Dow Jones futures fell slightly early Thursday, along with S&P 500 futures and Nasdaq futures, ahead of key economic data. The stock market rally had modest gains Wednesday, led by techs and small caps, with leading stocks having a good session.
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Ford Motor (F) broke out as it doubled down again on electric vehicles. Tesla (TSLA) rose, but lagged Ford stock and most EV plays, including Nio (NIO), Xpeng (XPEV) and Li Auto (LI).
Meanwhile, GameStop (GME) and AMC Entertainment (AMC) spiked again as „meme“ stocks popular on Reddit are back in favor.
Nvidia (NVDA), Williams-Sonoma (WSM), DXC Technology (DXC), Okta (OKTA), Snowflake (SNOW) and Workday (WDAY) headlined key earnings reports after the close.
Nvidia stock edged lower while WSM stock rose modestly. DXC, Okta, Snowflake and WDAY stock fell.
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GME Stock, AMC Soar
GME shot up nearly 16% to 242.56 on Wednesday after leaping 16% on Tuesday. Shares are below the March peak of 348.50 and the Jan. 28 high of 428. GameStop is creating a non-fungible token platform, which certainly seems appropriate for a meme-based play. GME stock is up 36% so far this week.
AMC stock leapt 19% to 19.56. That’s just below the multiyear high of 20.36 set on Jan. 27. AMC stock has surged 62% this week.
Nvidia stock, DXC Technology, Ford and Williams-Sonoma are on IBD Leaderboard.
Dow Jones Futures Today
Dow Jones futures fell about 0.1% vs. fair value. S&P 500 futures slipped 0.2% and Nasdaq 100 futures lost 0.4%.
At 8:30 a.m. ET, investors will get readings on weekly jobless claims and April durable goods orders. At 10 a.m. ET, April pending home sales will be released.
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 and portfolio manager Eve Boboch as they analyze actionable stocks in the market rally on IBD Live
Coronavirus News
Coronavirus cases worldwide reached 169.12 million. Covid-19 deaths topped 3.51 million.
Coronavirus cases in the U.S. have hit 33.97 million, with deaths above 606,000.
Stock Market Rally
The stock market rally had a quietly positive session.
The Dow Jones Industrial Average closed just above break-even in Wednesday’s stock market trading. The S&P 500 index rose 0.2%. The Nasdaq composite climbed 0.6%. The small-cap Russell 2000 popped 1.9%.
With Apple (AAPL) and Microsoft (MSFT) edging lower and most tech giants having quiet sessions, leading stocks and sectors had solid sessions.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) grew 2.1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 1.4%. The iShares Expanded Tech-Software Sector ETF (IGV) added 0.9%, with WDAY stock a notable IGV holding. The VanEck Vectors Semiconductor ETF (SMH) inched up 0.1%, as chip-gear makers that rallied in recent days took a break. Nvidia stock is a big SMH holding.
SPDR S&P Metals & Mining ETF (XME) gained 1.7%, paring recent losses. Global X U.S. Infrastructure Development ETF (PAVE) advanced 0.7%. U.S. Global Jets ETF (JETS) popped 2.2% after Tuesday’s intraday gains fizzled. SPDR S&P Homebuilders ETF (XHB) rose 1.2%. Williams-Sonoma is a major component in XHB.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) advanced 1.9% and ARK Genomics ETF (ARKG) 1.6%. Both ETFs are still below their 200-day line. Tesla stock is the No. 1 holding across ARK Invest’s ETFs.
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Ford Stock Breaks Out, Tesla Lags
Ford announced Wednesday that it will spend more than $25 billion on electric vehicles by 2025 and now expects at least 40% of its vehicles to be fully electric by 2030. That comes less than a week since Ford unveiled its F-150 Lightning. The EV version of America’s bestselling pickup will start at $39,974, before federal tax credits, when it goes on sale in spring 2022. That could come before the Tesla Cybertruck, which still awaits a finished design and next-generation batteries.
Ford stock jumped 8.5% to 13.90, clearing a 13.72 buy point in heavy volume, according to MarketSmith analysis. Shares had retreated in the prior two sessions after surging nearly 13% last week.
Tesla stock rose 2.4%, clearly outpacing the major indexes and bouncing from its 200-day line. But that’s well below Ford’s gain as well as other pure-play EV stocks. Li Auto stock spiked 14% after reporting mixed Q1 results but predicting a solid gain in Q2 deliveries. Li stock closed above its fast-falling 50-day line for the first time in four months. Among fellow China EV makers, Nio stock rallied 4.7% and Xpeng stock 7.45%.
All of these EV stocks are well off highs.
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Nvidia Earnings
Nvidia earnings and sales modestly beat views.
NVDA stock fell a fraction before the open. Shares edged up 0.3% to 628 on Wednesday. Nvidia stock rebounded from its 50-day line and broke a downtrend late last week, offering an early entry. Shares continued to climb toward the April 15 high of 648.57. While a couple days short of being a proper base, investors could use 648.67 as a buy point.
Nvidia stock has had three straight failed breakouts over the last several months. With shares in a sideways range, the relative strength line for NVDA stock has lagged. But it is close to recent highs at least. The RS line, the blue line in the charts provided, tracks a stock’s performance vs. the S&P 500 index.
Williams-Sonoma Earnings
Williams-Sonoma earnings crushed views with a 296% gain. Sales easily beat as well, while guidance was strong.
WSM stock rose 4% overnight, signaling a move back above its 50-day line. Williams-Sonoma stock climbed 2.6% on Wednesday to 171.29. WSM stock skyrocketed following the prior earnings report, then began consolidating a couple weeks later. Shares briefly hit a record high on May 10, but then reversed lower, undercutting the 50-day line a few days later.
Rival upscale home furnishings retailer RH closed up 0.1%, slightly extending Tuesday’s rebound from the 50-day line. RH stock was added to SwingTrader on Tuesday.
DXC Technology Earnings
DXC earnings and revenue topped views. But the IT consulting and outsourcing firm gave so-so guidance.
DXC stock fell 2% in overnight action. Shares dipped 2 cents to 36.92 on Wednesday. DXC stock has been on a steady climb since a March 30 breakout. The RS line was at a high as DXC stock broke out, an bullish sign.
Okta Earnings
The Okta earnings report beat forecasts for sales and per-share loss. The cybersecurity play also guided higher for full-year revenue.
Still, Okta stock retreated 3% in premarket action. Shares climbed 1% to 246.53 on Wednesday. Okta stock is in a wild-and-loose cup-with-handle base with a 287.54 buy point.
Fellow cybersecurity firm Zscaler (ZS) easily beat views late Tuesday. ZS stock gapped up 12% Wednesday.
Snowflake Earnings
Snowflake topped revenue forecasts, but guidance appeared to disappoint investors.
SNOW stock slumped 4% in overnight trade. Snowflake stock rose 2.3% to 235.25 on Wednesday. Shares recently reclaimed their 50-day line, after sinking to a record-low of 184.71. A late 2020 IPO, SNOW stock hit a record 409 on Dec. 8.
Workday Earnings
Workday earnings and revenue beat consensus forecasts modestly. The financial and human capital management software giant guided up on full-year revenue.
WDAY stock pulled back 1% late. Workday stock inched up 0.2% on Wednesday to 237.07. Shares could be working on a 268.98 buy point from an emerging double-bottom base. But WDAY stock, which recently found support at its 200-day line, remains below its declining 50-day line.
Market Rally Analysis
The stock market rally is still „under pressure,“ but has clearly improved since the May 19 morning low. It definitely feels like a stronger market with tech stocks rebounding. But is this the start of a broad, tech-led advance, or is this another short-term market bounce coinciding with a shift into techs?
The Bulls vs. Bears reading shows a welcome decline in bullishness among investment newsletter writers, though that weekly reading may already be somewhat out of date. The surge in AMC stock and GME stock certainly suggest investor euphoria isn’t far away. The rebound in EV stocks such as Nio and highly valued growth generally over the past week also suggest a „risk on“ mentality.
The Dow Jones and S&P 500 are close to record highs. The Russell 2000 has moved back above its 50-day line. The Nasdaq is starting to lose touch with its 50-day as it trends toward all-time highs. Still, it would only take one bad day for the Nasdaq to undercut its 50-day line, with the S&P 500 and Dow Jones not far behind.
What Investors Should Do Now
Breakouts and early entries are performing better, with chip-gear makers, new IPOs and traditional auto giants like Ford among those offering opportunities. Whether this tech-led trend is short-lived or longer lasting, investors hopefully added some exposure in the past few days.
If the market rally starts to fizzle, you may want to take some quick profits. It conditions continue to improve, you can gradually expand your portfolio. Keep in mind that even if the major indexes go on a solid advance, don’t expect a repeat of the hot market rally of April-September 2020.
Investors looking to buy highly valued growth stocks should wait for a proper set up. There is a difference between Tesla stock or SNOW stock trying to rise off a bottom and the likes of Upstart Holdings (UPST) and UiPath (PATH).
What the past week has shown is the importance of remaining engaged and prepared even when conditions are unfavorable. Paying attention meant investors saw the Nasdaq reclaiming its 50-day line as it happened. By having up-to-date watchlists, you could take advantage of buying opportunities quickly.
With new buys amid some hopeful market trends, investors should have extra motivation to be vigilant. But don’t get complacent. Stay alert and make sure you have exit strategies for your holdings.
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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