Finance
Dow Jones Futures Rise; Market Rally Adds to Earnings, New Warren Buffett Buy Ulta Rises Late
Dow Jones futures rose overnight along with S&P 500 futures and Nasdaq futures ahead of a slew of major economic reports. Warren Buffetts Berkshire Hathaway (BRKB) announced new stakes in the aerospace firm Heico (HEY) And Ultimate beauty (ULTA).
Cisco systems (CSCO) jumped to victory late. Walmart (WMT), Alibaba.com (BABA), JD.com (J.D) report early on Thursday.
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Market Holds Continuing Day Gains; Ferrari, Allstate, Netflix Flash Buy Signals
After Tuesday’s follow-up day on the major indices, the newly confirmed stock market rally contributed slightly to gains on Wednesday, with the S&P 500 on the right at a key level. CPI inflation cooled somewhat after Tuesday’s surprisingly tame producer price index.
On Wednesday, a few more stocks showed buy signals, including Ferrari (RACE), All states (ALL) And Netflix (NFLX). Nvidia (NVDA) delivered strong weekly gains as it works towards key resistance. On the other hand, Tesla (TSLA) and Google parent Alphabet (GOOGL) were notable Magnificent Seven drags.
Nvidia stock is on Leader board. Ferrari shares have joined SwingTrader. Netflix stock is on the brink IBD50. Ferrari was the IBD stock of the day on Wednesday.
The video embedded in this article discusses Wednesday’s market action and analyzes Ferrari, Allstate, and Netflix stocks.
Dow Jones futures today
Dow Jones futures rose 0.15% from fair value. S&P 500 futures rose 0.1% and Nasdaq 100 futures rose 0.2%. Cisco shares are members of the Dow Jones, S&P 500 and Nasdaq 100.
Remember, overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading during the next regular stock market session.
Warren Buffett announces Ulta, Heico buys
In its latest 13F filing, Buffett’s Berkshire Hathaway disclosed new stakes in beauty products retailer Ulta Beauty and aerospace/defense company Heico.
Ulta shares rose 14% in overnight action after hitting a three-year low earlier this week. Heico rose 4% and looked at a new high.
Investors already knew that Warren Buffett sold net shares again in the second quarter. That included a major cut to Berkshire’s Apple (AAPL) stake.
BRKB stock rose 1.4% to 438.47 on Wednesday, moving into a buy zone.
In the meantime, Bill Ackman built up new interests Nike (NKE) and investment management company Brookfield (BN), in the second quarter, according to a 13F filing from Ackman’s Pershing Square. Nike stock, which hit a four-year low earlier this month, rose modestly late Wednesday. BN shares, already in a buy zone, moved higher.
Main income
Cisco’s earnings exceeded expectations, with the long-lagging networking giant rising in first-quarter earnings per share. The Dow giant also said it will cut 7% of its workforce. CSCO shares jumped in late trading. Shares moved higher on Wednesday after hitting a 21-month low on Monday.
Walmart’s earnings are expected early Thursday, with results, guidance and commentary providing insight into the economy and consumers. WMT shares rose 0.8% to 68.66 on Wednesday, moving above the 50-day mark. The Dow discount giant is working on a new consolidation above a previous double-bottom base approved on May 16 due to a first-quarter earnings gap. A strong move above the 50-day line would provide a buying opportunity.
Chinese e-commerce giants Alibaba and JD are also available before the fair. BABA stock is trying to build the right side of a base, but has work to do. JD stock is below the 50-day and 200-day lines.
Economic data available
At 8:30 a.m. ET, investors will get July retail sales, weekly unemployment claims and August figures for the Philly Fed Manufacturing Index and the New York Fed’s Empire State Manufacturing Index.
The July industrial production report is due at 9:15 a.m., followed by the NAHB Housing Market Index at 10 a.m.
Walmart’s earnings and comments on consumer spending will also be important in assessing current economic conditions.
Join IBD experts as they analyze leading stocks and the market on IBD Live
Stock market rally
The stock market rally faltered Wednesday morning, but ultimately held and somewhat extended Tuesday’s bullish gains. Before the opening, the July consumer price index showed headline and core inflation cooling slightly compared to June.
The Dow Jones Industrial Average rose 0.6% during stock trading on Wednesday, moving further above the 50-day and 21-day lines. The S&P 500 Index added 0.3%, surpassing the 50-day line by the smallest fraction. The Nasdaq index moved higher, maintaining its 21-day line. The small-cap Russell 2000 fell 0.5% to fall above the 50-day line.
The Invesco S&P 500 Equal Weight ETF (RSP) climbed 0.2%, extending its move against the 50-day mark.
The first Trust Nasdaq 100 equal-weighted index ETF (QQEW) fell 0.1%, just below the 21-day mark, after regaining its 200-day mark on Tuesday.
Although the market rally is now a confirmed uptrend, it is still facing significant resistance. A V-shaped market recovery would be unusual. A break in the S&P 500 around the 50-day line for several days or weeks could be constructive. It would also offer many shares a better basis and perhaps better handles.
US crude oil prices fell 1.75% to $76.98 per barrel.
Ten-year Treasury yields fell three basis points to 3.82%, down 18 basis points in the past four sessions.
ETFs
Among the growth ETFs is the Innovator IBD 50 ETF (FFTY) fell by 0.2%. The iShares Expanded Tech-Software Sector ETF (IGV) rose by 0.6%. The VanEck Vectors Semiconductor ETF (SMH) rose by 0.1%. Nvidia stock is No. 1 in SMH.
Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) fell 2.7% and ARK Genomics ETF (ARKG) fell by 1.7%. Tesla shares are a major component of Ark Invest’s ETFs. TSLA stock fell 3.1% to 201.38 on Wednesday, back below the 200-day mark.
SPDR S&P Metals & Mining ETF (XME) retreated 1.8%. SPDR S&P Home Builders ETF (XHB) fell by 0.4%. The Energy Select SPDR ETF (XLE) advanced 0.6% and the Healthcare Select Sector SPDR Fund (XLV) gained 0.4%.
The Industrial Select Sector SPDR fund (XLI) rose by 0.4%.
The Financial Select SPDR ETF (XLF) fell by 1.2%. Berkshire stock is No. 1 in XLF, of which Allstate is also a member.
Time the market with IBD’s ETF market strategy
Nvidia stock
Nvidia shares rose 1.6% to 118.01, near its 50-day moving average. On Tuesday, shares rose above the 21-day moving average for the first time since June 16. NVDA stock is up 12.7% so far this week, rising sharply from its August 5 low of 90.69. A move above the 50-day line could provide an entry, although a longer pause could be useful.
Nvidia’s earnings are expected on August 28.
Shares in buy areas
Ferrari shares rose 4.9% to 452.90, marking a four-month consolidation at a record high. RACE shares hit early entries of 433.98 and 436.54, then the official buy point of 442.80.
Allstate shares rose 5.2% to 180.95, back above the Cupbase buy point of 177.37. The property and casualty insurer is selling its voluntary benefits business to StanCorp Financial for about $2 billion, with the two companies forging an alliance. All states’ profits will rise in 2024 due to rising insurance premiums, while revenue growth slowly accelerates.
Shares of Netflix rose 2.1% to 661.68, moving above its 50-day moving line in an emerging base. That could serve as an early entry. After this week, NFLX stock will have a cup base with a buy point of 697.49.
What to do now
The stock market rally is in a confirmed uptrend, which means investors have the green light, but it’s not time to hit the gas yet. There were some caveats heading into Tuesday’s follow-up as the S&P 500 and Nasdaq faced resistance.
But investors should participate in this new rally, even if only with modest exposure to stocks or ETFs.
If the market picks up, you’ll at least have a head start on the upside and can continue to build your portfolio over time. If the market rally falters, you can take a step back if necessary.
Read The Big Picture every day to stay informed about market direction and the most important stocks and sectors.
Follow Ed Carson on Threads at @edcarson1971 and X/Twitter on @IBD_ECarson for stock market updates and more.
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