Dow Jones futures rose early Thursday, along with S&P 500 futures and Nasdaq futures. Salesforce.com headlined another busy night of software and other earnings reports.
Before the open, the Fed's favorite inflation gauge will keep investors busy, with the Tesla Cybertruck event due shortly before the close.
The stock market rally slashed solid early gains Wednesday even as Treasury bond yields continued to fall solidly. The Nasdaq and S&P 500, which came very close to 2023 highs soon after the open, closed slightly lower.
Workday earnings buoyed a number of software plays, including CRM stock.
Software makers Salesforce, Nutanix, Snowflake, Synopsys reported late Wednesday, along with Pure Storage and Five Below.
Salesforce, Nutanix and SNOW stock were big winners overnight. Synopsys rose modestly and FIVE stock was flat. Pure Storage plunged.
Investors will also turn to Thursday's Tesla Cybertruck delivery event, with TSLA stock reversing lower from a buy point Wednesday.
CRM stock is on the IBD Leaderboard watchlist. SNPS stock is on IBD Long-Term Leaders. Synopsys is on the IBD 50 list as well.
Dow Jones Futures Today
Dow Jones futures rose 0.7% vs. fair value, with CRM stock lifting blue chips. S&P 500 futures advanced 0.3% and Nasdaq 100 futures climbed 0.35%.
The 10-year Treasury yield edged up to 4.29%.
Crude oil futures gained 1% amid reports that OPEC+ may deepen production cuts, but they are tentative and likely modest. Saudi Arabia could extend its voluntary output curbs and other members could join.
Overnight, the official China manufacturing index edged down 0.1 point to 49.4 in November, below views for 49.7. Readings below 50 signal contraction. The service-sector gauge dipped 0.4 point to 50.2, the lowest in 11 months.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
PCE Inflation Report
The PCE price index is expected to rise just 0.1% in October, with the core CPE price index up a modest 0.2%. PCE inflation should cool to 3.1% from September's 3.4%. Core PCE inflation should slow to 3.5% from 3.7%.
In recent days, Fed officials, even hawks, have grown more confident that inflation will come under control. Markets have ruled out further Fed rate hikes and are pricing in rate cuts, perhaps as soon as March 2024.
A stronger-than-expected PCE inflation report could push back Fed rate cut bets.
The Commerce Department will release the PCE inflation data is part of the monthly income and spending report at 8:30 a.m. ET. At the same time, the Labor Department will release weekly jobless data. Those figures also will be important.
On Wednesday, the Fed's beige book report said economic growth has slowed, with consumers curbing spending and labor markets easing somewhat.
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Stock Market Rally
The stock market rally opened with solid gains, with the S&P 500 and Nasdaq getting very close to their 2023 highs from July. But the major indexes soon came well off early highs, along with many growth stocks.
The Dow Jones Industrial Average rise a fraction in Wednesday's stock market trading. The S&P 500 index dipped 0.1%. The Nasdaq composite fell 0.2% after jumping 1% some 30 minutes into the trading session.
Some of the weakness in the major indexes reflected an off day for the megacaps. Meta Platforms fell 2% and Google-parent Alphabet 1.6%. Microsoft and Tesla stock lost about 1% while Amazon.com and Apple dipped 0.5%. Nvidia was the only Magnificent Seven stock to close higher, edging up 0.7%.
The Invesco S&P 500 Equal Weight ETF climbed 0.4%, outpacing the S&P 500.
The First Trust Nasdaq 100 Equal Weighted Index ETF gained 0.6%, hitting its best levels since early August. The Nasdaq 100 slipped 0.1%.
The small-cap Russell 2000 climbed 0.6%, but hit resistance at the 200-day line.
U.S. crude oil prices rose 1.9% to $77.86 a barrel.
The 10-year Treasury yield fell 6.5 basis points to 4.27%, the lowest since Sept. 14. The 10-year yield has tumbled 21 basis points so far this week. The two-year Treasury yield, more closely tied to Fed policy, has plunged 31 basis points this week to 4.645%.
A possible Fed shift toward rate cuts is driving yields lower, but more recently concerns about economic growth slowing too much in the months ahead, just Q3's powerful GDP growth.
That could be one reason why this week's big drop in Treasury yields isn't pushing up stocks the way they did earlier in the month. The market rally also could be due for a pullback, with various sentiment gauges at or near excessive levels. Lower bond yields may be propping up a tired rally.
Still, while Thursday's stock market action wasn't great, the major indexes still added to November's big gains.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF rose 1.6%. CRM stock is a major IGV holding, with Nutanix also in the ETF. The VanEck Vectors Semiconductor ETF gained 0.9%. SNPS stock is in both IGV and SMH.
Reflecting more-speculative story stocks, ARK Innovation ETF and ARK Genomics ETF climbed 0.4%. Tesla stock is still a major holding across Ark Invest's ETFs.
SPDR S&P Metals & Mining ETF inched up 0.1% and SPDR S&P Homebuilders ETF popped 1%. The Energy Select SPDR ETF fell 0.75% and the Health Care Select Sector SPDR Fund closed fractionally higher.
The Industrial Select Sector SPDR Fund was up 0.4%.
The Financial Select SPDR ETF advanced 0.7%. The SPDR S&P Regional Banking ETF jumped 2.1%. Bank stocks are getting a boost from Treasury yields falling and becoming less inverted.
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Key Earnings
CRM stock leapt early Thursday after Salesforce earnings topped and the business software giant guided up on EPS. Q3 sales and revenue guidance was in line. Salesforce stock popped 2.4% to 230.35 on Wednesday, clearing an early entry from a pseudo-handle near 226. CRM stock has an official buy point of 238.22.
NTNX stock rose solidly in extended trade as Nutanix earnings and guidance topped consensus. Shares gained 2.6% to 41.56 on Wednesday, hitting a two-year high. Nutanix stock is extended from a Sept. 1 gap-up breakout following fiscal Q4 results.
SNOW stock jumped in premarket trade after Snowflake earnings comfortably beat and the data analytics firm guided up for Q4 revenue. Shares climbed 2.2% on Wednesday to 175.32, working on the right side of a cup base. Snowflake stock has a 193.94 buy point, according to MarketSmith analysis.
SNPS stock rose modestly in extended action after Synopsys earnings and sales slightly exceeded forecasts. The chip and electronics design software giant rose 1.6% to $552.46 on Wednesday, hitting a record high.
PSTG stock dived Thursday morning after Pure Storage earnings beat views but the data storage firm guided sharply lower for Q4. Shares jumped 5.8% to 37.97 on Wednesday as rival NetApp surged on its quarterly results. Pure Storage stock has a 38.19 cup-with-handle buy point.
FIVE stock climbed slightly after Five Below earnings slightly beat and the teen and tween discounter gave bullish same-store guidance for the holiday Q4. Shares fell 1.8% to 188.06 on Wednesday, holding above the 200-day line. Five Below stock has a 209.12 buy point from a double-bottom base going back to early April, but is getting close to a downward-sloping trendline.
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Tesla Cybertruck Event
The Tesla Cybertruck event will kick off at 3 p.m. ET on Thursday, an hour before the market close. A lot of unknowns. Will Tesla hand over any Cybertrucks to actual customers? What are the prices and specs? How quickly will production ramp up, and will it be a moneymaker anytime soon?
Tesla stock fell 1.05% on Wednesday to 244.14. Shares reached 252.75 intraday, hitting resistance at a downward-sloping trendline that could serve as an early entry. The official TSLA stock buy point is 278.98 from a double-bottom base.
Shares rose 1% early Thursday.
What To Do Now
Even for active traders, a lot of the money is made in the sitting. Investors should have added substantial exposure following the Nov. 1-2 follow-through days. Many of those are still doing well. After a steady stream of buying opportunities in the first three weeks of November, the number has slowed significantly.
Investors could add a little more exposure, take some gains, or a little of both, but largely standing pat makes a lot of sense.
A market pullback, as opposed to the nudging-higher pause over the past several days, would create a number of buying opportunities. But that hasn't happened yet.
Keep working on your watchlists, scanning for leading stocks in a variety of sectors.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on X/Twitter at @IBD_ECarson, Threads at @edcarson1971 and Bluesky at @edcarson.bsky.social for stock market updates and more.
