Dow Jones futures fell slightly on Thursday morning, while futures for the S&P 500 and Nasdaq rose slightly. Shares of Shopify, Cisco, Crocs and Roku led gains overnight, with another big batch of economic data ahead of the open.
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The Nasdaq led a positive session on Wednesday as the market rebounded, despite booming retail sales and other better-than-expected economic data.
More stocks emerged, with earnings gaps to airbnb (ABNB) and Materials by Martin Marietta (MML). first lot (FSLR) made a bullish move from its 50-day line.
Shopify (TRADE), albermarle (SUNRISE), synopsis (SNPS), Roku (ROKU), cisco systems (CSCO), Transmission Allison (ALSN) and Quickly (FSLY) were big earnings reports on Wednesday night. crocodiles (CROX), data dog (DDOG) and Toast (TOST) report early Thursday.
Dow Jones Futures Today
Dow Jones futures were down 0.1% against fair value. S&P 500 futures fell 0.25%. Nasdaq 100 futures lost 0.3%. CSCO stocks are a component of the Dow Jones, S&P 500, and Nasdaq 100.
The 10-year Treasury yield fell 2 basis points to 3.79%.
Copper prices rose 1.5%, recovering since Wednesday. At 8:30 am ET, investors will get the January Producer Price Index and Home Starts reports, the Philadelphia Fed Manufacturing Index for February and the latest jobless claims data.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading at the next regular stock market session.
key gains
SHOP shares tumbled in overnight trading. Shopify reported a surprise profit, but its revenue guidance was weak. Shopify shares were up 6.55% in trading on Wednesday, extended from a bottoming basis.
ALB shares rose modestly in premarket trading as Albemarle earnings and revenue slightly topped elevated views, while 2023 revenue pointed up. The lithium giant previously announced strong fourth-quarter results in late January and gave a bullish guidance. EPS increased 753% and revenue increased 193%, the fourth consecutive quarter of accelerated growth for both.
ALB shares rose 0.8% to 272.79 on Wednesday after mixed actions. live (LTHM) earnings. Albemarle shares have a cup-handle buy point of 292.08, according to MarketSmith analysis, but could offer early entry on Thursday.
Roku shares soared in extended action after its fourth-quarter loss and revenue slightly outperformed views. The streaming media platform also added more users than expected. Roku also guided first-quarter revenue higher and expects a return to positive adjusted EBITDA in 2024. Roku shares were already up 12% at 63.49 on Wednesday. Shares are up 66% from their late-December low. Roku shares are still below their 200-day line, but could test that key level on Thursday.
SNPS shares fell modestly overnight, signaling a move back below a buy point. Synopsys’ earnings topped first-quarter views while revenue was in line. But the chip design software company ranked lower in second-quarter EPS. The shares rose 0.9% on Wednesday to 379.48, still in the range of a double bottom base buy point of 364.09. Synopsys shares broke on Tuesday after strong results from its rival cadence design systems (CDNS). Shares of CDNS rose 1.6%, extending the breakdown of Tuesday’s earnings, still in a buy zone.
CSCO shares rose modestly Thursday morning, off early after-hours action but close to possible entries. Cisco’s earnings topped the views for the fiscal second quarter. The Dow Jones giant guided comfortably higher for the fiscal third quarter and 2023. Cisco shares rose 1.6% to 48.45 on Wednesday, retaking the 50-day line. Stocks are working on a buy point of 50.81 from a flat base, with an early entry above 49.56.
ALSN shares rose solidly after Allison Transmission’s earnings and revenue easily outperformed views. Shares were up 0.1% at 45.58, continuing to trade just above a cup base buy point of 45.43.
FSLY shares were up slightly before the open. The edge network platform reported a lower-than-expected loss and exceeded revenue targets. Fastly’s shares rose 3.3% on Wednesday, up 41% so far this week.
CROX rose solidly early Thursday on the back of strong earnings and guidance. Crocs shares have been recovering from a first 50-day line test since a breakout in early November.
DDOG shares fell even as Datadog’s earnings outpaced views. The maker of application monitoring software posted lows in the first quarter and 2023. Datadog’s shares had been on the verge of resuming its 200-day line for the first time since last March.
TOST shares slumped with a bigger-than-expected loss, even though revenue outperformed. The toast broth had spread modestly from a bottom base.
SNPS shares are on IBD’s list of long-term leaders, along with Cadence Design. Crocs and TOST stocks are in the IBD 50.
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stock rally
Retail sales soared in January, well above views. Industrial production was flat, below views, but manufacturing output outperformed. 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 0.1% in trading on Wednesday and turned positive shortly before closing. The S&P 500 index rose 0.3%. The Nasdaq Composite advanced 0.9%. The small-cap Russell 2000 rose 1.05%.
The 10-year Treasury yield rose 5 basis points to 3.81%, a 2023 high. But short-term rates, more closely tied to the Fed, didn’t budge much. Investors are still expecting quarter-point rate hikes from the Fed at the March and May meetings. Markets are leaning towards a third hike in June or July, but the odds were down slightly on Wednesday.
The US dollar reached its highest level since January 6.
US crude prices fell 0.6% to $78.59 a barrel, from intraday lows. US crude inventories rose, while the strength of the dollar also affected commodities. Copper futures sank 1.4%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.2%. The iShares Expanded Technology Software (IGV) Sector ETF rose 1.1%. The VanEck Vectors Semiconductor (SMH) ETF was flat.
SPDR S&P Metals & Mining ETF (XME) fell 0.1% and the Global X US Infrastructure Development ETF (PAVE) gained 1.1%. The US Global Jets ETF (JETS) rose 0.3%. SPDR S&P Homebuilders ETF (XHB) rose 0.6%. The Energy Select SPDR ETF (XLE) fell 1.7% and the Financial Select SPDR ETF (XLF) rose 0.1%. The SPDR Fund of the Select Healthcare Sector (XLV) sank 0.5%
Reflecting stocks from more speculative stories, the ARK Innovation ETF (ARKK) jumped 5.9% and the ARK Genomics ETF (ARKG) 2.2%. Roku stock is a large cross-investment of Ark Invest ETFs.
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Market recovery analysis
The stock market rally continues to advance amid mixed economic data and earnings.
Despite the good economic data, the Nasdaq rallied for the third session in a row, back above the 12,000 level. The S&P 500 is rising, while the Dow Jones and Russell 2000 rallied from their 21-day lines once again.
Treasury yields have risen sharply since early February, acting as a modest drag on a stock market rally, but not quite like the gale they had last year. Unlike in 2022, when they rose mainly on inflation and Fed fears, yields are now rising on receding recession fears. Although Wall Street would like to see the Fed’s rate hikes end, it also doesn’t want the economy to collapse.
Rising returns are often bad news for growth stocks, because future earnings are discounted at a higher rate. So it’s notable that growth, especially speculative growth, continues to lead the market rally, including shares of Roku and Fastly.
It’s also notable that stocks generally hold up despite the dollar’s rebound. Not coincidentally, the market rally had its follow-up day on January 6, when the dollar and Treasury yields sold off, and peaked on February 2, just as the dollar and Treasury yields 10-year yield were bottoming out
Energy and mining stocks had a down day as crude oil and metal prices fell partly due to the strength of the dollar. But a positive day or two for underlying goods would make these areas interesting again.
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What to do now
The stock market rally continues to offer reasons and opportunities to increase exposure. Do it gradually, especially with the major indices trading mixed within their recent range.
Breakouts and buying opportunities usually work, but not always. So be prepared to cut your losses fast. Don’t buy expanded and diversify your holdings.
While some leading stocks are showing buy signals, many others are setting up amid the market rally pause. So keep updating your watchlists.
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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