Dow Jones futures rose modestly Thursday morning, along with S&P 500 futures and Nasdaq futures, after a strong session for the stock market rally.
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The major indexes made robust gains Wednesday. Bank fears continue to ebb while Micron Technology (MU) offered some hope for a bottom in chips despite a grim report and near-term outlook.
A number of stocks are flashing buy signals, including Micron stock, Microsoft (MSFT), Shift4Payments (FOUR), Mobileye Global (MBLY), STMicroelectronics (STM), Wynn Resorts (WYNN), DraftKings (DKNG), Rambus (RMBS), Skyline Champion (SKY) and Workday (WDAY).
Microsoft, Rambus, Workday and STM stock are above traditional buy points. MU stock, Shift4Payments, Wynn, DraftKings and Skyline are rebounding from key areas, breaking down-sloping trendlines for early entries. MBLY stock has retaken key levels.
SKY stock, Rambus and Wynn Resorts are on IBD Leaderboard. WYNN stock and DraftKings are on SwingTrader. MSFT stock is on IBD Long-Term Leaders. STMicro, DraftKings, Shift4Payments and WDAY stock are on the IBD 50. MBLY stock is on IBD Big Cap 20. Skyline Champion also was Wednesday’s IBD Stock Of The Day, while FOUR stock was Tuesday’s.
Regional banks haven’t rallied much this week, but at least they aren’t tumbling. Embattled First Republic (FRC) has bounced. Larger banks such as JPMorgan Chase (JPM) and Bank of America (BAC) have rebounded this week after hitting at least 2023 lows intraday Friday.
Investors should be looking to add exposure, given the action in the major indexes and leading stocks. But don’t rush in.
Dow Jones Futures Today
Dow Jones futures climbed 0.6% vs. fair value. S&P 500 futures advanced 0.6% and Nasdaq 100 futures climbed 0.6%.
Crude oil futures rose 1%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally
The stock market rally opened solidly higher, with the major indexes adding to gains in the late afternoon.
The Dow Jones Industrial Average climbed 1% in Wednesday’s stock market trading. The S&P 500 index popped 1.4%, with Micron stock one of the top performers. The Nasdaq composite jumped 1.8%. The small-cap Russell 2000 advanced 1.1%.
U.S. crude oil prices dipped 0.3% to $72.97 a barrel.
The 10-year Treasury yield was essentially flat at 3.565%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) popped 2.2%. The iShares Expanded Tech-Software Sector ETF (IGV) climbed 1.7%, with MSFT stock a major holding and Workday also a component. The VanEck Vectors Semiconductor ETF (SMH) leapt 1.7%, with MU stock and STMicro both SMH components.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) rallied 3.8% and ARK Genomics ETF (ARKG) 3.2%.
SPDR S&P Metals & Mining ETF (XME) rose 1%, while U.S. Global Jets ETF (JETS) ascended 2.15%. SPDR S&P Homebuilders ETF (XHB) stepped up 0.8%. The Energy Select SPDR ETF (XLE) climbed 1.5% and the Health Care Select Sector SPDR Fund (XLV) edged up 0.3%
The Financial Select SPDR ETF (XLF) rebounded 1.5%, with JPM stock and Bank of America both significant holdings. The SPDR S&P Regional Banking ETF (KRE) gained 1.1%. FRC stock, a KRE component, rose 5.6% Wednesday and 15.4% so far this week. It’s still down 88% in March.
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Market Rally Analysis
A day after the major indexes held key support, the stock market rally attempt gained steam, clearing some notable levels.
The Nasdaq composite led the way, with a strong bounce after getting near its 50-day line at Tuesday’s lows. The 12,000 level looms as the next challenge, with the Feb. 2 market rally peak not far above that.
The S&P 500 moved back above the 4,000 level and the 50-day moving average as well as breaking a down-sloping trendline.
The Dow Jones closed above its 21-day line for the first time since March 6, but is still below its 200-day. The Russell 2000 is bouncing from Friday’s 2023 lows, but has some distance to the 50-day and 200-day lines.
Nasdaq volume was higher than on Tuesday. NYSE volume appeared to be up slightly. Exchange volume was below normal.
Advancers led decliners decisively on the NYSE and Nasdaq, with breadth picking up slightly this week. Market leadership remains relatively narrow, however.
Chip stocks were big winners Wednesday, after retreating Tuesday ahead of Micron’s earnings report. In addition to MU stock, Mobileye, Rambus and STM are chip plays flashing buy signals. Several others showed bullish action.
Microsoft and WDAY stock are among a number of software names in buy zones, while SKY stock is one of several homebuilders stepping up. Investors are placing their bets on gaming plays such as Wynn Resorts and DKNG stock.
FOUR stock is among a few payment stocks acting well, including Flywire (FLYW). MercadoLibre (MELI), which has some similar chart action to Shift4, is an e-commerce giant with a booming payments business.
While banking fears are on the back burner, Treasury yields aren’t racing higher. The recent banking woes, even if the worst is over, likely will lead to less lending and generally tighter financial conditions, slowing the economy and reducing the need for Fed rate hikes. Right now, markets are leaning toward a Fed rate pause in early May. Friday’s PCE inflation report, the Fed’s favorite price gauge, could change that dynamic.
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What To Do Now
The stock market is gaining some steam as the bank crisis appears to have peaked while Fed rate hikes are over, or nearly so. The major indexes have shown a mix of resilience and strength this week, while a number of stocks are flashing buy signals.
So it’s good idea to start adding some exposure — gradually. If the market has real legs, it won’t take long to gradually build up to being 100% invested. If the market soon reverses lower or peters out, it’ll be a lot easier mechanically and psychologically to exit if you’re not fully committed.
But it’s important to be ready by updating your watchlists and staying engaged.
Read The Big Picture every day to stay in sync with the 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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