Dow Jones futures rose modestly early Thursday, along with S&P 500 futures and Nasdaq futures. The ARM IPO priced at the top of its expected range Wednesday night, with Adobe earnings in focus Thursday.
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The stock market rally had a mixed session despite initially rising following a CPI inflation report that was a touch hotter than expected. The 10-year Treasury yield initially jumped toward a 15-year high but reversed lower.
Nvidia stock, Microsoft (MSFT), Amazon.com (AMZN), Meta Platforms (META) and Tesla (TSLA) fared well. Tesla and AMZN stock are actionable while Nvidia (NVDA), Microsoft and Meta stock are near early entries.
But otherwise, the market showed weakness, with the small-cap Russell 2000 breaking below the long-term 200-day moving average. Airline stocks fell on warnings tied to higher fuel costs, while Dow industrial conglomerate 3M (MMM) warned of slowing growth.
Meta, Nvidia and Tesla stock are on IBD Leaderboard. Amazon stock is on SwingTrader. MSFT stock is on the IBD Long-Term Leaders list. Meta stock and Tesla are on the IBD 50.
Dow Jones Futures Today
Dow Jones futures were 0.3% above fair value. S&P 500 futures climbed 0.4%. Nasdaq 100 futures rose 0.5%. Russell 2000 futures advanced 0.6%.
Futures suggest the S&P 500 and Nasdaq will again test their 50-day lines near the open, while the Russell 2000 would retake its 200-day.
The 10-year Treasury yield edged up to 4.26%.
U.S. crude oil futures rose more than 1%, pushing toward $90 a barrel. Copper prices climbed 1%. China’s central bank will get banks’ reserve requirement ratio by 25 basis points as of Friday to spur more lending.
At 8:30 a.m. ET, investors will get August retail sales and producer prices, along with weekly jobless claims.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
ARM IPO
Arm Holdings (ARM) late Wednesday priced its initial public offering at $51 a share, at the top of the expected range of $47-$51. That gives the U.K.-based wireless chip designer, owned by Softbank, an initial valuation of more than $54 billion. Arm will begin trading on the Nasdaq with the ticker ARM.
Softbank, which bought Arm for $36 billion in 2016, is selling at least 95.5 million shares. It will still own 90% of Arm stock after the IPO.
Arm’s chip designs are used by the Apple iPhone and essentially every other smartphone.
Taiwan Semiconductor (TSM), which makes many Arm-designed chips, said Tuesday that will invest up to $100 million into the ARM stock IPO. Arm Holdings had said in its IPO prospectus that Taiwan Semi, Apple (AAPL) and Nvidia might invest in the offering.
Adobe Earnings
On Thursday, attention will turn to Adobe (ADBE) earnings. That’ll be key for the software sector after mixed results from Oracle (ORCL) slammed ORCL stock on Tuesday. Adobe’s comments about artificial intelligence will be important for AI-related stocks.
Homebuilder Lennar (LEN) also is due Thursday night, with the housing sector running into trouble recently.
UAW Strike Looms
Finally, a United Auto Workers strike looms for Ford Motor (F), General Motors (GM) and Stellantis (STLA), barring a labor deal before the end of Thursday. Wall Street seems to think a strike won’t last more than a couple of weeks. But an extended shutdown could hit the economy and benefit nonunion rivals such as Tesla and Toyota (TM).
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Stock Market Rally
The stock market rally faded in the afternoon with all the major indexes backing off intraday moves toward the 50-day line, despite a mini-bounce in the final 45 minutes.
The Dow Jones Industrial Average fell 0.2% in Wednesday’s stock market trading. The S&P 500 index edged up 0.1%. The Nasdaq composite rose 0.3%.
The small-cap Russell 2000 fell 0.8%, closing below the 200-day moving average for the first time in three months.
The Invesco S&P 500 Equal Weight ETF (RSP) sank 0.4%, nearing the 200-day line.
All of that reflects continued weak breadth. Losers outpaced winners once again. New lows easily beat new highs, especially on the Nasdaq.
U.S. crude oil prices reversed lower to drop 0.4% to $88.52 a barrel.
The 10-year Treasury yield fell 1 basis point to 4.25% after spiking to 4.34% early on, just below a 15-year high 4.36%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) fell 1%. The iShares Expanded Tech-Software Sector ETF (IGV) edged up 0.2%. ADBE stock, Oracle and Microsoft are huge IGV holdings. The VanEck Vectors Semiconductor ETF (SMH) rose 0.8%, with NVDA stock the No. 1 component.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) retreated 1.3% and ARK Genomics ETF (ARKG) declined 0.4%. Tesla stock is the No. 1 holding across Ark Invest’s ETFs.
SPDR S&P Metals & Mining ETF (XME) gained 0.75%. U.S. Global Jets ETF (JETS) descended 2.7%. SPDR S&P Homebuilders ETF (XHB) stepped down 1.1%. The Energy Select SPDR ETF (XLE) slipped 0.8% and the Health Care Select Sector SPDR Fund (XLV) closed just above break-even
The Industrial Select Sector SPDR Fund (XLI) slumped 0.7%, roundtripping a solid advance from a late June breakout. 3M is an XLI holding, but several big industrials had notable losses
The Financial Select SPDR ETF (XLF) rose a fraction. The SPDR S&P Regional Banking ETF (KRE) declined 1.2%.
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Megacap Stocks
Nvidia stock rose 1.4% to 454.85, back above the 50-day. A move above the 21-day line would also coincide with a very short downtrend line, offering an early entry.
Microsoft stock climbed 1.3% to 336.08, back above the 50-day line. The Dow tech titan has a 366.78 buy point, but Monday’s high of 338.42 would be an early entry for MSFT stock.
Amazon stock gained 2.6% to 144.85, clearing a 143.63 flat-base buy point. Perhaps the better entry was on Monday, when AMZN stock cleared a short-term high of 139.96.
TSLA stock advanced 1.4% to 271.30, an inside day to Tuesday’s downside reversal after Monday’s 10.1% spike. The EV giant has a 299.29 cup-base buy point. But it’s actionable from an early entry of 261.18.
META stock advanced 1.1% to 305.06, just above the 50-day. Shares have a 326.20 consolidation buy point, according to MarketSmith. But Monday’s high of 309.04 would offer an early entry.
Among the remaining “Magnificent Seven” stocks, Google-parent Alphabet (GOOGL) rose 1%, still in buy range. Apple stock dipped 1.2%, extending sharp recent losses.
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What To Do Now
The stock market rally remains under pressure. The major indexes are fighting to get back above the 50-day moving average, but they are fighting. With the major indexes sandwiched between key levels, modest intraday market moves may seem more meaningful than they really are.
Market breadth is poor. Sectors that had a slew of strong stocks are seeing leadership dwindle to a handful.
So there aren’t a lot of reasons to be adding exposure right now. That could change quickly, so be prepared. Keep working on your watchlists.
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