Overnight, Dow Jones futures, S&P 500 futures, and Nasdaq futures declined marginally. On Wednesday, the stock market rally pushed higher, extending a recent uptrend but finishing far off session lows. While Apple chipmaker Taiwan Semiconductor (TSM) is about to publish earnings, Tesla share was a significant winner.
Consumer price inflation came in little higher than projected, at 7%, a new 39-year high. On the other hand, investors appeared relieved that the December inflation figure was not worse. Meanwhile, crude oil and copper prices have risen, as have equities in the energy, mining, and other commodity-related industries.
Nonetheless, the significant indices retreated from their morning highs, with the Nasdaq striking resistance following a Monday afternoon rally. Mosaic (MOS) pushed out past a purchase target, while Applied Materials (AMAT) rallied bullishly from its 50-day line. On Wednesday, Tesla (TSLA) was one of the leading movers, reclaiming crucial support, although it is still not actionable.
After the close of business on Wednesday, KB Home released profits. At the same time, Taiwan Semiconductor (TSM) and Delta Air Lines (DAL) reported early on Thursday, kicking off earnings for their respective sectors.
KB Home's results outperformed expectations. Although sales were disappointing, the homebuilder provided upbeat forecasts for revenue, selling prices, and profit margins. KBH stock gained steadily overnight, signifying rises over the 50-day and 200-day lines, despite being a laggard while rivals were breaking out.
On Wednesday, DAL's stock dropped 1.5 per cent. The price has been rebounding for several weeks, although it is still significantly below its 2021 highs, as do other airline equities. However, Delta's earnings will be vital for rival airlines and hotels and online travel companies that perform well.
On Wednesday, Taiwan Semiconductor climbed 2.6 per cent to 132.51. With a 135.60 buy target, TSM stock now has an 11-month cup-with-handle base. Taiwan Semi works as a chip contractor for Apple (AAPL), Nvidia (NVDA), and other fabless chipmakers. Chip-equipment producers like Applied Materials will be interested in its capital investment forecast.
Apple's stock rose 0.3 per cent, still trading within its 10-week range. After last week's sell-off, Nvidia's stock rose 0.65%, although it remains below its 50-day line.
The IBD Leaderboard includes Tesla and Nvidia. SwingTrader has Applied Materials and MOS stock. The IBD 50 list includes AMAT shares. Mosaic was the IBD Stock of the Day on Wednesday.
The video featured in this article evaluates AMAT, Mosaic, and other stocks from Wednesday's market action.
Today's Dow Jones Futures
Dow Jones futures spoiled 0.1% VS fair grade. S&P 500 futures slid 0.2% and Nasdaq 100 futures floor 0.3%
It's important to remember that overnight trading in Dow futures and elsewhere does not always equate to actual trading in the next ordinary stock market session.
Rally in the Stock Market
The stock market surge ended significantly below its morning highs, but the major indexes ended the day in the black.
On Wednesday, the Dow Jones Industrial Average increased 0.1% in stock market trading. The S&P 500 index increased by 0.3%. The Nasdaq Composite Index increased by 0.2%. The Russell 2000, a small-cap index, fell 0.7%.
The 10-year Treasury yield slipped 2 basis points to 1.725% on Tuesday, reversing a 23-month intraday high of 1.81% on Monday. Crude oil prices rose 1.8% to $82.64 per barrel, while natural gas prices increased by 10%. Copper prices increased by around 3%.
The Innovator IBD 50 ETF (FFTY) increased by 1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) increased by 0.8%. IGV, the iShares Expanded Tech-Software Sector ETF, fell 0.3%. VanEck Vectors Semiconductor ETF (SMH) increased by 0.85%. Major SMH components include TSM stock, Nvidia, and AMAT.
The SPDR S&P Metals & Mining ETF (XME) increased by 2.3%, while the Global X US Infrastructure Development ETF (PAVE) increased by 0.5%. The JETS (US Global Jets ETF) fell 0.9%, with DAL stock being a significant JETS holding. The SPDR S&P Homebuilders ETF (XHB) ended the day barely above break-even. The Energy Select SPDR ETF (XLE) increased by 0.2%, while the Financial Select SPDR ETF (XLF) increased by 0.1%. The SPDR Health Care Select Sector Fund (XLV) fell 0.3%.
ARK Innovation ETF (ARKK) fell 2.8%, while ARK Genomics ETF (ARKG) fell 4.1%, reflecting more speculative story equities. ARK Invest's ETFs still have Tesla stock as their top holding.
According to MarketSmith research, Mosaic stock surged 3.8% to 41.91, clearing a 41.25 cup-with-handle buy target in above-average volume. MOS has retreated from intraday highs of 42.61.
AMAT stock jumped 4.7% to 159.55, shattering a very short trend line entrance and recovering bullishly from its 50-day line. The stock of Applied Materials has also risen above a previous purchase point of 159.10, even though it is technically no longer valid. It's now possible to do something about it.
Tesla Inc. (NASDAQ: TSLA)
Tesla's shares rose 3.9% to 1,106.22, decisively recovering its 50-day moving average. TSLA stock has risen more than 125 points since Monday's lows. The 50-day line is generally to get an early entry, but after dropping from its intraday high on Jan. 4, the EV giant is attempting to go straight up. For the time being, Tesla stock is still trading close above the 1,200 level. Before breaking out, shares should ideally pause somewhere below or around 1,200.
Analysis of the Market Rally
On Wednesday, the stock market rebounded again, but it fell short of its yearly highs.
After hitting its 10-day line and nearly reaching its 21-day moving average, the Nasdaq composite, which had gained more than 1% intraday, dropped down. It's still below the 50-day moving average. Above their 21-day and 50-day lines, the Dow Jones and S&P500 came into resistance at their 10-day lines.
Short-term moving averages were also flipper in the Russell 2000. However, the small-cap index fell as well.
At Monday's lows, the market rise was ripe for a bounce. So, we've figured it out. But it's still unclear whether that rebound will last. Is it possible for Nasdaq to recapture its 50-day line and year-end levels? Is it possible for the S&P500 and Dow Jones to reach new highs? Will the market rally continue, or will it falter once more?
We are not obligated to receive a response right away. A brief halt in the major indices may be beneficial. It's unusual for stocks to rise in a straight line. Stocks would be able to fix themselves with some sideways movement, while leaders would stand out.
The numbers are looking terrific. Energy equities are still strong, albeit Wednesday's gains were modest compared to crude oil and natural gas price swings. Before placing large fresh wagers on bank stocks, investors should wait for JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) to report earnings on Friday.
What Should I Do Now?
The market direction may be the most important part of may slim. Most stocks will climb if the market is generally heading higher. Top stocks with strong fundamentals can be found, but those leaders wist likely to follow if the market falls.
While the stock market is still surging, it is under pressure as its trajectory is uncertain. If you buy Nvidia, Tesla, or Microsoft (MSFT) stock now, you're not just betting on those firms too early but also on the market as a whole. Instead of anticipating where the market will go, focus on what it is doing right now.
Although most growth firms are faltering, commodity-related equities and financials are not added to the confusion.