Dow Jones futures edged lower early Thursday, along with S&P 500 futures and Nasdaq futures, with the CPI inflation report due before the open. The S&P 500 and Nasdaq hit record highs Wednesday, with the latter the most extended in over a year. That’s a notable warning for investors.
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What Investors Need To Know About How The CPI Report And PPI Report Influence The Stock Market
Key Stock Market Movers
Nvidia (NVDA) had another solid session Wednesday as Nvidia chipmaker Taiwan Semiconductor Manufacturing (TSM) reported robust June sales. Tesla (TSLA) extended its win streak to 11 sessions.
Cameco (CCJ), Carvana (CVNA) and GE Aerospace (GE) flashed buy signals.
Software and restaurant stocks struggled, with leaders CrowdStrike (CRWD) and Cava (CAVA) coming under pressure.
Costco Wholesale (COST) rose early Thursday after announcing its first membership fee hike since 2017.
Delta Air Lines (DAL) slightly missed second-quarter earnings views and guided lower on Q3 EPS. Delta stock sold off after trending lower for two months, with other carriers also sliding.
Nvidia, Cava, and Taiwan Semiconductor stock are on IBD Leaderboard. Nvidia, CrowdStrike stock is on the IBD 50. GE Aerospace was Wednesday’s IBD Stock Of The Day.
Dow Jones Futures Today
Dow Jones futures were 0.15% below vs. fair value. S&P 500 futures declined 0.1% and Nasdaq 100 futures lost a fraction.
The 10-year Treasury yield edged up to 4.29%.
The June CPI inflation report will swing Dow futures and Treasury yields before the open.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
CPI Inflation Report
The Labor Department releases the June consumer price index at 8:30 a.m. ET Thursday. Economists expect a 0.1% overall CPI increase vs. May. Core CPI is seen rising 0.2%.
Markets see a 73.3% chance of a quarter-point rate cut at the Sept. 17-18 meeting.
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Stock Market Rally
The stock market rally had a solid, broad advance. The Dow Jones Industrial Average jumped 1.1% in Wednesday’s stock market trading to its best levels since late May. The S&P 500 index gained 1% and the Nasdaq composite leapt 1.2%, both rising for a seventh straight session to fresh highs.
The small-cap Russell 2000 popped 1.1%. The Invesco S&P 500 Equal Weight ETF (RSP) rose 0.8%. Both reclaimed their 50-day lines.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) climbed 0.8%, hitting a record high.
U.S. crude oil prices rose 0.85% to $82.10 a barrel.
The 10-year Treasury yield fell 2 basis points to 4.28%.
Extended Nasdaq Is Warning To Investors
The Nasdaq is now 9% above its 50-day moving average, the most since closing 10.1% above that key level on June 15, 2023. The risks of a pullback are mounting. But, as the past few days and weeks have shown, that doesn’t have to happen right away, and it doesn’t have to be sharp or lengthy.
The S&P 500, at 5.4% above its 50-day, is now slightly extended.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) dipped 0.1%. The iShares Expanded Tech-Software Sector ETF (IGV) lost a fraction, with CRWD stock a holding. The VanEck Vectors Semiconductor ETF (SMH) rallied 2.35%. Nvidia and TSM stock are the biggest SMH components.
Reflecting more-speculative stocks, ARK Innovation ETF (ARKK) fell 0.2% 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) climbed 0.9% and the Global X U.S. Infrastructure Development ETF (PAVE) popped 1.5%. U.S. Global Jets ETF (JETS) rose 0.6%, with Delta Air a big holding. SPDR S&P Homebuilders ETF (XHB) rebounded 2.2%. The Energy Select SPDR ETF (XLE) added 0.7% and the Health Care Select Sector SPDR Fund (XLV) advanced 0.95%.
The Industrial Select Sector SPDR Fund (XLI) gained 0.9%, with GE stock a major holding.
The Financial Select SPDR ETF (XLF) rose 0.4%.
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Tesla Stock Win Streak Goes To 11
Tesla stock edged up 0.35% to 263.26 on Wednesday, its 11th straight advance. Shares are up 44% in that win streak, its longest since a 13-day run in June 2023. Nearly all of the gains have come on strong volume. TSLA stock is greatly extended from a late June breakout.
Nvidia Stock
Nvidia stock popped 2.7% to 134.91, now up 7.2% for the week. Shares are approaching the June 20 intraday peak of 140.76, but the consolidation is far too short to offer a buying opportunity.
NVDA stock is rallying on renewed AI optimism, notably from Taiwan Semiconductor.
Taiwan Semi reported strong June sales early Wednesday on AI chip demand, with Q2 revenue up 40% vs. a year earlier. Nvidia is a huge customer for the foundry giant, which also makes chips for Apple (AAPL), Broadcom (AVGO) and many more.
TSM stock climbed 3.5% to 191.01, a record close. Shares hit 192.80 Monday morning, briefly giving Taiwan Semi stock a $1 trillion market cap.
Market Update: Stocks In Buy Areas
As of Wednesday, the market closed at $990.72 billion.
Cameco stock saw a 9.6% increase, reaching $53.71 and surpassing the 50-day moving average with high trading volume. CCJ stock has a buy point of $56.24 from a flat base pattern. Buying Cameco off the 50-day line has been more successful in the past year than traditional breakouts.
Carvana stock rose by 4.2% to $130.97, reclaiming a buy point of $129 from a cup base, following positive analyst remarks. However, CVNA stock has proven difficult to hold from traditional breakouts.
GE Aerospace stock went up by 1.6% to $165.74, moving away from the 50-day line and offering an early entry point. Additional entry points could be at short-term highs of $167.50 and $169.15, with the official flat-base buy point at $170.80.
Stocks Under Pressure: CrowdStrike And Cava
Software and restaurant stocks are facing pressure, impacting key players in these sectors.
CrowdStrike stock dropped by 3% to $374.45, closing below its 21-day moving average for the first time since early June. The stock had been trading near a buy zone from a cup-with-handle base since June 8 but failed to maintain momentum on Tuesday.
Cava stock declined by 5.5% to $85.30, testing its 50-day line after a 4.75% decrease on Tuesday. The stock briefly attempted to break out of a flat base on Monday.
It remains uncertain whether these movements signal a prolonged downturn or if they are temporary shakeouts for CrowdStrike and Cava.
Market Strategy: What To Do Now
With the market rally showing signs of being overextended ahead of inflation data and the start of earnings season, investors need to prepare for increased risk. Some stocks are showing buy signals, while others are indicating potential sell signals.
Investors can maintain a solid-to-heavy exposure in the current market but may consider taking profits. It is important to stay engaged and ready to act, given the volatility in individual stocks and sectors.
Update watchlists regularly to keep up with stock and sector movements. Stay informed with daily market updates and insights from Ed Carson on Threads and Twitter.
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following sentence in a more concise way:
“The current situation is not ideal and requires immediate action to address it.”
“The situation needs urgent attention.”