Dow Jones futures rose slightly overnight, along with S&P 500 futures and Nasdaq futures.
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Market Rises Powerfully Again; Nvidia, Shake Shack, Tesla In Focus
The stock market rally had a strong session, with the key indexes all above their 50-day lines now. Strong retail sales and other economic data Thursday — along with Walmart (WMT) earnings — bolstered the case for a soft landing and modest Fed rate cuts.
Nvidia (NVDA) reclaimed its 50-day, offering an early entry. Fellow Magnificent Seven stock Meta Platforms (META) continues to flash buy signals. Tesla (TSLA) gave a very aggressive entry, with caveats.
Shake Shack (SHAK) and GE Vernova (GEV) cleared buy points as well.
The stock market rally is sending a clear message to investors to add exposure, but do so gradually.
Applied Materials (AMAT) reported better-than-expected earnings Thursday night and guided in line to slightly higher for the current quarter. AMAT stock fell modestly in late trading. The chip-equipment giant jumped 5.1% in Thursday’s regular session, regaining the 21-day line but still below the 50-day.
Nvidia stock is on Leaderboard and the IBD 50. Shake Shack stock and GE Vernova have joined SwingTrader. Shake Shack was Thursday’s IBD Stock Of The Day.
The video embedded in this article discusses Thursday’s bullish market action and analyzes Nvidia, Shake Shack and Tesla stock.
Dow Jones Futures Today
Dow Jones futures rose 0.2% vs. fair value. S&P 500 futures advanced 0.1% and Nasdaq 100 futures climbed 0.2%.
The 10-year Treasury yield dipped to 3.9%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
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Stock Market Rally
The stock market rally started strong and gained momentum. The Nasdaq composite leapt to just above its 50-day moving average with the S&P 500 and Russell 2000 now clearly above their 50-day lines.
The Dow Jones Industrial Average rallied 1.4% in Thursday’s stock market trading, led by Walmart stock. The S&P 500 index rose 1.6%. The Nasdaq composite popped 2.3%. The small-cap Russell 2000 jumped 2.45%. Volume was higher on both exchanges.
Thursday marked a subsequent follow-through day, an FTD-like session after Tuesday’s original follow-through day to confirm the rally. Tuesday’s FTD had some caveats, given the relatively low volume bounce from Aug. 5 lows. But the indexes have shown continued strength, clearing key levels, along with more and more stocks flashing buy signals and extending gains.
The Nasdaq still needs to clear the 50-day line decisively, though it’s possible that won’t happen right away. After so many up days, the market could pull back or pause. That could be constructive, however, letting many stocks forge less V-shape patterns and build handles.
U.S. crude oil prices rose 1.5% to $78.16 a barrel.
The 10-year Treasury yield jumped 10 basis points to 3.92%, rebounding on generally solid economic data and putting recession fears from earlier this month to rest. The two-year Treasury yield, more closely tied to Fed policy, soared 15 basis points to 4.1%, back above the 4% level.
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ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.3%. The iShares Expanded Tech-Software Sector ETF (IGV) gained 1.8%. The VanEck Vectors Semiconductor ETF (SMH) leapt 4.2%. Nvidia stock is the No. 1 holding in SMH, with AMAT stock a notable holding.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) leapt 4.8% and ARK Genomics ETF (ARKG) soared 5.4%. Tesla stock is a significant holding across Ark Invest’s ETFs, but Meta stock is an even-bigger holding. Cathie Wood also has built up a significant Nvidia stake.
SPDR S&P Metals & Mining ETF (XME) bounced 2%. SPDR S&P Homebuilders ETF (XHB) stepped up 1.8%. The Energy Select SPDR ETF (XLE) climbed 1.2% and the Health Care Select Sector SPDR Fund (XLV) was up 0.6%.
The Industrial Select Sector SPDR Fund (XLI) gained 1.35%. The Financial Select SPDR ETF (XLF) rose 0.9%.
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Nvidia Stock
Nvidia stock rose 4.05% to 122.86, back above the 50-day line. Shares have now surged 17% this week, though the gains have come on low volume. Investors could have used Thursday’s move as an early entry or place to start a position. Keep in mind that Nvidia earnings are due in less than two weeks.
Tesla Stock
Tesla stock leapt 6.3% to 214.14, regaining the 21-day, 50-day and 200-day lines. Shares cleared a very-steep downtrend as well. Investors could use Thursday’s move as an aggressive entry into TSLA stock. But if you covered up the stock ticker, investors might choose to look for better-looking charts and stronger fundamentals.
Meta Stock
Meta stock rose 2% to 537.33, just below the July 8 record high of 542.81. In one more day, that could be a new cup base for the Facebook and Instagram parent. Shares have been actionable from various entries, including Tuesday’s move above the Aug. 1 short-term post-earnings high of 527.17.
GE Vernova Stock
GE Vernova stock rose 2.5% to 188.82, clearing a flat-base buy point of 185.50. The energy spinoff from the old General Electric came public in late March and soon ran higher. GEV stock has rebounded powerfully from the Aug. 5 low of 150.01.
Shake Shack Stock
Shake Shack stock rose 4.9% to 109.49, clearing a 105.68 cup-with-handle base.
The handle began with a gap-up in earnings on August 1st. Despite the global sell-off on August 5th, shares were able to test the 50-day line and quickly recover.
What To Do Next
With the current stock market rally indicating a need for investors to increase their exposure, it’s important to continue monitoring the market and your holdings for progress. Consider making new or add-on purchases gradually.
As the Nasdaq rebounds and Nvidia surpasses its 50-day line, investors may want to shift their focus towards defensive growth and growth stocks. However, defensive names could still perform well in this environment.
Various sectors are displaying strength, so make sure your watchlists reflect this diversity.
Stay updated on market trends and leading stocks and sectors by reading The Big Picture daily.
For more stock market updates and insights, follow Ed Carson on Threads at @edcarson1971 and on Twitter at @IBD_ECarson.
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