Dow Jones futures saw minimal changes in value over time, mirroring the stability in S&P 500 and Nasdaq futures. JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup © are scheduled to announce their earnings early on Friday.
The decisions regarding interest rates have a profound impact on both the economy and the stock market. Ed Carson, the IBD News Editor, delves into the varying reactions these decisions can elicit and highlights the key insights that investors should be aware of.
In light of the positive CPI inflation report released on Wednesday, the stock market generally experienced an uptick as investors shrugged off the combined PPI prices report for March.
The Nasdaq index surged to achieve a new record high, propelled by the strong performance of Nvidia (NVDA), which once again took the lead and signaled a buying opportunity following a bullish rebound on Wednesday.
Companies specializing in AI chips and hardware such as Broadcom (AVGO), Astera Labs (ALAB), Arista Networks (ANET), and Super Micro Computer (SMCI) also had robust trading sessions. In the software sector, Datadog (DDOG) triggered early interest, while Microsoft (MSFT) made gains within a buy range.
Thursday presented opportunities for strategic investments, but it is advisable not to hastily increase exposure. While this could mark the beginning of a new phase, exercising caution is warranted as the market dynamics are still in a sideways pattern.
Notable investments include Nvidia on the IBD Leaderboard, Nvidia, Microsoft, and Broadcom on SwingTrader, Microsoft on IBD Long-Word Leaders, Nvidia, Microsoft, Citigroup, and Arista on the IBD 50, and Nvidia, Datadog, Broadcom, Arista Networks, and Super Micro on the IBD Big Cap 20.
Microsoft was recognized as the IBD Stock Of The Day on Thursday.
Current Dow Jones Futures Status
Dow Jones futures exhibited a modest 0.1% increase compared to the fair price, while S&P 500 and Nasdaq 100 futures remained relatively stable.
It is important to note that fluctuations in Dow futures and other markets may not always translate directly to actual trading activities during the subsequent regular stock market session.
Banking Sector Performance
On Friday morning, JPMorgan, Wells Fargo, Citigroup, and BlackRock (BLK) are set to disclose their earnings, marking the commencement of the bank reporting season.
Following a notable upward trend, JPMorgan, Wells Fargo, and Citigroup are currently finding support around their 21-day moving averages. With Wells Fargo nearing a test of its 10-month range and sporting a five-weeks-tight entry at 58.44, investors are closely monitoring its performance.
Conversely, BlackRock’s stock is experiencing a decline and is veering away from its 50-day moving average.
Analysis of Stock Market Trends
The positive impact of the PPI prices report on Thursday helped bolster market sentiments, particularly driving investments in AI-related companies.
Despite a slight dip towards the end of Thursday’s trading session, the Dow Jones Industrial Average recovered to close marginally lower. The S&P 500 index surged by 0.7%, surpassing its 21-day moving average, while the Nasdaq composite soared by 1.7% to achieve a new record high.
Nvidia’s leadership role in driving the Nasdaq and S&P 500 indexes was evident, both of which have rebounded from their 10-year averages this year.
In addition to the AI companies mentioned earlier, tech giants like Google parent Alphabet (GOOGL) and Amazon.com (AMZN) saw their stocks rise by 2.1% and 1.7%, respectively, nearing the $2 trillion market capitalization mark. Apple (AAPL) also experienced an upswing, rising by 4.3% following positive remarks from JPMorgan regarding an AI-powered iPhone expected later this year.
While mega-cap companies and AI-focused firms demonstrated strong performance, trading volumes were relatively lighter compared to Wednesday. The market breadth was satisfactory, although slightly below par considering the Nasdaq’s performance.
The small-cap Russell 2000 index climbed by 0.7%, surpassing its 50-day moving average.
The Invesco S&P 500 Equal Weight ETF (RSP) experienced a slight decline of 0.1% after briefly touching its 10-week moving average intraday.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) recorded a 1% increase, lagging behind the Nasdaq 100’s 1.6% gain but managing to reclaim its 50-day moving average.
As the Nasdaq composite index approached its record high, it broke a trendline, although it remains within the downward turn observed since April 4. A successful breach of this level, along with surpassing the daily peak from March 21, would signal a positive trend shift, resonating well with the broader market sentiment.
The price of U.S. crude oil experienced a 1.4% decline, settling at $85.02 per barrel.
Meanwhile, the 10-year Treasury yield rose by 2 basis points to 4.575%, marking a five-quarter high and a 20-basis point increase for the week.
ETF Performance
Within the realm of growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) advanced by 0.7%, with Microsoft stock occupying the top position. The VanEck Vectors Semiconductor ETF (SMH), where Nvidia holds a prominent position, surged by 2.3%. Both Broadcom and Nvidia are key constituents of this ETF.
In the domain of speculative story stocks, the ARK Innovation ETF (ARKK) climbed by 1.5%, while the ARK Genomics ETF (ARKG) recorded a 0.5% increase.
The SPDR S&P Metals & Mining ETF (XME) rose by 0.35%, whereas the SPDR S&P Homebuilders ETF (XHB) advanced by 0.4%. On the flip side, the Energy Select SPDR ETF (XLE) dipped by 0.2%, and the Health Care Select Sector SPDR Fund (XLV) fell by 0.4%.
The SPDR Fund for Industrial Select Sector witnessed a modest 0.1% increase. However, the Financial Select SPDR ETF (XLF) saw a 0.6% decline, with notable holdings including JPMorgan, Wells Fargo, and Citigroup stocks.
Nvidia Stock Performance
Nvidia’s stock price surged by 4.1% to reach 906.16, surpassing the 21-day moving average and breaking a minor downtrend. This development presented an early entry opportunity, following a bullish rebound from the 10-week moving average. Post the Friday close, NVDA stock is poised to form a flat base with a 974 buy point.
Raymond James raised its price target for Nvidia from 850 to 1,100 on Thursday.
Performance of Other AI Stocks
Broadcom’s stock price soared by 4.5% to 1,382.56, rebounding from both the 21-day and 10-week moving averages to achieve the highest closing price in a month. The chip-and-software giant is anticipated to consolidate further post-Friday, with investors eyeing the April 4 high of 1,403.28 as a potential buy point.
Astera Labs witnessed a 6% surge to reach 75.59, surpassing a critical resistance level at 75 and signaling a buy opportunity. This AI networking chipmaker, which recently went public in March, is currently forming an IPO base with an official buy point at 95.21. Given its new IPO status, ALAB stock exhibits high volatility.
Super Micro’s stock price advanced by 3.2% to 937.28, rebounding from the 50-day moving average amidst light trading volumes. Investors may consider initiating their first position at this level. Ideally, SMCI stock would reclaim its 21-day moving average and break through a downward-sloping trendline, currently situated around the 1,000 level. This stock is characterized by its volatile nature.
Arista Networks’ stock price climbed by 2.9% to 296.58, rising above the 21-day moving average and a flat-base buy point of 292.66, as per MarketSurge’s analysis. The stock has been hovering around this entry point for some time.
Datadog’s stock price surged by 4% to 130.80, closing above the 50-day moving average for the first time since early March. This development presented an early entry opportunity into a flat base, which is part of a base-on-base pattern.
Microsoft’s stock price rose by 1.1% to 427.93, rebounding from the 21-day moving average and surpassing some short-term resistance levels.
Morgan Stanley raised its price target for Microsoft to 520 from 465 on Thursday, citing the company’s leadership in generative AI. The stock is currently within the buy point range of 420.86, following a brief consolidation phase in mid-March. MSFT stock might be forming a three-weeks-tight pattern, with a potential entry point at 430.82.
The outcomes of Microsoft’s earnings report on April 23 are expected to have a significant impact on Nvidia, Arista, and the broader tech sector.
Strategic Considerations
Thursday showcased positive indicators for the market rally, hinting at a potential turnaround and a subsequent upward movement. However, it is crucial to exercise caution as this could also be a temporary market fluctuation.
Given the robust performance of the Nasdaq index and leading stocks like Nvidia, investors might have taken or considered taking positions in select stocks on Thursday.
Nonetheless, it is advisable to avoid hasty decisions or aggressive exposure increments. Stay prepared to retract if the gains from Thursday do not sustain.
For new investments, it may be prudent to wait until the Nasdaq hits an all-time high before making any significant portfolio adjustments based on Thursday’s activities. A broader market confirmation would be a positive signal.
Remaining vigilant and keeping watchlists updated is essential in the current market environment, as several stocks are displaying potential setups that could be actionable.
Regularly following The Big Picture can help in staying abreast of market trends, prominent stocks, and sector movements.
For the latest stock market updates and more insights, follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson.
