As with S&P 500 futures and Nasdaq futures, Dow Jones futures changed little overnight.
x
The stock market’s rally rose on Thursday following a lower-than-expected CPI inflation report, with the Dow Jones trading up 1,198 points. Headlines and core price gains were lower than expected, bolstering the case for a slower Fed rate hike. Treasury yields and the dollar fell.
If inflation continues to ease, the Fed may choose to end rate hikes sooner than Fed chief Jerome Powell said last week.
A lot of the big moves were in the beaten up stocks. Apple (AAPL), Microsoft (MSFT), Google Parent Alphabet (GOOGL), facebook-guardian meta platform (meta), Amazon.Com (AMZN) and Tesla (TSLA) were all big winners on Thursday, but only MSFT stock moved above the 50-day line. NVIDIA (NVDA), which now has a higher market cap than Meta stock, having already reclaimed the 50-day line, but still needs a lot of work.
Several crashing cloud software stocks posted double-digit gains on Thursday. digital turbine (APPS) blew up for a 61% profit after earnings, but that’s not even a two-month high.
Nevertheless, investors should definitely consider adding more risk and look for the stock to establish.
However, there weren’t many actionable stocks on Thursday. but Global Foundries (GFS), Enphase Energy (ENPH), freshman (gff), Builders firstsource (BLDR) and General Motors (GM) all showed different buy signals.
GM stock was added to Swing Trader and it was Thursday’s IBD Stock of the Day. ENPH stock is on the IBD leaderboard watchlist and is on the IBD 50 list.
dow jones futures today
Dow Jones futures rose a fraction versus fair value. S&P 500 futures and Nasdaq 100 futures were down.
The bond market will be closed for Veterans Day on Friday. US stock markets will open as usual.
Bitcoin, which rose above $18,000 at one point on Thursday after falling below a two-year low of $16,000 on Thursday afternoon. But the cryptocurrency faded to around $17,000 on Thursday night. Crypto lender BlockFi said it was halting withdrawals in the wake of FTX’s collapse. Earlier this year, FTX entered into an agreement to acquire BlockFi.
Beijing reported the highest number of Covid cases in more than a year, as rising infections led to renewed lockdowns across the country. China’s new leaders urged more targeted, “decisive” sanctions to control the spread.
Remember that overnight action in Dow futures and elsewhere does not necessarily entail actual trading in the next regular stock market session.
Join IBD experts as they analyze stock market rally actionable stocks on IBD Live
stock market rally
The stock market’s rally started off strong and closed at session highs on Thursday.
Dow futures edged higher ahead of the open on a surprisingly limited CPI inflation report. October consumer prices excluding food and energy rose 0.4%, or 0.3%. The CPI inflation rate fell to 7.7%, the lowest since January. Core inflation pulled back to stay at 6.3% versus a 40-year high of 6.6%.
Bulls cheered and sighed after finally getting positive inflation readings.
The Dow Jones Industrial Average jumped 3.7% in Thursday’s stock market trading. The S&P 500 Index is up 5.5%. Nasdaq Composite 7.35% vaulted. The small-cap Russell 2000 jumped 6.1%.
The 10-year Treasury yield fell 32 basis points to 3.83%, its lowest in a month. The dollar suffered its biggest fall in years, continuing its steep decline over the past week.
The market now sees an 81 per cent chance of a 50-basis point hike in the Fed rate in December. Before the CPI inflation report, there was still a solid prospect of a fifth-straight 75-basis-point increase. Notably, there is now a 50-50 chance for the Fed to hike the rate by only a quarter-point in February.
US crude oil prices rose 0.6% to $86.47 a barrel. Natural gas declined by 6.4 percent.
megacap stock
Apple stock gained 8.9%, rebounding from its worst level in nearly four months. Meta stock jumped 10.25%, continuing a mini-run from bear-market lows amid big jobs and other cost cuts. Amazon stock jumped 12.2% from Wednesday’s 30-month low as the e-commerce giant announced a review of cost-cutting.
Microsoft’s stock jumped 8.2%, rising above its 50-day mark. Google stock rose 7.6%, but is well below its 50-day line.
Tesla stock jumped 7.4%, but it was still an inside day after hitting a two-year low on Wednesday.
Nvidia stock rose 14.3%, continuing a rebound that began on October 13. Nvidia’s earnings release is due on November 16.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) gained 3.1%. The iShares Extended Tech-Software Sector ETF (IGV) gained 9.1%, with MSFT stock being a major component. The VanEck Vector Semiconductor ETF (SMH) screamed 10.2% higher. NVDA stock is a large holding.
The SPDR S&P Metals & Mining ETF (XME) rose 5.5% and the Global X US Infrastructure Development ETF (PAVE) gained 5.65%. The US Global Jets ETF (JETS) rose 4.9%. The SPDR S&P Homebuilders ETF (XHB) raised the roof, with a gain of 10.3%. The Energy Select SPDR ETF (XLE) gained 2.2% and the Financial Select SPDR ETF (XLF) gained over 5%. Health Care Select Sector SPDR Fund (XLV) climbed 2.5%.
Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) charged 14.5% higher and the ARK Genomics ETF (ARKG) 11.1%. Tesla stock is a major holding in Arch Invest’s ETF.
The five best Chinese stocks to watch right now
market rally analysis
The stock market’s rally on the CPI inflation report was a huge gain. The S&P 500 and Russell 2000 vaulted above their 50-day moving averages, with the former clearing recent highs and the latter just shy of their 200-day moving averages. The Dow Jones, which is leading this uptrend, jumped from its 200-day line at its best level since the August peaks.
The Nasdaq, clearly lagging behind in the market’s rally so far, jumped to cross its 50-day line. Amazon and a lot of beaten-down megacap and cloud stocks led the way, while Nvidia and other chips continued their recent surge, but mostly below buying areas.
Thursday’s action was a follow-up day on all major indices, with large NYSE and Nasdaq volume gains. It provides more confidence in the rally of the stock market.
The CPI inflation report was just one data point, but it was what the Fed wanted and needed to see. Notably, the next wave of Fed-critical reports will take weeks to arrive. This suggests a favorable background for a market rally, at least during that period.
There will be a positive follow-up, with the Nasdaq moving decisively above the 50-day line, clearing the October high above 11,200. A move above 200 days for the S&P 500 would be a very strong signal.
Why This IBD Tool Makes Finding Top Stocks Easier
leading stock
Many major stocks were not in the market on Thursday. Some strong names look extended, while Thursday’s big winners were mostly battered tech like Google that requires a lot of repair work.
It is not clear which groups will lead the market rally. But there are a lot of interesting groups and regions.
Biotechs and health insurers such as Medicare, which have been leaders of the market rally, sat with big gains on Thursday or fell back in favor of riskier growth names. Is this just a blip?
Defensive names had broad outings, such as hershey (HSY) and other food product stocks.
A wide range of housing-related stocks, including builders, suppliers and retailers, are clearing bases or moving above the long-term moving average or trendline. which consists of Dr. Horton (DHI), tempur-silli (TPX) and BLDR stocks.
Some other retailers, along with several restaurants and some consumer plays, are showing strength. crocs from (CROX) wingstop (wing) from GM in stock. Some financial, lithium, solar, agriculture and steel stocks are also looking good, including steel mobility (STLD), Albemarle (ALB), CF Industries (cf), Charles Schwab (SCHW) and ENPH stock.
Some infrastructure firms are in or near the procurement area, including quanta services (PWR).
Energy stocks, which didn’t do much on Thursday, may continue to rise.
Networking stocks looking strong, including Digi International (DGI). Some chip names look interesting as the sector rebounds after a long slide. This includes GFS stock, which is up marginally from early entries.
But for megacaps like Apple stock, Microsoft and Tesla, their lead could take some time. The same goes for cloud software, with the risk that some may not recover for years, if ever.
Time Markets with IBD’s ETF Market Strategy
What should we do now
The stock market rally showed strength on Thursday, and there is a plausible story that the uptrend has had its legs after the October inflation report. But for now it is just a story.
Ultimately, investors should focus on what the market is doing now, following the action of the major indices and major stocks.
It is signaling that it is time to increase risk, but there is no rush. If this market has legs in an uptrend, there will be plenty of time to invest heavily.
The limited number of actionable shares was one reason not to make huge purchases on Thursday. Investors can choose to buy a broad market or sector ETF, such as SPY or SMH.
But there are a lot of stocks and sectors that look interesting. Investors should have their watchlist up to date.
Read The Big Picture every day to keep up with the market direction and key stocks and sectors.
Please follow Ed Carson on Twitter @ibd_ecarson For stock market updates and much more.
You may also like:
Get the Next Big Winning Stock with MarketSmith
Best growth stocks to buy and see
IBD Digital: Unlock IBD’s premium stock list, tools and analysis today
Tesla Vs. BYD: Which EV giant is the better buy?
