
MakeMyTrip, an outstanding mover in 2024 as well, on Wednesday cleared a new six-week cuplike base with a 110.49 buy point. However, shares in the travel services firm fell 8% to 104 and triggered a loss-cutting sell rule. The stock remains above its 50-day line, a plus.
The company two weeks ago reported a 44% jump in third-quarter earnings to 36 cents a share. Earnings have grown on average a hefty 76% vs. year-ago levels in the past four quarters. Revenue in Q3 rose 25% to $211 million.
What To Watch In The Fed Announcement
Movers Within The Tech Sector
Microsoft pulled above its 200-day moving average, sparking a buy point for long-term investors. The Dow Jones Industrial Average component rallied more than four points, or 1%, in average turnover. MSFT got as high as 426.42.
Amphenol, an IBD Big Cap 20 stock, gained ground for a third straight session. The expert in electronic and fiber optic connectors and interconnect systems spurted ahead 1.6% to 73.36, rising further past a 71.20 handle entry on its four-month base.
After the close, expect results from cybersecurity group leader Fortinet. The specialist in protecting wide area networks and other data networking systems rallied 2.5% in buoyant trading. Shares also recently rebounded above the 50-day moving average, providing a recent follow-on buy point near 78.
In Q2, Fortinet posted earnings growth of 50% and revenue growth of 11%. Analysts expect third-quarter profit to increase 26% to 52 cents a share on an 11% bump higher in revenue to $1.48 billion.
Please read more earnings news on technology companies at the Technology main page of Investors.com.
11:59 a.m. ET
Qualcomm, Arm Rally
Weekly jobless claims edged up to 221,000 in the latest reported week, meeting the Econoday forecast. U.S. economic productivity in the third quarter rose 2.2%, according to a preliminary meeting, missing a consensus forecast for a 2.5% rise.
Elsewhere, megacap wireless tech giant Qualcomm rallied on favorable Q3 results and a positive forecast but lost some of its initial gains, while fellow fabless chip firm Arm brushed off early losses and rallied more than 5%.
During an interview on Bloomberg TV, Arm CEO Rene Haas said he is very bullish about his company's future as smartphones that feature more artificial intelligence capabilities will boost demand for more sophisticated chip designs. That could help boost Arm's business. Both Qualcomm and Arm are in the middle of forming new bases that could generate breakouts to new highs.
Meanwhile, outside the tech sector, Cencora thrust more than 1.5% higher and surpassed the top of a new base with a 247.66 buy point. The 5% buy zone goes up to 260.04. Thus, the stock remains in buy range.
The wholesale drug supplier, formerly known as AmerisourceBergen, reported a solid 17% gain in Q3 earnings to $3.34 a share as revenue accelerated 15% higher to $79.1 billion. Cencora on Wednesday rushed past a trendline entry that gave a lower buy point near 240.
Meta Leads, Up 3%
Meta Platforms, a full-size position in Leaderboard, boosted the Nasdaq 100. The stock coasted more than 3% higher and is rallying off its rising 10-week moving average after a successful breakout past resistance near 543. Meta Platforms offered a follow-on buy point near 564 and remains barely in the 5% buy zone. Volume jumped 35% above average levels and was on pace to hit 16 million shares.
Small caps initially edged higher, then faded into soft losses. The Russell 2000 backtracked less than 0.2% after surging 5.8% on Wednesday and breaking out of a three-month trading range between 1,993 and 2,300.
At its intraday peak of 2,402, the Russell gained 18.5% for the year.
The Dow Jones Industrial Average more or less moved in stride with the Russell 2000, down around 0.1%. Volume was mixed, running higher on the Nasdaq vs. the same time Wednesday but notably lower on the NYSE.
10:38 a.m. ET
Dow Stocks, Earnings Movers
Within the Dow industrials, home improvement chain Home Depot led the upside, up seven points and showing bullish support at the 50-day moving average. The retail giant, a blue chip leader in the stock market today, reports quarterly results on Nov. 12. It's risen more than 20 points, or 6%, above a recent breakout point of 378.58 in a cup with handle. Sherwin Williams, which will replace chemical maker Dow in the Dow Jones industrials Friday, rallied six points, or around 1.7%.
Yet some hot stocks also plunged on their quarterly results.
Among big decliners, Klaviyo gapped down at the open and fell more than 16% in heavy trading. The stock cleaved its 50-day moving average, spurring a sell signal. The text message-based marketing software firm reported double-digit earnings and sales growth (up 67% and 34%, respectively, vs. year-ago levels).
But the stock gave back all gains from a breakout past a large cup-with-handle's 32.81 entry. That move also triggered a round-trip sell rule.
Nasdaq Extends Trump Rally As Powell Signals More Cuts
Beyond The Stock Market Today
The yield on the key U.S. Treasury 10-year bond fell five basis points to 4.37%, according to Cboe data. Investors sought bargains in long-dated bonds following a strong decline in prices ahead of a 2 p.m. ET announcement on interest rates by the Federal Reserve.
The Fed, according to CME FedWatch, is showing a 99% probability of reducing short-term interest rates on Thursday by a quarter point. Currently, the fed funds rate for large banks stands at a range of 4.75%-5% following a half-point cut made in September.
Also beyond the stock market today, crude oil futures on the Nymex eased nearly 0.6% to $71.29 a barrel, while gold jumped 0.9% to $2,699 an ounce. Bitcoin cooled off, sending iShares Bitcoin Trust, a popular spot bitcoin ETF, down nearly 2%. The ETF cleared a narrow five-day handle on its base at 41.96.
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