Dow Jones futures were little changed early Wednesday, along with S&P 500 futures and Nasdaq futures. The CPI inflation report is on tap after cooling producer prices provided a market tailwind Tuesday.
The stock market rally had a strong session, with the Nasdaq and Nvidia leading the way.
Sea Limited surged into a buy area on earnings. Meta Platforms, ServiceNow and Monolithic Power Systems flashed buy signals.
Investors can be looking to add exposure, as long as the stock market continues to act well.
Nu Holdings earnings beat views. NU stock rose modestly in premarket action. The Brazilian digital bank climbed 1.7% to 12.71 on Tuesday, a sixth straight gain after diving as low as 9.67 on Aug. 5.
Nvidia stock and ServiceNow are on Leaderboard. ServiceNow stock has joined SwingTrader. Monolithic Power stock is on the IBD Long-Term Leaders watchlist. Samara stock and ServiceNow are on the IBD 50 list. ServiceNow stock was Tuesday's IBD Stock Of The Day. Samsara stock was Friday's selection.
The video embedded in this article discusses Tuesday's market rally and analyzes Sea Limited stock, Samsara and Monolithic Power.
Dow Jones Futures Today
Dow Jones futures edged higher vs. fair value. S&P 500 futures rose a fraction and Nasdaq 100 futures were flat.
The 10-year Treasury yield dipped to 3.83%.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
DOJ Mulls Google Breakup
The Justice Department is mulling a breakup of Google-parent Alphabet, Bloomberg reported Tuesday night, in the wake of last week's antitrust victory vs. the internet giant. During the remedy phase of the trial later this year, the DOJ will almost certainly push to end exclusive search deals, such as making Google the default search provider on the Apple iPhone. If Justice aims for a breakup, it would probably seek to carve off the Android mobile operating system and Google's Chrome web browser.
Google stock fell slightly after the close. Shares rose 1.15% to 164.16 on Tuesday. Apple, which gets $20 billion a year from the Google search deal, lost a fraction. AAPL stock rose 1.7% to 221.27 on Tuesday.
CPI Inflation
At 8:30 a.m. ET, the Labor Department will release the consumer price index. Economists expect a modest 0.2% monthly gain for both the overall CPI in July and the core CPI. That would keep the 12-month CPI inflation rate at 3%, while core inflation eases to 3.2%, the lowest since April 2021.
The Fed's favorite inflation gauge, the core PCE price index, gets about 70% of its inputs from the CPI and 30% from the PPI.
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Stock Market Rally
The stock market rally enjoyed broad, strong gains, with the Nasdaq leading. Cooling PPI inflation offered a tailwind ahead of the Wednesday's consumer price index and other key economic data this week
The Dow Jones Industrial Average rose just over 1% in Tuesday's stock market trading, back above its 50-day line. The S&P 500 index popped 1.7%, reclaiming the 21-day line and approaching the 50-day. The Nasdaq composite jumped 2.4%, also above the 21-day. The small-cap Russell 2000 rallied 1.6%, almost back to the 50-day line.
Volume was heavier vs. Monday on both exchanges.
U.S. crude oil prices declined 2.1% to $78.35 a barrel, snapping a five-session win streak.
The 10-year Treasury yield fell six basis points to 3.85%.
Stock Market Returning To Risk-On Mindset
Financial markets have rebounded dramatically since the global sell-off on Aug. 5, when recession fears combined with yen-carry unwinding as well as Nvidia AI chip concerns. The CBOE Volatility Index, or VIX, has plunged since skyrocketing on Aug. 5 to its highest level since the Covid crisis.
Risk-on trading has returned, with the Nasdaq and growth stocks trying to reestablish leadership.
Still, the S&P 500 and Nasdaq have the 50-day line as possible resistance. The CPI report on Wednesday, along with retail sales and a slew of reports Thursday, will offer new tests for the nascent market rally.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF rose 0.4%. The iShares Expanded Tech-Software Sector ETF popped 1.8% with ServiceNow stock and Samsara both members. The VanEck Vectors Semiconductor ETF leapt 4.1%. Nvidia stock is the dominant SMH holding, with Monolithic Power also a member.
Reflecting more-speculative story stocks, ARK Innovation ETF jumped 4.1% and ARK Genomics ETF gained 4%.
SPDR S&P Metals & Mining ETF added 1.1%. SPDR S&P Homebuilders ETF bounced 2.1%. The Energy Select SPDR ETF fell 1% and the Health Care Select Sector SPDR Fund rose 1.2%.
The Industrial Select Sector SPDR Fund advanced 1.05%. The Financial Select SPDR ETF climbed 0.8%.
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Nvidia Stock
Nvidia stock leapt 6.5% to 116.14, shrugging off a report that Chinese tech giant Huawei will roll out its own AI chip. Shares closed above the 21-day moving average for the first time since July 16. NVDA stock is still below its 50-day line, but the gap has narrowed.
The AI chip leader had tumbled to 90.69 on Aug. 5, as reports of a next-generation AI chip delay added to global fears that day.
Stocks In Buy Zones
Sea Limited stock soared 11.85% to 74.85, vaulting above its 50-day line in huge volume. The Singapore-based e-commerce and gaming giant's earnings missed views, but 23% revenue growth topped. SE stock has a 76.60 consolidation buy point, but cleared a trendline entry Tuesday.
Meta stock rose 2.4% to 528.54, breaking a trendline and the Aug. 1 short-term high of 527.17 after Meta earnings. Meta stock is on track to have a shallow cup base next to a prior base after this week. The buy point would be 542.81.
Samsara stock popped 4.3% to 39.83, clearing a 39.21 cup-with-handle buy point. Back on Aug. 5, IOT stock dived intraday below its 200-day and 50-day lines, but closed above both. The AI and Internet of Things play is highly volatile.
ServiceNow stock climbed 1.5% to 818.80, above the 806.52 handle entry and 815.32 alternate entry. After breaking out July 25 on earnings, NOW stock fell back amid the tech-led market retreat. But the software giant bounced off the 50-day and generally found support around the 21-day line.
Monolithic Power stock gained 5.3% to 867.81, now clearly above its 50-day and breaking a trendline. MPWR stock is on track to have a flat base after this week with an 891.67 buy point.
What To Do Now
The new market rally is showing promise, on the major indexes and leading stocks. Investors should be looking to add exposure, especially those that moved to all cash or nearly so during the recent sell-off. But let the market and your positions draw you in gradually.
The S&P 500 and Nasdaq face key resistance, while Wednesday's CPI inflation report and other key data loom. If stocks reverse lower, you have to be ready to step out.
But it's definitely a time to be looking for new buys. So have your watchlists ready.
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