Dow Jones futures and S&P 500 futures rose slightly early Friday, while Nasdaq futures edged lower as Treasury yields neared long-term highs.
A United Auto Workers strike has begun vs. General Motors, Ford Motor and Stellantis.
Adobe and Lennar headlined earnings Thursday night, with a UAW auto strike now underway. Chip-gear makers fell on a report that foundry giant Taiwan Semiconductor wants to receive equipment later. China economic data generally topped views.
The stock market rally had a solid broad-based advance Thursday even with Treasury yields and the U.S. dollar rising. All the major indexes reclaimed their 50-day moving averages while the small-cap Russell 2000 rebounded back above the 200-day line.
ARM stock surged nearly 25% to 63.59 in its trading debut Thursday. Wireless chip design giant Arm Holdings priced its IPO at $51 a share on Wednesday night, at the top of its expected range.
Still, the market rally remains under pressure. Investors should be cautious with new buys.
AEHR stock, Airbnb, Shopify and DraftKings are four growth names setting up near buy points, with DraftKings and SHOP stock both big holdings of Cathie Wood's Ark Invest.
Meanwhile, Taiwan Semi has asked chip-equipment suppliers including ASML to delay sending more gear amid concerns about customer demand, Reuters reported. ASML stock, Applied Materials, Lam Research and KLA Corp. all fell modestly before the open, while TSM stock edged lower.
Steel giant Nucor guided significantly lower on the current Q3, hitting steel stocks.
DKNG stock was added to IBD Leaderboard on Thursday. ABNB stock is on the IBD Big Cap 20. Aehr Test Systems was Thursday's IBD Stock Of The Day, with Airbnb the pick on Wednesday.
UAW Strike
United Auto Workers members went on strike at three U.S. auto plants on Friday, one for GM, Ford and Stellantis' Jeep. The two sides are still far apart on a labor deal. UAW had said Thursday night it would begin with a targeted strike vs. a complete shutdown.
Wall Street is betting on a relatively short strike with minimal disruptions to auto production and the economy. But a protracted labor fight for GM, Ford and Chrysler could be good news for nonunion firms such as Tesla, Toyota and Honda.
GM and Ford stock edged lower while STLA edged higher early Friday. Tesla, Toyota and Honda continued their rallies.
Dow Jones Futures Today
Dow Jones futures rose 0.25% vs. fair value. S&P 500 futures climbed about 0.1% and Nasdaq 100 futures edged lower. Adobe stock is a big Nasdaq component, along with ASML, Applied Materials, KLA and LRCX stock.
Chinese retail sales rose 4.6% in August vs. a year earlier, picking up from July's 2.5% gain and topping estimates for 3%. Industrial production grew 4.5%, beating views for 3.9% and up from July's 3.7%. Fixed asset investment through August rose 3.2% slowing slightly and just missing views for 3.3%, amid a big drop in real estate investment.
Crude oil futures rose a fraction.
The 10-year Treasury yield rose a few basis points to 4.32%, closing in on the 15-year high of 4.36% set in August.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Adobe Earnings
ADBE stock fell 3% in premarket trade after Adobe earnings slightly beat Q3 views. The software giant guided up marginally on Q4 EPS and in line for revenue. Adobe stock dipped 0.25% to 552.16 in Thursday's regular trade, finding support at the 21-day line and around the top of a short consolidation.
Adobe has been a big winner in recent months as it ramps up AI efforts. With few big earnings reports slated over the next month, Adobe's results and AI commentary are important for software and artificial intelligence plays. The mixed results from Oracle, which sent ORCL stock tumbling Tuesday, raised the stakes.
Microsoft, ServiceNow and other notable software plays were relatively quiet in late trading.
Microsoft and Oracle announced a deeper cloud partnership Thursday night.
Lennar Earnings
LEN edged lower early Friday after Lennar earnings fell less than expected in fiscal Q3 while revenue dipped 3%. The homebuilder guided slightly higher at the midpoint on Q4 new orders.
Lennar stock rose 1.5% to 117.70 on Thursday, still below the 21-day and 50-day lines. The housing sector has been struggling for the past two months and especially the last few weeks amid higher interest rates.
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Stock Market Rally
The stock market rally wobbled after the open, but soon gained steam, closing with solid-to-strong gains as the major indexes moved back above their 50-day moving averages.
The Dow Jones Industrial Average jumped nearly 1% in Thursday's stock market trading. The S&P 500 index and Nasdaq composite climbed 0.8%.
The small-cap Russell 2000 leapt 1.4%, back above its 200-day but still below the 21-day and 50-day lines.
Advancers easily beat decliners, though the trend in the past several weeks has been weak.
The Invesco S&P 500 Equal Weight ETF popped 1.2%, outperforming the S&P 500 after nearly hitting its 200-day line on Wednesday.
U.S. crude oil prices jumped 1.85% to $90.16 a barrel, a 10-month high.
The 10-year Treasury yield rose 4 basis points to 4.29%, reversing higher intraday but still within a recent range. The U.S. dollar had a solid advance to a fresh 2023 high.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF edged up 0.1%. The iShares Expanded Tech-Software Sector ETF climbed 0.5%. ADBE stock is the No. 1 holding in IGV. The VanEck Vectors Semiconductor ETF rose 0.5%. TSM, ASML, AMAT stock, Lam Research and KLA are all notable SMH components.
Reflecting more-speculative story stocks, ARK Innovation ETF advanced 0.4% and ARK Genomics ETF lost 1%. Tesla remains the No. 1 holding across Ark Invest's ETFs, but Shopify and DKNG stock are top-10 components too.
SPDR S&P Metals & Mining ETF jumped 3.4% and the Global X U.S. Infrastructure Development ETF climbed 1.3%. U.S. Global Jets ETF ascended 0.5%. SPDR S&P Homebuilders ETF stepped up 1.2%, with LEN stock a component. The Energy Select SPDR ETF rose 1.2% and the Health Care Select Sector SPDR Fund advanced 0.3%.
The Industrial Select Sector SPDR Fund bounced 1%.
The Financial Select SPDR ETF gained 0.9%. The SPDR S&P Regional Banking ETF popped 2%.
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Stocks Near Buy Points
AEHR stock rose 3.7% to 43.46, bouncing off the 50-day line within a cup-with-handle base with a 53.06 buy point. The 28%-deep base is less volatile than prior consolidations. A move above Thursday's high of 48.90 would offer an early entry into Aehr Test Systems, which makes testing equipment used by EV-tied chips and more.
ABNB stock edged down 0.4% to 144.12, working on a cup base with a 154.95 entry, according to MarketSmith analysis. Airbnb could be working on a handle after running up in the past few weeks. Shares gapped up Sept. 5 on news that Airbnb stock will join the S&P 500 index.
Booking Holdings and Marriott Worldwide are two other travel stocks acting well.
SHOP stock climbed 1.25% to 63.40, extending Wednesday's intraday bounce off the 50-day line. The e-commerce software giant has a 67.60 cup-with-handle buy point, with volume drying up in the handle. Investors could use a move above Tuesday's high of 64.92 as an early entry within the handle.
DKNG stock advanced 2.5% to 31.49. Shares have a 34.49 buy point from a cup base, rebounding recently from the 50-day line. DraftKings stock could soon have a handle, lowering the buy point to 32.65, which could already work as an early entry.
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Market Rally Analysis
While the major indexes are above their 50-day lines, they haven't decisively cleared that key level. A little more strength would push the S&P 500 and Nasdaq clearing downward-sloping trendlines, with the Sept. 1 short-term highs another near-term resistance area. But a modest decline would send the indexes back below the 50-day.
The Russell 2000 and the equal-weight S&P 500 ETF RSP got much-needed rebounds, but clearly have work to do.
It was impressive to see the market rally even with Treasury yields and the dollar climbing. One likely reason is declining Fed rate hike fears. Markets essentially see no chance of a move at next week's policy meeting, while the odds of a Nov. 1 Fed rate hike have fallen to one-third, down from 50-50 odds not too long ago.
Still, if the 10-year Treasury yield moved up to or beyond its 15-year high of 4.36%, the market would likely struggle.
Thursday's breadth provided welcome bounces for a variety of sectors including leading sectors. But not many stocks flashed buy signals.
Despite the sluggish market action, bullish sentiment remains high, which is not a great sign. The bulls vs. bears reading topped 50% in the latest week. The CBOE Volatility Index is near the lowest levels since January 2020.
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What To Do Now
Choppy markets are the most dangerous for active investors. Bear markets are easy to steer clear of. But sideways sine wave markets offer just enough strength to lure investors in, and just enough weakness to shake them out near lows.
Thursday's action may be the start of a revitalized uptrend. Then again, the indexes could reverse lower soon.
Investors could have added to exposure incrementally on Thursday, testing the waters with one of the few stocks flashing buy signals or perhaps a sector or market ETF. But holding steady also would have been fine.
Either way, if the market rally continues to improve, a large number of buying opportunities will soon develop.
So stay engaged and have your watchlists ready. On the flip side, be ready to pare exposure, especially recent buys, if the market deteriorates.
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