Dow Jones futures were down overnight, along with S&P 500 futures and Nasdaq futures, with Boeing skidding on 737 woes. JPMorgan Chase (JPM), Citigroup and UnitedHealth are big earnings reports available Friday.
X
The stock market rally rebounded strongly after another slower-than-expected inflation reading, coupled with rising jobless claims. The major indices recouped Wednesday’s losses or more. The S&P 500 hit its best level in nearly two months, joining the Dow Jones. The Nasdaq hosted a follow-up day.
Leading stocks posted solid gains, but not many buy signals.
Megacap shares had a strong session. Apple (AAPL), amazon.com (AMZN), father of Google Alphabet (GOOGL), metaplatforms (GOAL), Microsoft (MSFT) and Tesla shares rose more than 2%. Google shares rose again above a buy point. Apple and Microsoft shares rose within buy zones. tesla (TSLA) and Amazon shares rose on bases that formed just below the 200-day moving average. Meta’s shares hit an 11-month high.
Amazon joins Microsoft and Google in the field of generative artificial intelligence, the e-commerce and cloud computing giant said on Thursday.
Meta stock is on IBD Leaderboard and SwingTrader. MSFT shares are among the long-term leaders of IBD.
Investors should participate in this uptrend of the market. But the profits of the big banks loom large.
Dow Jones Futures Today
Dow Jones futures fell 0.15% against fair value. S&P 500 futures edged lower and Nasdaq 100 futures fell 0.1%.
Thursday afternoon, Boeing (BA) warned of lower production and deliveries of the 737 Max in the near term, citing a supplier parts issue. BA shares fell 5%, affecting Dow Jones futures.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading at the next regular stock market session.
bank earnings
JPMorgan, Citigroup (C) and fargo wells (WFC) together with superregional PNC Financial Services (PNC) all report on Friday morning.
In the midst of the banking crisis, investors are likely to be most concerned about the balance sheet: deposits, loans, and more. They will be very interested in the guidance of bank executives in the future.
Bank deposits have fallen for 10 straight weeks, according to Fed data, although smaller banks have seen a slight rise in the past week. The new weekly figures will be released on Friday evening. Fears of bank failures have faded, but deposit rates, especially at the largest banks, are still well below money market funds and short-term Treasury bills.
If banks have to start paying substantially more for deposits, net interest margins will come under pressure. That’s especially true for smaller banks, as depositors still seek a safer haven with too-big-to-fail giants. Lower and more expensive deposits are also likely to affect lending and therefore the economy. Bank loans began to decline in recent weeks.
Federal Reserve staff saw a “mild recession” later this year due to banking stress, according to minutes from the Fed’s March 21-22 policy meeting released Wednesday.
All of this explains why the market in general will pay close attention to the bank results and earnings calls on Friday.
Bank stocks are clear laggards. JPM shares rose 0.4% on Thursday, above its 200-day line, but remained below its 21-day line and well below its 50-day line. Citi shares are modestly below their 50 and 200 day values. WFC shares are well below those key levels, but recently recaptured the 21-day line.
PNC shares rose 1.4% on Thursday, but after reaching their worst level since November 2020 intraday.
Several other important finances are due next week, including Bank of America (BAC), charles schwab (SCHW), Goldman Sachs (GS) and Morgan Stanley (MS), as well as several regional and super regional.
UnitedHealth Earnings
Also reporting before opening, UnitedHealth Group (UNH) is a Dow Jones giant like JPMorgan.
UnitedHealth’s profits kickstart health insurers’ bottom line. UNH shares were up nearly 1% at 526.21 on Thursday, moving toward a buy point of 558.20. Stocks have rallied in the past two weeks as Medicare reimbursements are expected to rise. UNH shares have a buy point of 558.20, but are not far from a possible trendline entry. A pause around the trend line could be welcome.
UNH shares have rejoined long-term leaders.
Join IBD experts as they discuss actionable actions in the stock market rally on IBD Live
stock rally
The stock market rally rebounded from Wednesday’s bearish reversal, with the major indices gaining momentum during the Thursday session, closing near intraday highs.
The Dow Jones industrial average rose 1.1% in trading on Thursday. The S&P 500 index rose 1.3%. The Nasdaq Composite jumped 2%. The small-cap Russell 2000 rose 1.3%.
US crude prices fell 1.1% to $82.16 a barrel, retreating from their best levels in nearly five months.
The 10-year Treasury yield rose 3 basis points to 3.45%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.55%. The iShares Expanded Technology Software (IGV) Sector ETF rebounded 1.9%, with large holdings in shares of ServiceNow and MSFT. The VanEck Vectors Semiconductor (SMH) ETF rose 0.8%.
Reflecting more speculative history stocks, the ARK Innovation ETF (ARKK) jumped 4% and the ARK Genomics ETF (ARKG) 5.6%. Tesla stock is a major holding in Ark Invest ETFs.
SPDR S&P Metals & Mining ETF (XME) rose 2.2%, with FCX shares a notable holding. The Global X US Infrastructure Development ETF (PAVE) rose 0.3%. The US Global Jets ETF (JETS) rose 0.2%. SPDR S&P Homebuilders ETF (XHB) rose 0.4%. The Energy Select SPDR ETF (XLE) rose 0.6% and the Health Care Select Sector SPDR Fund (XLV) rose 1.3%.
The Financial Select SPDR ETF (XLF) closed up 0.9%. Stocks of JPM, Wells Fargo and Citigroup are big XLF holdings. The SPDR S&P Regional Banking ETF (KRE) gained 1.5%. PNC Stock is a component of KRE.
Five best Chinese stocks to watch now
Market recovery analysis
The stock market rebounded from Wednesday’s downward reversal with even stronger gains.
The Nasdaq led the way on Thursday. The technology index rallied above the 12,000 level. It is close to its March 31 high, with a 2023 peak just above that. Volume rose slightly on the Nasdaq, giving the tech index one day of accumulation after three days of distribution in the previous five sessions.
The sharp gain at the higher price marked a follow-up day for the Nasdaq.
NYSE volume fell versus Wednesday. Still, the S&P 500 rallied above early April peaks to its best level since mid-February, not its 2023 highs. The Dow Jones retook the 34,000 level with 2023 highs above that. The Russell 2000 moved above its 21-day line, but is well below the 50- and 200-day lines.
Winners beat losers nearly 5-2 on NYSE and Nasdaq
But despite the broad breadth and strong price gains of the major indices, there weren’t many stocks sending buy signals.
southern copper (SCCO) and McMoRan Free Port (FCX) showed a bullish action, while service now (NOW) is flirting with a breakup. STMicroelectronics (STM), hubspot (BUSHINGS) and fly wire (FLYW) all purchase points claimed.
The Invesco S&P 500 Equal Weight ETF (RSP) rose 0.8%, a decent gain but definitely behind the S&P 500. And the RSP is still down from its 50-day drop.
Megacap shares performed well on Thursday and have been throughout 2023. AMZN shares rose 4.7%, recapturing their 50-day line. Apple shares gained 3.4%, while Meta rose 3%. Google shares advanced 2.7% as the tech titan pulled back above its buy point. Tesla shares rebounded 3%, but it was an inside day for the electric vehicle giant, which is below all of its moving averages. Microsoft shares lagged behind with a 2.2% advance.
Hitting the 2023 highs would be a big step for the market rebound. Ideally, breadth would continue to improve, with RSP gaining some ground over SPY.
Earnings reports on Friday, especially from JPMorgan and other banks, could be big movers for the market up or down.
Time the Market with IBD’s ETF Market Strategy
What to do now
Thursday’s action was a positive step for the stock market’s rally, despite relatively few buying opportunities.
Investors can add exposure gradually, assuming the market is trending higher. It wouldn’t take much for the major indices and major stocks to look hurt once again.
The market is still in a sideways pattern, with sectors and individual names prone to big swings at times. Try to build a portfolio with positions in leading stocks across a variety of sectors or themes.
Be prepared to take profits and cut losses quickly. Investors should always remain flexible, but this is definitely not a time to lock yourself in a bullish or bearish mindset.
Read The Big Picture every day to stay in sync with market direction and major stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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