Dow Jones futures were little changed after the close, as were S&P 500 futures and Nasdaq futures. Shopify, Cisco, and Roku stocks made the headlines late Wednesday, while Crocs is set to pick up early Thursday.
X
The Nasdaq held a positive session for the market rally on Wednesday, despite booming retail sales and other better-than-expected economic data.
More stocks erupted, with earnings gapping for Airbnb (ABNB) and Martin Marietta materials (MLM). first sun (FSLR) made a bullish move off its 50-day moving average.
Shopify (BUSINESS), Albemarle (ALB), Synopsys (SNPS), roku (ROKU), Cisco systems (CSCO), Allison transmission (ALSN) and Fast (FSLY) were big earnings reports late Wednesday. Crocs (CROX), data dog (DDOG) and toast (TOST) Report early Thursday.
Dow Jones futures today
Dow Jones futures fell a fraction from fair value. Futures on the S&P 500 were flat. Nasdaq 100 futures were up 0.15%. CSCO stock is a component of the Dow Jones, S&P 500, and Nasdaq 100.
At 8:30am ET, investors get January’s PPI and housing starts reports, February’s Philly Fed manufacturing index and the latest jobless claims data.
Keep in mind that overnight action in Dow futures and elsewhere doesn’t necessarily translate to actual trading in the next regular trading session.
key income
SHOP stock plummeted in late trade. Shopify reported surprise earnings, but its revenue guidance was weak. Shopify stock is up 6.55% on Wednesday from a bottoming position.
ALB stock was up slightly after the close as Albemarle earnings and revenue slightly beat elevated views while forecasting 2023 earnings higher. The lithium giant pre-announced strong fourth-quarter results in late January and issued an upbeat guidance. ALB shares rose 0.8% to 272.79 on Wednesday after mixed prices Lively (LTHM) Income. Albemarle stock has a 292.08 cup with Henkel buy point, according to MarketSmith analysis.
Roku stock rose in sustained action after the fourth-quarter loss and earnings that slightly beat expectations. The streaming media platform also added more users than expected. Roku also forecast higher first-quarter revenue and sees a return to positive Adjusted EBITDA in 2024. Roku shares were already up 12% on Wednesday to 63.49. Shares are up 66% from their late-December low. Roku stock is still below its 200-day moving average, but could test that key level on Thursday.
SNPS stock declined solidly overnight, signaling a move back below a buy point. Synopsys revenue exceeded first-quarter views while revenue was flat. But the chip design software company led Q2 EPS lower. Shares were up 0.9% on Wednesday to 379.48, still trading in the area from a double bottomed basis buy point of 364.09. Synopsys shares erupted on Tuesday after strong results from the competitor Cadence design systems (CDNS). CDNS stock rose 1.6%, extending Tuesday’s earnings breakout, still in a buy zone.
CSCO stock rose slightly, well after initial after-hours action, as Cisco earnings beat second-quarter outlook. The Dow Jones giant led significantly higher for the fiscal third quarter and 2023. Cisco shares rose 1.6% on Wednesday to 48.45, again touching the 50-day moving average. Shares are working from a buy point of 50.81 from a flat base with an early entry above 49.56.
ALSN stock rose solidly after Allison Transmission’s earnings and revenue slightly beat expectations. Shares edged up 0.1% to 45.58 and continued to trade just above a buy point of 45.43 on a cup basis.
FSLY shares fell after the networking company reported a smaller-than-expected loss and beat revenue targets. Fastly stock is up 3.3% on Wednesday, up 41% so far this week.
As for Crocs, Datadog and Toast:
Crox stock is recovering from a first 50-day line test since a breakout in early November.
DDOG stock is on the verge of reaching its 200-day moving average for the first time since last March.
The TOST stock is slightly extended from a ground base.
SNPS shares are co-ranked with Cadence Design on the IBD Long-Term Leaders list. Crocs and TOST stocks are on the IBD 50.
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stock market rally
Retail sales rose well above forecast in January. Industrial production was flat, below prospects, but manufacturing output beat. Meanwhile, the New York Fed’s Empire State Manufacturing Index showed a much smaller decline in February, beating expectations.
The Dow Jones Industrial Average rose slightly by 0.1% in trading on Wednesday and turned positive just before the close. The S&P 500 index rose 0.3%. The Nasdaq Composite gained 0.9%. Small-cap Russell 2000 is up 1.05%.
The 10-year Treasury yield rose 5 basis points to 3.81%, a 2023 high. But shorter-term interest rates, which are more closely tied to the Fed, didn’t move much. Investors continue to expect the Fed to raise interest rates by a quarter point at the March and May meetings. Markets are leaning towards a third hike in June or July but the odds are down slightly on Wednesday.
The US dollar shot to its highest level since January 6th.
US crude prices fell 0.6% to $78.59 a barrel, below daily lows. US crude inventories jumped while the stronger dollar also weighed on commodities. Copper futures fell 1.4%.
ETFs
Among growth ETFs, innovator IBD 50 ETF (FFTY) was up 0.2%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 1.1%. The VanEck Vectors Semiconductor ETF (SMH) was unchanged.
The SPDR S&P Metals & Mining ETF (XME) fell 0.1% and the Global X US Infrastructure Development ETF (PAVE) rose 1.1%. The US Global Jets ETF (JETS) rose 0.3%. SPDR S&P Homebuilders ETF (XHB) is up 0.6%. The Energy Select SPDR ETF (XLE) fell 1.7% and the Financial Select SPDR ETF (XLF) rose 0.1%. Health Care Select Sector SPDR Fund (XLV) down 0.5%
Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) is up 5.9% and ARK Genomics ETF (ARKG) is up 2.2%. Roku stock is a large holding that crosses Ark Invest’s ETFs.
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Analysis of the market rally
Stock market rally continues on mixed economic data and earnings.
Despite hot economic data, the Nasdaq climbed back above the 12,000 mark for the third time in a row. The S&P 500 edged up slightly while the Dow Jones and Russell 2000 rallied again from their 21-day moving averages.
Treasury yields have risen sharply since early February, giving the stock market rally a slight headwind, but not the storm force it was last year. Unlike in 2022, when they rose mainly on inflation and Fed fears, yields are now rising on easing recession fears. While Wall Street would welcome an end to the Fed’s rate hikes, it also doesn’t want the economy to go under.
Rising yields are usually bad news for growth stocks as future earnings are discounted at a higher rate. So it’s notable that growth, particularly speculative growth, continues to lead the market rally, including Roku stock and Fastly.
Also of note is that stocks are generally holding up despite the recovering dollar. It is no coincidence that the market rally had its continuation day on January 6th when dollar and treasury yields were heavily sold off and peaked on February 2nd as did the 10 year yield and the dollar bottomed out.
Energy and mining stocks had a bad day as crude oil and metals prices fell in part on the strength of the dollar. But a positive day or two for the underlying commodities would make these areas interesting again.
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What now
The stock market rally continues to provide reasons and opportunities to increase exposure. Do this gradually, especially when the major indices are trading mixed within their recent range.
Breakouts and buying opportunities generally work, but not always. So be ready to cut your losses fast. Stop buying and diversify your holdings.
While some leading stocks are sending buy signals, many others are building amid the pause in the market rally. So update your watch lists.
Read The Big Picture every day to keep up to date with market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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