The Dow Jones Industrial Average briefly rallied 190 points Thursday, as investors were encouraged by GDP data that showed mild inflation gauges. Meanwhile, Tesla stock took a dive on a weaker-than-expected earnings report and Chief Executive Elon Musk's warnings of slower growth ahead.
After the opening bell, the Dow Jones Industrial Average rose 0.2%, while the S&P 500 gained 0.3%. The tech-heavy Nasdaq composite advanced 0.4% in morning action. The S&P and Nasdaq are working on their sixth straight day of gains.
Among U.S. exchange traded funds, the Nasdaq 100 tracker Invesco QQQ Trust was up 0.3%, while the SPDR S&P 500 ETF moved up 0.4%.
The 10-year Treasury yield dipped four basis points to 4.13%.
Further, oil prices looked to add to Wednesday's gains, as West Texas Intermediate futures rallied around 1.7%. WTI futures traded above $76 a barrel.
Tesla Dives On Earnings; GDP, Jobless Claims
Tesla plunged more than 10% in morning action after the company reported fourth-quarter earnings and revenue late Wednesday that fell below expectations.
The electric-vehicle giant said that earnings fell 40% to 71 cents per share while revenue totaled $25.17 billion, up 3.5% vs. the year-ago period. Wall Street expected earnings of 73 cents a share on revenue of $25.62 billion. For 2023, Tesla earnings fell 23% to $3.12 a share while revenue increased 19% to $96.77 billion vs. estimates of $3.05 on sales of $97.5 billion.
Further, Tesla's gross profit margin came in at 17.6% for the quarter, down 612 basis points, but ahead of estimates for 15.7%. Musk warned that growth would be "notably lower" as Tesla focuses on the company's next-generation EV to be made at its Texas factory in the second half of 2025.
Other key earnings movers Thursday morning include American Airlines, IBMand Lam Research, along with Las Vegas Sands, Mobileye, ServiceNow and Southwest Airlines.
American Airlines advanced 8% in early action, while IBM stock jumped more than 11%. Lam Research rallied more than 5%, as Las Vegas Sands stock moved up 0.5%. Mobileye stock gained 2%. Finally, ServiceNow moved up 0.7%. And Southwest stock climbed 1% in early morning trading.
Fourth-quarter GDP from the Commerce Department slowed to 3.3%, above the 2% estimate, vs. third-quarter growth of 4.9%. Personal consumption expenditures slowed to a 2.8% rise, above the 2.5% estimate, and down from the third quarter's 3.1% increase.
But the report also indicated mild inflation as the Federal Reserve's primary gauge, the core personal consumption expenditures or PCE index rose 2%. That's in line with Fed targets and is the second straight quarter of 2% annualized inflation. Core PCE increased 3.7% in the second quarter and 5% in the first quarter.
Finally, initial unemployment claims from the Labor Department jumped to 214,000 vs. 187,000 in the previous week. They were expected to rise to 200,000, per Econoday estimates.
Dow Jones Falls
On Wednesday, the Dow Jones Industrial Average fell 0.3%, while the S&P 500 moved up 0.1%. The tech-heavy Nasdaq composite climbed 0.4%.
Wednesday's Big Picture column commented, "However, both Monday's and Wednesday's trading sessions fit the very definition of a stalling day. That is, the action hinted at institutional players taking advantage of an intraday rally to sell into strength and take profits off the table."
Now is an important time to read IBD's The Big Picture column amid the continuing stock market rally. Be sure to read how to adjust to changing market conditions, with IBD's new exposure levels.
Learn How To Time The Stock Market With IBD's ETF Market Strategy
Best Stocks To Buy And Watch
DraftKings, MercadoLibre, Novo Nordisk, Snowflake and Spotify — plus Dow Jones components American Express, Amgen and Merck — are among the best stocks to buy and watch in the current market rally.
MercadoLibre and Spotify were featured in this Stocks Near A Buy Zone column.
Get Real-time Buy And Sell Alerts On Stock Market Leaders With IBD Leaderboard
Dow Jones: Amex Continues To Rebound
Credit card leader American Express bounced further out of buy range, with a 0.2% gain Wednesday. Shares are now just out of the buy range past a 175.31 buy point in a cup with handle. Shares rose 0.5% Thursday morning.
Biotech leader Amgen fell 1.4% Wednesday, easing from recent highs. Shares remain out of the 5% buy range past a 288.46 official buy point in a flat base. The 5% buy area went up to 302.88. Amgen stock gained 1% early Thursday.
Drug maker Merck is trying to break out past a cup base's 119.65 buy point, according to IBD MarketSmith pattern recognition. Shares finished back below their entry amid a 0.8% drop Wednesday. Merck stock was up 0.1% Thursday.
4 Top Growth Stocks To Watch In The Stock Market Rally
DraftKings Breaks Out
IBD Leaderboard watch list stock DraftKings extended a win streak to seven sessions Wednesday, rising another 0.4%. Shares briefly broke out past their double-bottom base's official buy point at 38.97. Shares rose another 0.6% Thursday.
MercadoLibre is moving out of buy range past a flat base's 1,660 buy point, as shares climbed another 0.2% Wednesday. MercadoLibre stock rose 0.1% early Thursday.
Weight-loss drug maker Novo Nordisk ended Wednesday down 0.15%, further below its 105.69 flat-base buy point. Shares inched lower Thursday morning.
Software leader Snowflake is breaking out past a 202.83 buy point in a flat base, despite a 0.9% fall Wednesday, according to IBD MarketSmith. Snowflake stock rose 1% Thursday.
IBD SwingTrader stock Spotify closed Wednesday above a 202.88 buy trigger in a flat base, with a 2.1% rise. Shares were up 0.4% Thursday morning.
Best Bets In Today's Action
These are four best stocks to watch in today's stock market, including a Dow Jones leader.
| Company Name | Symbol | Correct Buy Point | Type Of Buy Point |
|---|---|---|---|
| Novo Nordisk | 105.69 | Flat base | |
| American Express | 175.31 | Cup with handle | |
| DraftKings | 39.35 | Cup base | |
| Spotify | 202.88 | Flat base |
Source: IBD Data As Of Jan. 22, 2024
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Magnificent Seven Stocks: Nvidia
Magnificent Seven stocks Nvidia rose 1.5% in early action Thursday, just shy of Wednesday's record intraday high.
Nvidia moved up 2.5% Wednesday, more than 20% past a a 505.48 buy point in a flat base after a Jan. 8 breakout move.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks in the Magnificent Seven, Apple and Microsoft traded higher after Thursday's stock market open.
Apple stock fell 0.3% Wednesday, holding above its 50-day line. Friday's bullish move placed the stock in an aggressive buy area. A new official buy point has emerged at 199.62 due to a flat base. Shares gained 0.4% early Thursday.
Microsoft stock moved up 0.9% Wednesday, nearly extended past a flat base's 384.30 buy point. Microsoft was a recent IBD Stock Of The Day. And the software giant rose 0.8% Thursday morning.
Be sure to follow Scott Lehtonen on X, formerly known as Twitter, at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
