Dow Jones futures fell sharply early Thursday, along with S&P 500 futures and Nasdaq futures, after the stock market's best day in many years as President Donald Trump temporarily reduced sweeping tariffs. The CPI inflation report is due before the open.
The stock market erupted for massive gains Wednesday, as President Trump reined in many tariffs that had just gone into effect, due to what he called "yippy" markets.
Magnificent Seven stocks Tesla, Meta Platforms, Nvidia, Apple, Amazon.com, Microsoft and Google parent Alphabet surged. All are still heavily damaged, though Meta stock reclaimed its 200-day line.
Meanwhile, Palantir Technologies, DoorDash, Netflix, Spotify and CrowdStrike also spiked as they work on potential double-bottom bases. But they still have work to do.
A stock market rally attempt is underway, but investors should remain defensive.
Meanwhile, Taiwan Semiconductor Manufacturing reported strong first-quarter sales early Thursday, with a 42% rise vs. a year earlier in local currency, partially boosted by customers stocking up chips ahead of Trump tariffs. Nvidia and Apple are major TSMC customers. TSM stock fell slightly before the oepn
DoorDash, Spotify and Netflix stock are all on the IBD Leaderboard watchlist. Microsoft stock is on the IBD Long-Term Leaders list. DoorDash stock is on the IBD 50. Netflix and Palantir stock are on the IBD Big Cap 20.
Dow Jones Futures Today
Dow Jones futures fell 1.3% vs. fair value. S&P 500 futures slumped 1.8%. Nasdaq 100 futures declined 2.2%.
The 10-year Treasury yield retreated to 4.3%.
Crude oil futures sank about 3%.
The CPI inflation report and weekly jobless claims will be out at 8:30 a.m. ET.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Trump Tariffs Reined In Because Of 'Yippy' Markets
President Trump announced Wednesday afternoon that massive "reciprocal" tariffs will be paused for 90 days on all "non retaliating countries." A 10% baseline tariff will remain in effect. Trump upped the tariff on Chinese goods to 125%, largely symbolic given that he just hiked China duties to a prohibitive 104%. Beijing has imposed an 84% tariff on U.S. goods.
The so-called reciprocal tariffs, which actually are tied to trading partners' surpluses with the U.S., just went into effect at midnight Wednesday.
Trump later told reporters that he rolled back tariffs in reaction to financial markets. "They were getting a little bit yippy, a little bit afraid."
A 90-day tariff reduction will offer time for the U.S. to try to work out deals with trading partners. But a 10% tariff — along with steel, aluminum and auto duties — is still very high historically. That will strain trading partners and the U.S. economy. U.S. consumers will still face higher prices, though they won't be as extreme. Business investment and other big decisions likely will remain on hold until there is some tariff clarity.
A recession, which seemed highly likely as of Wednesday morning, remains a significant risk.
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Stock Market Rally Attempt
The stock market rally attempt made a giant move Wednesday, as investors cheered Trump's 90-day reduction in many tariffs.
The Dow Jones Industrial Average leapt 7.9% in Wednesday's stock market trading, its biggest gain since March 2020. The S&P 500 index vaulted 9.5%, its strongest performance since October 2008. The Nasdaq composite spiked 12.2%, the best gain since 2001.
Keep in mind that the major indexes are still below where they were on April 2,
Wednesday marked day three of a stock market rally attempt. A follow-through day could come at any point to confirm the new uptrend. The risk of failure would be extremely high.
Not many stocks are in position to buy.
U.S. crude oil prices rebounded 4.65% to $62.35 a barrel.
The 10-year Treasury yield leapt 15 basis points to 4.41%, up 42 basis points in three days. The 10-year yield had popped above 4.5% in the prior overnight session.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF popped 7%. The iShares Expanded Tech-Software Sector ETF soared 11.65%, with Microsoft and Palantir stock key holdings, along with CrowdStrike. The VanEck Vectors Semiconductor ETF surged 17.7%. Nvidia and Taiwan Semiconductor stock are two huge SMH members.
ARK Innovation ETF raced 16.6% higher and ARK Genomics ETF rebounded 12.1%. Tesla stock is the No. 1 holding across ARK Invest's ETFs, with Cathie Wood also owning a lot of Palantir.
SPDR S&P Metals & Mining ETF bounced 9.7%. The Energy Select SPDR ETF gained 7.7% and the Health Care Select Sector SPDR Fund rose 4.35%. The Industrial Select Sector SPDR Fund advanced 8.9%. The Financial Select SPDR ETF climbed 7.5%.
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Megacap Stocks Rebound
Tesla stock vaulted 22.6%, Apple 15.3%, Nvidia 18.7% and Microsoft 10.1%. Google gained 9.6% and Amazon stock 12%. Meta stock leapt 14.8%, above its 200-day moving average. All the other Magnificent Seven stocks are still below that long-term level.
Tech Leaders Near Buy Points
Palantir, DoorDash, Netflix, Spotify and CrowdStrike stock are all trying to build the right side of double-bottom bases, testing or coming up toward their 50-day lines.
Palantir stock spiked 19% to 92.01, just below its 50-day moving average. PLTR's emerging buy point would be 98.17. DoorDash stock leaped 13.8% to 188.58, also closing just shy of its 50-day line, with an emerging 201.03 buy point. Arguably both could have early entries from breaking trendlines modestly above their 50-day lines.
Netflix stock gained 8.6% to 945.47, still modestly below the 50-day with a potential 998.70 buy point.
Spotify stock rallied 9.8% to 569.06, close to the 50-day line. The buy point would be 621.20, with a possible trendline entry as well.
CrowdStrike stock surged 16.3% to 378.01, hitting resistance at the 50-day line. The looming buy point would be 392.69, just above the entry of a prior base.
All five stocks fell modestly early Thursday.
What To Do Now
Wednesday was a classic relief rally, with stock and bond investors clearly relieved that Trump tariff pressure eased somewhat. Will that momentum continue or will the market waver or resume a retreat as tariff concerns remain high?
Investors could have made a token buy or two Wednesday, though not many stocks were in position. Being all or nearly all in cash is a sound strategy.
If a follow-through day happens soon, enter gradually. The risks of a failed FTD are high given the sharp sell-off and headline-driven market. A FTD could fail right away or hit resistance at the 200-day line.
Very few stock charts look healthy. But it's vital to find stocks that are trying to set up, showing strong relative strength. That can include names such as Palantir, CrowdStrike or DoorDash, but cast a wide net well beyond old leaders.
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