Dow Jones futures edged higher early Friday, along with S&P 500 futures and Nasdaq futures while fresh China stimulus kept Chinese stocks running. The core PCE price index, the Fed's favorite inflation gauge, is on tap.
The stock market rally jumped at Thursday's open, fueled by Micron Technology and China-related stocks, with the S&P 500 hitting a record high. The major indexes slashed early gains, but did bounce back somewhat.
The Nasdaq has now entered a power trend, a bullish sign for the market rally. The S&P 500's ongoing power trend is now longer under pressure.
Nvidia edged higher, but hit resistance at a trendline. Arm Holdings flirted with a breakout. Taiwan Semiconductor and Broadcom kept rising after clearing buy signals earlier this week.
However, Super Micro Computer dived as The Wall Street Journal reported the Justice Department is probing the AI server maker, a key Nvidia partner.
MakeMyTrip also was a big loser, while ServiceNow held key support.
Nvidia stock is on IBD Leaderboard and SwingTrader. ARM stock, Nvidia, MakeMyTrip, ServiceNow and Taiwan Semiconductor are on the IBD 50. ServiceNow and Broadcom stock are on the IBD Big Cap 20.
Fed Inflation Gauge
The Commerce Department will release the August PCE price index at 8:30 a.m. ET Friday. The Federal Reserve uses the core PCE price index as its primary inflation gauge. Economists see a modest 0.2% monthly gain with core PCE inflation ticking up to 2.7% vs. a year earlier. Markets are roughly split on whether the Fed will cut rates by 25 basis points on Nov. 7 or go ahead with a second straight half-point move.
Dow Jones Futures Today
Dow Jones futures rose 0.1% vs. fair value. S&P 500 futures and Nasdaq 100 futures climbed 0.1%.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Fresh China Stimulus
Chinese stocks continued their huge stimulus-fueled run overnight, with Hong Kong's Hang Seng up 3.55%, capping a 13% weekly surge, the best since 1998. Many U.S.-listed stocks have had much bigger gains, with Alibaba up 19% through Thursday and JD.com 33%. Both were pointing higher early Friday.
China cut banks' reserve requirement ratio by 50 basis points and reduced the 7-day reverse repo rate on Friday, both previewed by the central bank chief on Tuesday. On Wednesday, the People's Bank of China cut its 1-year loan rate, also previewed Tuesday. On Thursday, Bloomberg reported that Beijing was mulling a $142 billion injection into state-owned banks.
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Costco Earnings, Bristol Drug
Costco earnings topped fiscal Q4 views while sales came in light. Costco Wholesale fell slightly in extended trading. The warehouse retail giant edged down 0.8% to 901.44, holding slightly above a 896.67 cup-base buy point. Investors also could use the record high of 923.83 as an alternate or add-on entry.
Bristol-Myers Squibb won Food and Drug Administration approval late Thursday for its novel schizophrenia drug, Cobenfy. BMY stock rose solidly early Friday, signaling a breakout.
Stock Market Rally
The stock market rally opened strongly Thursday, with Micron fueling the chip sector and China stocks hot once again. The major indexes quickly slashed gains but did pick up in the afternoon.
The Dow Jones Industrial Average rose 0.6% in Thursday's stock market trading. The S&P 500 index climbed 0.4%. The Nasdaq composite advanced 0.6% after rising nearly 1.4% soon after the open. The small-cap Russell 2000 was up 0.6%.
The Invesco S&P 500 Equal Weight ETF rose 0.8%, a record close.
Thursday's brief shakeout seems relatively normal and healthy. The major indexes closed up for the day and are solidly higher for the week, above key levels. Leading stocks also are generally acting well for the week.
MakeMyTrip was an exception Thursday. MMYT stock plunged 11.5%, undercutting its 50-day line, even as other travel stocks were mostly higher.
Meanwhile, ServiceNow stock extended significant weekly losses amid fears of a government probe. But shares found support around the 21-day line, paring Thursday's decline to just 0.6%.
U.S. crude oil prices fell 2.9% to $67.67 a barrel, back near 2024 lows, on a report that Saudi Arabia will ramp up output.
The 10-year Treasury yield rose 1 basis points to 3.79%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF fell 0.8%. The iShares Expanded Tech-Software Sector ETF rose 0.5%, with ServiceNow stock a notable weight. The VanEck Vectors Semiconductor ETF jumped 2.9%. Nvidia stock is the dominant SMH holding, but Micron stock, Broadcom and Taiwan Semiconductor are all big components.
Reflecting more-speculative story stocks, ARK Innovation ETF advanced 0.9% and ARK Genomics ETF popped 3%.
SPDR S&P Metals & Mining ETF gained 2.3%. U.S. Global Jets ETF soared 4.6%. SPDR S&P Homebuilders ETF stepped up 0.9%. The Energy Select SPDR ETF lost nearly 2%.
The Health Care Select Sector SPDR Fund climbed 0.3%. The Industrial Select Sector SPDR Fund and Financial Select SPDR ETF both rose 0.5%.
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Super Micro Dives On Probe Report
Super Micro dived 12.2% to 402.40, hitting an eight-month low intraday and nearly wiping out a massive run from late January to early March. The DOJ is allegedly investigating Supermicro for alleged accounting irregularities. That follows an August short-seller report claiming accounting manipulation.
The news may have weighed on AI chip names somewhat.
Micron, AI Chip Stocks
Micron stock gapped up 14.7% to 109.88, retaking the 50-day and 200-day lines though closing off session highs. The memory-chip giant reported strong earnings, another quarter of accelerating revenue growth and bullish guidance. Micron cited AI-related demand. MU stock remains well off its June peak of 153.41.
Arm stock gained 1.9% to 149.16. Thursday morning, shares cleared a 149.93 cup-with-handle buy point.
Nvidia stock edged up 0.4% to 124.04. Intraday, shares rose to 127.67, just topping a trendline entry. NVDA stock already offered an aggressive entry on Tuesday as it jumped off its 50-day line and topped a short-term high. Shares are up 6.9% this week. Nvidia has a 131.26 buy point from an ungainly handle.
Broadcom stock rose 1.5% to 178.09, its sixth straight gain. Shares are still in range of a 172.42 early entry. AVGO stock is working toward a 185.16 official buy point.
Taiwan Semiconductor stock climbed 2.4% to 186.79, now extended from a 175.45 cup-with-handle buy point, according to MarketSurge. Taiwan Semi makes chips for Nvidia, Arm and Broadcom.
What To Do Now
Thursday's morning fade — despite the partial afternoon recovery — shows why it's a good idea to wait at least a few minutes after the open, especially a gap-up open, before making new buys. It's also why scaling into positions can be a savvy way to just into potential winners while limiting the initial risk.
Stepping back, the market rally is still acting well this week and overall.
The macroeconomic backdrop is positive, with the U.S. economy enjoying modest growth as inflation eases, while the Federal Reserve and other central banks cut rates or provide other stimulus.
So while Thursday wasn't a great time to be buying stocks, investors should be heavily invested. Thursday's shift into full power trends for the Nasdaq and S&P 500 bolster the case for stepping on the gas and buying more-aggressive stocks.
Keep working on watchlists and reviewing your portfolio, looking for possible adds and subtractions.
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