Dow Jones Futures Edge Up, S&P 500 and Nasdaq Futures Stable
In early trading on Friday morning, Dow Jones futures showed a slight rise, while S&P 500 futures and Nasdaq futures remained relatively unchanged. Before the market open, JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) are set to report their earnings.
Rotation in Market: Small Caps Surge, Tech Giants Decline
Thursday’s trading session witnessed a significant shift in market dynamics. Large-cap technology stocks such as Nvidia (NVDA), Tesla (TSLA), and Meta Platforms (META) saw notable declines, putting pressure on the Nasdaq. In contrast, a softer-than-expected CPI inflation report fueled gains in small-cap stocks, mid-caps, homebuilders, and regional banks.
Several stocks flashed buy signals, including KB Home (KBH), Medpace (MEDP), TechnipFMC (FTI), and BYD (BYDDF).
Bank Earnings and Economic Data
Ahead of Friday’s trading, JPMorgan and Citigroup held steady within their respective buy zones. Wells Fargo saw marginal gains, potentially nearing actionable levels.
The Labor Department is scheduled to release the producer price index, a key indicator influencing the core personal consumption expenditures (PCE) index—the Federal Reserve’s preferred inflation gauge.
Stocks in Focus
Noteworthy stocks on various investment platforms include Nvidia and Meta Platforms on IBD Leaderboard, KB Home and Meta Platforms on SwingTrader, and Medpace on IBD Long-Term Leaders. Additionally, Nvidia, Citigroup, and Medpace are featured on the IBD 50, with Nvidia also on the IBD Big Cap 20. KB Home was highlighted as Thursday’s IBD Stock Of The Day.
Current Futures Performance
As of early Friday, Dow Jones futures showed a 0.1% rise compared to fair value, with S&P 500 futures slightly higher and Nasdaq 100 futures showing a fractional decline.
The 10-year Treasury yield rose to 4.22%.
Market Recap
During Thursday’s trading, the Dow Jones Industrial Average increased by 0.1%, while the S&P 500 index declined by 0.9%. The Nasdaq composite experienced a notable drop of 1.95%. Conversely, the small-cap Russell 2000 surged by 3.6%, marking its highest level and best closing since March 2022. The S&P 400 MidCap also saw a robust gain of 2.45%, reclaiming its 50-day moving average.
Market Rotation Analysis
The market’s rotation on Thursday raised questions about its sustainability. Despite the Nasdaq being 6.5% above its 50-day moving average, down from its recent high, concerns about its stretched valuation persist. A potential pullback, especially with upcoming Big Tech earnings, could provide a healthy correction.
Commodities and Treasury Yields
U.S. crude oil prices rose by 0.6% to $82.62 per barrel. Meanwhile, the 10-year Treasury yield saw a decline of 9 basis points to 4.19%, just above its three-month lows. The yield curve, while still inverted, has shown reduced inversion in recent weeks.
ETF Performance
Among ETFs, growth-focused funds like the Innovator IBD 50 ETF (FFTY) and the iShares Expanded Tech-Software Sector ETF (IGV) experienced declines, while the VanEck Vectors Semiconductor ETF (SMH) tumbled sharply. Conversely, ARK Innovation ETF (ARKK) saw a slight decrease, while ARK Genomics ETF (ARKG) posted a notable gain. Sector-specific ETFs such as SPDR S&P Metals & Mining ETF (XME), Global X U.S. Infrastructure Development ETF (PAVE), and SPDR S&P Homebuilders ETF (XHB) showed varied performances, with XHB surging by 5.9%.
Megacap Stocks Performance
Tesla stock registered a decline of 8.4% to $241.03 on Thursday, following reports of a delayed robotaxi event. Nvidia stock also fell by 5.6%, although it remains slightly up for the week. Meta Platforms declined by 4.1%, holding above critical support levels.
Stocks in Buy Zones
KB Home stock surged by 10.3% to $73.79, breaking through its 50-day moving average and signaling potential bullish momentum. Medpace stock rose by 3.8%, rebounding from the 50-day line. TechnipFTI and BYD also saw gains, with BYD benefiting from positive analyst sentiment and recent expansion plans.
Conclusion
Thursday’s market activity underscored the importance of adapting to ongoing sector rotations. Investors are advised to monitor upcoming earnings reports closely, especially from leading stocks, to navigate potential market shifts effectively. As market conditions evolve, maintaining a diversified portfolio approach remains prudent.
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