Dow Jones futures were up slightly early Wednesday, along with S&P 500 futures and Nasdaq futures. US domestic flights grounded due to FAA glitch. WWE, Wells Fargo, Axcelis Technologies, Impinj and Tesla were also in focus ahead of the opening.
The stock market rally was undecided for most of Tuesday, but major indices gained momentum, with the S&P 500 moving its 50-day moving average. Investors await the December CPI inflation report on Thursday morning.
Medpac (MEDP) rose solidly on Tuesday, signaling a fresh buy signal after a similar move in late 2022 fizzled. first sun (FSLR) bounced off its 50-day moving average and also offered an early entry. leg ELF beauty (ELEVEN) and super microcomputer (SMCI) crashed after Monday’s reversals.
Investors should remain cautious, especially with the forthcoming CPI inflation report.
Dow Jones futures today
Dow Jones futures up 0.3% vs. fair value. S&P 500 futures were up 0.4% and Nasdaq 100 futures were up 0.4%.
The 10-year government bond yield fell 5 basis points to 3.57%.
Crude oil futures rose more than 1% even as the American Petroleum Institute estimated a huge weekly increase in U.S. inventories. The Energy Information Administration will release data on US crude oil and petroleum products at 10:30 am ET.
The FAA grounded all domestic flights until 9 a.m. ET due to a major system failure, except for some flights out of Newark and Atlanta due to congestion there. The FAA expects to “repopulate” the system soon, but airlines are struggling to get back on schedule. Airline shares included Delta Airlines (YES AND) and United Airlines (UAL) were flat to slightly lower.
Vince McMahon is again chairman at World Wrestling Entertainment (WWE) after his daughter Stephanie stepped down as chair and co-CEO on Tuesday night. Mr. McMahon, a major shareholder, resigned last year over payments related to sexual misconduct lawsuits. WWE stock was up solidly in premarket trading after surging in recent days on reports of his expected return to lead a sale of the company.
In the meantime, Wells Fargo (WFC) will largely exit the mortgage business amid regulatory pressure, CNBC reported late Tuesday. It will offer home loans only to existing banking and wealth management clients and borrowers in minority communities. WFC stock was little changed in extended trading.
Axcelis Technologies (ACLS), which has taken a strong move in recent sessions, said revenue for the fourth quarter ended December exceeded $250 million. the chip equipment maker’s earlier forecast of $232-$240 million. ACLS shares gained early Wednesday.
leprechaun (PI) says Fourth quarter revenue exceeded $76 million vs. the RFID chipmaker’s previous guidance of $71.5 million to $73.5 million. PI stock, which was already slightly above the 50-day moving average, rose solidly overnight. That could offer early entry or get close to Impinj stock’s flat base buy point. PI stocks are also on the leaderboard.
Earnings season also starts at the end of the week. Taiwan semiconductor (TSM) reported on Thursday morning. On Friday, JPMorgan Chase (JPM), Bank of America (BAK), Citigroup (C) and Wells Fargo all reported ahead of the opening, along with Delta Air and UnitedHealth.
Shares rose 2% ahead of Wednesday’s open.
Tesla has applied for a major expansion of its Austin assembly plant in Texas, the Austin Business Journal reported late Tuesday. Tesla Austin is still expanding its existing capacity.
Tesla is also close to a tentative deal to build a factory in Indonesia, Bloomberg reported. In late December, Bloomberg reported that Tesla would announce a new plant in northeastern Mexico, but there’s no official word on it.
Tesla shares fell 0.8% on Tuesday after rising 5.9% on Monday. Shares reversed higher on Friday after hitting a bear market low of 101.06 after the EV giant announced big price cuts in China and other major Asian markets. TSLA stocks need a lot of repairs.
Stock market rally Tuesday
After Monday’s disappointing decline, the stock market rally strengthened Tuesday afternoon, closing near session highs.
The Dow Jones Industrial Average rose 0.6% on Tuesday stock exchange trading. The S&P 500 index rose 0.7%. The Nasdaq Composite rose 1%. Small-cap Russell 2000 rose 1.5%
UNH shares fell 0.8%, hitting their lowest level since last June. Health insurer Dow Jones is already down 8.3% in 2023 after ending 2022 in reasonably good shape. UnitedHealth’s earnings and guidance on Friday will be important for the suddenly competitive sector.
US crude prices rose 0.7% to $75.12 a barrel. Natural gas prices fell by 6.9%.
The 10-year Treasury yield rose 10 basis points to 3.62% after slipping 20 basis points in the previous two sessions.
Among the growth ETFs is the innovator IBD 50 ETF (FFTY) rose 1.1%, while innovator IBD Breakout Opportunities ETF (STRUGGLE) rose 0.15%. The iShares Expanded Tech Software Sector ETF (IGV) achieved growth of 0.1%. The VanEck Vectors Semiconductor ETF (SMH) rose 1.3%, just surpassing the 200-day moving average after breaching the 50-day moving average on Friday. TSM stock is a large SMH holding.
SPDR S&P Metals & Mining ETF (XME) rose 2.5% and the Global X US Infrastructure Development ETF (PAVE) rose by 1.6%. US Global Jets ETF (JETS) was up 2.4%, with DAL shares among notable holdings. SPDR S&P Homebuilders ETF (XHB) rose 1%. The Energy Select SPDR ETF (XL) was up 0.7% and the Financial Select SPDR ETF (XLF) increased by 0.6%. The SPDR Fund for Selected Healthcare Sectors (XLV) closed up 0.8% with UNH stock a top XLV holding.
Analysis of the market rally
The stock market rally spent much of the morning hovering around breakeven but ended on Tuesday with relatively strong performance.
The S&P 500 rose above the 50-day moving average. The 200-day moving average is slightly above.
The Dow Jones recovered from a test of its 50-day moving average after moving above this key level on Friday. The Nasdaq rose off its 21-day moving average with the 50-day moving average not far away.
The Russell 2000 is back above its 50-day moving average, just below its 200-day moving average.
The S&P MidCap 400 rose Tuesday after finding support at the 50-day price. That’s after it jumped above its 21-day, 50-day, and 200-day moving averages on Friday. Invesco S&P 500 Equal Weight ETF (RRP) looks very similar.
RSP and the MidCap 400 highlight how big caps such as Apple (AAPL), Tesla and UNH shares weighed on the market.
A sustained stock market rally may not begin until there is clarity about when the US Federal Reserve will stop raising interest rates. Markets are keenly expecting a hike of just a quarter point on the 26th. 1 political session and again at the end of March.
Thursday’s CPI inflation report could set expectations for a quarter-point hike. Inflation should trend downwards further in the coming months, if only because year-on-year comparisons are so steep.
Mixed leading stocks
A number of leading stocks have flashed buy signals over the past few days and weeks. But most quickly faltered. In some cases, such as B. the MEDP stock, they recover a few days later.
Medpace was up 5.9% in strong volume to 223.29, bouncing off the 50-day MA and surmounting its Dec 29 high as MEDP attempted to move out.
First Solar rose 7.4% to 171.01, continuing a mini-win streak. The move off the 50-day moving average offered an early entry into a new base, but now looks a bit prolonged. But the official buy point of 173.78 is not far away.
Other names keep falling.
ELF stock had a promising breakout on Friday but gave back most of those gains on Monday and fell 8.3% to 51.15 on Tuesday, breaking below the 50-day moving average and undercutting its low flat base.
SMCI shares rose Monday morning, offering an early entry but closing only marginally higher. On Tuesday, shares fell 7.55% below the 50-day moving average after a short seller report.
Many other stocks are hovering right around potential buy points.
The stock market rally is still in force, but the major indices, sectors and especially leading stocks are vulnerable to trend reversals. Thursday’s CPI inflation report could trigger big gains as major indexes decisively breach some key levels. But it could also go the other way around.
Investors should be cautious about their exposure and cautious about new purchases, especially ahead of the CPI report.
When making new purchases, know your exit strategy before you jump in. Consider taking quick partial wins to lock in some wins.
This is still a window market. But there are many intriguing stocks to watch across a variety of sectors. Prepare these watch lists.
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