Dow futures tended higher early Thursday, along with S&P 500 futures and Nasdaq futures, ahead of Thursday’s CPI inflation report.
The stock market rally on Wednesday extended its recent gains. Investors are betting on quiet inflation data, which raises the risk of the Fed’s monetary report.
Amazon.com (AMZNTesla stock led a huge rally on Wednesday, with an Apple (AAPL), Microsoft (MSFT) and the parent of Google the alphabet (The Google) get strong sessions. Tesla (TSLA) and AMZN also contributed strong performance in the automotive/EV and e-commerce names, respectively.
Centennial Holdings (CELH) heated up on Wednesday, showing a buy signal.
KB major (KBH) reported post-close earnings, kicking off housing reports. KBH stock is down modestly KB main earnings Significantly lowered the first quarter’s financial views, with a loss in revenue as well. KB Home stock rose 3.2% on Wednesday to its best level since March 2022, up about 13% so far this year.
Shares of homebuilders and housing-related names in general have soared in recent weeks.
Taiwan Semiconductor (TSMEarnings topped the views early Thursday, but revenue fell. Taiwan Semi, which makes chips for Apple, nvidia (NVDA) and several others, he said first-quarter sales may be down compared to the previous year. TSMC also cut capital spending plans for 2023. TSM stock still rose modestly early Thursday, indicating a move above the 200-day moving average.
American Airlines (AAL) provided bullish preliminary numbers for the fourth quarter early Thursday, a day earlier Delta Airlines (DAL) profits. AAL stock rose strongly, with Delta up modestly. Airline stocks have trended higher in recent days.
Disney taps a veteran Nike
Disney also recommended that shareholders vote for its board slate and not support activist investor Nelson Peltz, who is seeking to join the board of entertainment giant Dow Jones.
DIS stock rose modestly. Nike, a fellow Dow stock like Disney, Apple, and Microsoft, hasn’t changed much after hours.
CPI inflation report
the Consumer price index for the month of December It will be released at 8:30 am ET.
Economists expect consumer prices to stabilize after November’s gain of 0.1%. Core CPI is expected to rise 0.3% after November’s rise of 0.2%. The overall CPI inflation rate should continue to slow, to 6.6% from 7.1% in November. Core inflation is expected to slow to 5.7% from 6% in November.
The CPI inflation rate peaked at 9.1% last June, while the core CPI inflation rate reached 6.6% in September, both the highest levels in 40 years.
Other data this week, including the New York Fed’s inflation outlook and small businesses with jobs and plans to hire, point to slowing inflation and labor markets.
The tame inflation report should keep the rate hike by a quarter point at the February 1 policy meeting, slowing from 50bp and 75bp at the previous two meetings. More importantly, slowing inflation could raise expectations that the Fed will pause interest rate hikes, possibly after the March meeting.
Dow jones futures today
Dow futures rose 0.2% against fair value. S&P 500 futures rose 0.2% and Nasdaq 100 futures rose 0.1%.
The 10-year Treasury yield fell 3 basis points, to 3.52%.
Crude oil futures rose 1%.
The CPI inflation report is sure to swing the Dow Jones futures and Treasury yields.
Stock market rise
A stock market rally added to recent gains, with major indexes closing near session highs for the second straight session. The Nasdaq led the advance thanks to Amazon and high-cap growth names.
The Dow Jones Industrial Average rose 0.8% on Wednesday Stock market trading. The S&P 500 rose 1.3%. The Nasdaq Composite Index jumped 1.8%. Small cap Russell 2000 rose 1.2%.
US crude oil prices rose 3.1% to $77.41 a barrel, as Chinese optimism outweighed a massive jump in US crude inventories.
The 10-year Treasury yield fell 6 basis points, to 3.55%.
Exchange Traded Funds
Among the ETFs, the Innovator IBD 50 ETF (fifty) rose 1.3%. iShares Expanded Technology and Software ETF (IGV) advanced 1.6%, regaining the 50-day streak, with MSFT shares owning a major IGV. VanEck Vectors Semiconductor Corporation (SMH) rose 1.2%, moving above the 200-day line. TSM stock is a top SMH component.
Reflecting more speculative stories, the ARK Innovation ETF (ARK)ark(up 3.4% and ARK Genomics ETF)ARKG) 3.7%. Tesla stock continues to lead across Ark Invest’s ETFs. Cathie Wood’s Ark has loaded on TSLA stock in recent days and weeks.
SPDR S&P Metals & Mining ETFs (XME(Increased 0.5% and Global Infrastructure Development Fund (ETF) in the USA)cradle) rose 1.3%. US Global Gates Foundation ETF (Planes) rose 0.4%, with the main components of American Airlines and DAL stocks. SPDR S&P Homebuilders ETF (XHB) figured 2.6%. Energy Defined Fund SPDR ETF (xle(Up 0.3% and Financial Select SPDR ETF)XLF) by 0.9%. SPDR Health Care Sector Selection Fund (XLV) added 0.6%.
Tesla stock rose 3.7% to 123.22, extending its rebound from Friday morning’s bear market low of 101.81. The stock remains below the 21-day long downtrend line. Tesla plans to expand a large factory in Austin and is said to be close to an initial deal for a new factory in Indonesia. The latter could complicate Tesla Shanghai’s ordering issues.
The Chinese government on Thursday delayed another expansion of Tesla Shanghai, which will bring annual production capacity to 2 million people from the recently expanded 1.2 million. Officials are reportedly concerned about Elon Musk’s Starlink.
Amazon stock jumped 5.8% to 95.09, closing above the 50-day moving average for the first time in four months. AMZN stock also hit a bear market low last Friday.
Apple stock jumped 2.1%, crossing the 21-day line. This came despite Barclays cutting its price target for AAPL, citing it Weaken Apple’s demand across many product categories.
Google stock gained 3.5%, and also regained the 21-day streak. Microsoft stock advanced 3%, just below the 21-day line after falling last week.
CELH stock jumped 5.3% to 106.57 on Wednesday on heavy volume, after reversing the bullish trend on Tuesday. The stock rose from the 50-day line, broke the trend line, and closed above the 21-day moving average. All of which provided a buy signal. CELH stock ended its intraday gains at 108.80, but had a strong close.
Market rally analysis
The stock market rally showed more strength on Wednesday heading into the CPI inflation report.
The S&P 500 moved more than its 50-day line and hit an intraday high on Tuesday. While still below the 200-day line, the benchmark has crossed the 10-week and 40-week lines. Russell 2000 removed the 200-day streak after it passed 50 days on Wednesday.
The Nasdaq, which has been lagging behind in recent months, has cleared the 50-day line for the first time in nearly a month.
Meanwhile, the blue-chip stocks showed generally positive action. CELH arrow flashed a buy signal. Stocks that have recently broken out have generally held up or continued to rise.
Apple, Tesla, Amazon, and other mega-corporations are still a long way from being doable, but at least they’re not weighing down on the leading benchmarks.
Just by looking at the major indices and blue-chip stocks, the stock market rally shows a nice move, albeit with more resistance levels ahead.
But the rush to the Fed’s critical economic data or events has been dicey, at best, for the past several months. Yes, the dreaded CPI inflation report could send the market bullish. But a hotter-than-expected reading could trigger a major sell-off. The market rates the “good news”.
Of course, it is not the news that is important, but the reaction to the news. the November consumer price index inflation report It was cooler than expected on December 13, which pushed major indexes to their best intraday levels in months. But this was the highest market rally in October and December. The indices closed off their highs of the day and slid lower until about the end of the year.
What are you doing now
Investors may have added some exposure in recent days with indices rallying and many stocks flashing buy signals.
The latest buying may look great on Thursday, but it could all explode as well, depending on the December CPI inflation report.
So investors should not be too exposed in reading the inflation reading.
But be prepared to act if the major indices show a strong move beyond the opening bell. Lots of high quality stocks flashing buy or setup signals.
Microsoft and Tesla are scheduled to go public in two weeks, with Apple, Amazon and Google soon to follow.
Earnings results and guidance will be crucial in the midst of uncertain economic times.
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