Dow Jones futures inched up Thursday, as S&P 500 and Nasdaq futures dipped, amid weekly jobless claims data. Dow giant Disney and hot chip player Arm Holdings, a recent initial public offering, were big earnings winners on the stock market today.
The stock market rally continues to show strength, with the S&P 500 hitting a fresh record high and nearly hitting the 5,000 level. The Nasdaq is setting a fresh two-year best.
But with many big winners such as Nvidia extended and new buying opportunities limited, it's again becoming a "lockout" rally. If you're lightly invested, it's not easy to add exposure, especially in the true leaders.
Also, with Wednesday's gains, the market is starting to look extended again. So investors need patience.
Dow Jones Futures
Dow Jones futures were 0.15% above fair value, with Disney stock offering a lift. S&P 500 futures and Nasdaq 100 futures lost a fraction.
The 10-year Treasury yield climbed to 4.14% from 4.11%, moving above the 200-day line.
Crude oil futures rose more than 1%.
The Labor Department reported initial jobless claims fell 6,000 to 218,000 in the week ended Feb. 3. Economists expected 222,000.
Remember that premarket action in Dow futures doesn't necessarily translate into actual trading in the next regular stock market session.
Stock Market Today: Earnings
Walt Disney, Qualys, Arm Holdings, Monolithic Power Systems, McKesson and O'Reilly Auto reported Wednesday after the close, while Dynatrace reported early Thursday.
Disney stock jumped in premarket trade, as cost cuts buoyed earnings, signaling a move out of a buy zone. ARM skyrocketed more than 25% on strong fiscal third-quarter results and raised its full-year outlook, saying artificial intelligence is boosting sales. Monolithic Power ran solidly higher, set to clear a messy consolidation.
Qualys tumbled on mixed results and a weak outlook. Dynatrace stock plunged despite beating earnings and revenue views. McKesson fell modestly despite topping views. And O'Reilly Auto slumped, back to near a buy point, after sales came in light.
ARM stock and Nvidia are on IBD Leaderboard. Nvidia stock is on SwingTrader. Monolithic Power and O'Reilly stock are on the IBD Long-Term Leaders watchlist. Dynatrace stock and Nvidia are on the IBD 50.
Further, Nvidia rallied 2.75% to 700.99, clearing the 700 level for the first time.
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Stock Market Rally Wednesday
The Dow Jones Industrial Average rose 0.4% in Wednesday's stock market trading, a record close. The S&P 500 index popped 0.8%, hitting a new all-time high and coming within a point of the 5,000 mark. The Nasdaq composite gained just under 1% to reach its best levels since January 2022, not far from its November 2021 peak.
Market breadth was slightly negative despite the solid gains for the S&P 500 and Nasdaq.
The small-cap Russell 2000 fell 0.2%, just holding the 50-day line.
Nvidia Is King, But This Frog May Turn Into A Prince
Exchange Traded Funds
Among growth exchange traded funds on the stock market today, the iShares Expanded Tech-Software Sector ETF rose gained 1.6% and the VanEck Vectors Semiconductor ETF jumped 2%, both hitting record highs. Nvidia stock is the No. 1 SMH holding, with MPWR also a holding.
Also hitting all-time levels: the Global X U.S. Infrastructure Development ETF, the SPDR S&P Homebuilders ETF, the Health Care Select Sector SPDR Fund and the Industrial Select Sector SPDR Fund. PAVE rose 1.4%, while XHB gained 1.7%, XLV was up 0.3% and XLI added 0.7%.
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Market Rally Analysis
It's hard to fault a market showing strength. However, the Nasdaq is 5.7% above its 50-day line, with the Nasdaq 100 6% above that key level. The S&P 500 is 5.1% above its 50-day. These all are getting extended, where the risks of a pullback start to climb. To be sure, these indexes could get a lot more extended before that happens, but it's something to note.
A number of multiple sector ETFs now at highs are highlighting the point that market leadership remains broad. But with the market refusing to take much of a break, leading stocks are looking increasingly extended, locking investors out.
Nvidia, leading the S&P 500 for a second straight year, is already up nearly 42% for 2024. But it's 31% above its 50-day line.
Some second-tier leaders are flashing buy signals. Many have struggled to hold those entries, at least for a time, though many were doing well in Wednesday's rally. Other setups or buying opportunities are for stocks with upcoming earnings, such as Affirm Holdings.
Stock Market Today: What To Do Now
In a lockout market rally, patience is key.
If you're in winning stocks and have heavy exposure, you can choose to add incrementally or take some partial profits, but you can largely ride the positive trend.
If you're lightly exposed, a lockout market rally can be frustrating. You see the indexes and leading stocks running up without you. But you don't want to chase, especially with the Nasdaq and big rally leaders extended.
You can choose to buy second-tier stocks as they flash buy signals. Some of them may work out quite well, but others may be relative laggards or stumble. So add carefully. If the market rally pulls back relatively soon, these stocks may falter.
Eventually, the market rally will have a pause or pullback that lasts more than a few days. The pause that took place in late November and early December, followed by an early 2024 retreat briefly "unlocked" the market rally, creating a number of new buying opportunities.
So keep working on your watchlists and stay engaged so you'll be ready to act.
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