Dow Jones futures rose early Friday, along with S&P 500 futures and Nasdaq futures. The stock market rallied Thursday morning on doomsday Fed statements, extending Wednesday’s losses. But the main index rebounded from some key levels and closed slightly lower.
While crude oil prices fell, Treasury yields rose again.
apple (AAPL), Microsoft (MSFT) and parent Google Alphabet (GOOGL), the only $3 trillion in U.S. stocks, rallied after testing support at its 50-day moving average. Meanwhile, Tesla ( TSLA ) retreated to its market lows.
Investors should be cautious in the current market, add exposure slowly and be prepared to take profits and minimize losses.
Practical materials (AMAT), Palo Alto Networks (PANW), Clearfield (CLFD) and Ross Stores ( ROST ) all ended Thursday on higher EPS and sales sentiment, with guidance also generally strong.
AMAT stock rallied sharply early Friday and is poised to bounce back from its 200-day line. Shares of PANW moved higher, indicating a move above its 50-day high. Shares of CLFD rallied in extended trading and looked to challenge the 50-day line as it attempts to build the right side of a double base. ROST shares rose after closing in the range from the lower base until 2022.
JD.com (JD) and A performance (ATKR) reported early Friday.
JD.com’s revenue increased from a viewership perspective, while revenue declined, as did Alibaba (BABA) early Thursday. Shares of JD rose modestly in premarket trading. On Thursday, shares rose 7.5% to a 200-day high on Alibaba’s results.
ATKR shares rose sharply on Friday as construction products maker Atkore beat Q4 financial outlook and posted higher Q1 and 2023 profits. ATKR stock fell 3.5% on Thursday, but was comfortably above its 200-day line as it runs to the right of a deep trough base.
Dow Jones futures today
Dow Jones futures rose 0.65% against fair value. S&P 500 futures rose 0.85%. Nasdaq 100 futures were up 1% with AMAT and PANW technology stocks up.
The 10-year treasury yield increased by 2 basis points and reached 3.79%.
Crude oil futures fell nearly 2%, while natural gas fell more than 3%.
Keep in mind that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next stock market session.
Join IBD’s experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock market rally
The stock market rallied as St. Louis Fed President James Bullard and Kansas City Fed President Esther George made dire statements. The major indexes rose again and were flat and slightly lower.
The Dow Jones industrial average was slightly lower in stock market trading on Thursday. The S&P 500 index fell 0.3%. The Nasdaq Composite fell 0.35%. The small-cap Russell 2000 yielded 0.9%.
Apple shares rose 1.3%. Microsoft shares returned two cents, while Google shares fell 0.5%. All tested their 50-day levels during the day. All are below their 200-day lines, with no clear buy points. Tesla shares fell 2%, nearing a Nov. 9 bear market low.
The price of US crude oil decreased by 4.6% and reached 81.64 dollars per barrel. In addition to the Fed’s dire comments, blame Beijing’s renewed emphasis on a “zero-Covid” policy. China’s State Council has reportedly warned cities to avoid “irresponsible” Covid-19 measures, just a week after top officials backed relaxed rules. On Wednesday, Peking University closed a case. Over the past two weeks, the number of Covid infections in China has increased.
Hawkish Fed raises Treasury yields
The 10-year treasury yield increased by 8 basis points and reached 3.77%.
St. Louis Bullard said the federal funds rate, currently at 3.75%-4%, may need to rise to 7%, well above the consensus for around 5%. George of the Kansas City Fed said it may take a recession to bring down inflation.
One of the reasons why politicians sound apathetic is to raise market rates and prevent stock market rallies. If financial conditions ease significantly as the Fed hopes, inflation could remain higher for a long time, forcing the Fed to further tighten official rates.
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Among the top ETFs, the Innovator IBD 50 ETF ( FFTY ) fell 0.1%. The iShares Expanded Tech-Software Sector ETF ( IGV ) fell 2.65%, even with MSFT shares a key component. PANW shares is also a holding company of IGV. VanEck Vectors Semiconductor ETF (SMH) is down 0.5% and AMAT shares have a prominent SMH.
The SPDR S&P Metals & Mining ETF ( XME ) fell 2.1%. The SPDR S&P Homebuilders ETF ( XHB ) retreated 2%. The Energy Select SPDR ETF ( XLE ) was down 0.5% and the Healthcare Sector Select Fund SPDR ( XLV ) was down 0.2%.
Reflecting more speculative stocks, the ARK Innovation ETF ( ARKK ) shed 2.8% and the ARK Genomics ETF ( ARKG ) shed 3.2%. TSLA shares are a large holding in Ark Invest ETFs.
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Stock Market Rally Analysis
The stock market rally tested some key levels in Thursday’s open. The Nasdaq found support just above its 50-day moving average. The S&P 500 briefly hit its October short-term highs. The Russell 2000 has bounced back from near its 21-day line. The S&P 400 MidCap held its 200-day line.
Arguably, the market closed after a strong run and the S&P 500 neared its 200-day line. At the same time, the market rally on Thursday received support in important areas. So the past two days have been normal and somewhat constructive for the major indexes – if they can hold Thursday’s lows and eventually move higher.
However, the market’s pullback from Tuesday’s high to Thursday morning’s low has seen a number of stocks break out or show early entry over the past two days. Several have tried these records or failed completely. Some will return, while others may not. In some cases, previous purchase points are still valid, while others need to assign new teams or other records. Others may struggle for longer.
Various resources and industries show interesting action.
In all these cases, a healthy market rally will be the key.
Shares of Apple, Microsoft and Google are not market leaders and may not be for some time. But it will be a big help if they avoid the backlog.
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What to do now
The stock market index showed encouraging action on Thursday. The overall trend has been higher over the past few weeks. But it’s been a bumpy ride for investors.
Anyone who bought stock after October 21st was probably underwater by early November. While the indexes rose on Nov. 10 on the tame CPI report, the Nasdaq, S&P 500 and Russell 2000 have all been flat since then.
The stock market rally remains elusive, with sector volatility and large intraday swings complicating matters. Buying opportunities have often been the moment the market pulls the rug out from investors.
So keep the light on. Add exposure gradually – and be prepared to reduce exposure due to market conditions or stock sale regulations.
Update your checklist so you can find new leads.
Read The Big Picture daily to stay in tune with market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter @IBD_ECarson for stock market updates and more.
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