A robust U.S. retail sales report for July boosted investor confidence following recent reports that inflation continues to cool, and buyers continued to jump back into the stock market today. Indexes saw gains accelerate and closed near session highs.
Meta Platforms and Microsoft represented continued leadership and presented new buy points, and more leaders rolled past buy points in the retail sector.
After the market close, H&R Block jumped more than 6% on solid results. The tax prep firm reported earnings of $1.89 a share, beating the Capital IQ consensus estimate by 15 cents, while revenue of $1.06 billion climbed only 3% vs. a year earlier yet topped views. H&R Block also announced a large $1.5 billion share buyback, equivalent to nearly 19% of the stock's total market value of $8 billion.
H&R Block shares are getting extended after pushing past a flat base with a 54.21 buy point. According to chart pattern recognition at MarketSurge, HRB's latest base is third stage.
The 5% buy zone from 54.21 goes up to 56.92.
Stock Market Today: A Strong Finish
The Nasdaq composite held on to a gains of 2.3%, trailing a 2.5% jump by the Russell 2000. The Nasdaq remains lower for the third quarter so far, but the decline has now shrunk to less than 1%.
The Nasdaq closed just above its 50-day moving average, a positive sign. The composite index holds a year-to-date gain of more than 17%.
The Invesco QQQ Trust, tracking the Nasdaq's 100 largest nonfinancial companies, jumped 2.5%. The ETF has rallied more than 5% for the week and looks poised to climb back above its 10-week moving average.
The S&P 500 also showed an increasingly bullish stance, up 1.6%. The large-cap benchmark is up more than 16% since Jan. 1. More importantly, the index closed 1.4% above its 50-day moving average, moving past a potential resistance level.
The Invesco S&P 500 Equal Weight ETF gained 1.4% also. Breadth improved. On the Nasdaq, rising stocks swamped falling ones by a nearly 3-1 ratio. On the NYSE, gainers beat losers by almost 4 to 1. Meanwhile, the Dow Jones Industrial Average gapped up to advance 1.4%, its fifth gain in six sessions.
Volume ran about 8% higher vs. the same time on Wednesday on both the Nasdaq and the NYSE.
Please read Thursday's Big Picture why the price-and-volume action warranted a change in suggested exposure in the stock market today.
Updated on 3:10 p.m. ET
Stock Market Gets A Few Breakouts
As highlighted in the IBD Stocks On The Move table, NCino also staged a bullish move, rising more than 4% to as high as 34.68 in heavy trading and surpassing an aggressive entry at 34.01. The mid-cap growth stock remains in the buy zone from this buy point. The expert in banking software is constructing a new base after a late-March breakout past 35.83 in a cup without handle reversed badly.
NCino boasts large earnings-per-share growth in the past two quarters, up 425% and 171% vs. year-ago levels to 21 cents and 19 cents, respectively. So, an 81 Earnings Per Share Rating belies these recent impressive numbers. Plus, NCino turned a net loss in fiscal 2023 of 7 cents per share into a net profit of 51 cents in the fiscal year ended in January this year. FY 2025 earnings are seen surging 31% to 67 cents a share.
Sales at the Wilmington, N.C., firm climbed 13% in both quarters. Trailing 12-month sales topped $490 million.
Good Economic News
Retail sales rose 1% in July vs. the prior month, sharply above a 0.3% consensus forecast. Excluding vehicles, a 0.4% gain also well exceeded the Econoday view for a 0.1% gain.
Scott Helfstein, head of investment strategy at GlobalX, noted that a 2.6% increase year over year in retail sales "should help alleviate concern about the consumer after the sluggish jobs report" in comments sent to IBD.
"Unemployment and household debt remain low and that fuels the consumer," Helfstein added.
Looking at IBD's 107 industry groups during the final hour of trading, specialty retail, discount and variety retail, and apparel and shoe retail stocks did exceptionally well with gains of 9.7%, 5.8% and 5.1%, respectively, on a price-weighted basis. Home furnishings retailers advanced 4.8%. Computer hardware, fiber optics telecom, fabless semiconductor, chip equipment and airline shares also outperformed major stock benchmarks in the stock market today.
See the fully daily performance of all 197 industries at IBD Data Tables.
Earlier this week, IBD raised its suggested exposure for active stock market investors and longer-term ETF buyers.
A Healthy Consumer
Jim Baird, chief investment officer at Plante Moran Financial Advisors, wrote in a note sent to clients that the U.S. retail sales data showed that auto sales "may have led the way, but the underlying positive tone of the report extended across most sectors, ranging from electronics and furniture to groceries and general merchandise."
Baird also highlighted that "the sharp rise in credit card debt in recent years is a cautionary note, particularly for borrowers that have seen their balances outstanding climb while interest costs have risen sharply." That said, Mastercard shares moved 1.4% higher in light volume. It is building the right side of a new base. IBD's credit card processing and payments industry group rose 1.7%.
The yield on the key U.S. Treasury 10-year bond spiked as much as 13 basis points to 3.95%, then settled to 3.92%.
Following the good news on retail sales, CME FedWatch showed a 75% probability the Federal Reserve will trim the fed funds rate charged to large banks by a quarter point to a range of 5%-5.25%. The chance of a half-point cut sank to 25% from 55% one week earlier.
GM Rebounds
General Motors may be one to monitor as evidence of continued health in the auto sector.
The Detroit-based gasoline and electric-powered vehicle giant is working on a second straight weekly advance. While shares are up 3.6% for the week, it's still looking up at the 10-week moving average. Strong stocks trade above their 10-week lines and lead their moving averages higher.
A new base could be forming, but it needs at least six weeks of time to complete a cup pattern.
GM is also back above a prior handle entry of 41.80 in a very long base that formed over most of 2023. The large cap holds an 88 Relative Strength Rating, third highest within IBD's automaker industry group. Wall Street forecasts GM's earnings to rise 29% to $9.87 a share this year, stronger than gains of 7% in 2022 and 1% last year.
This Is Why Microsoft Stock Is A Buy Now
Stock Market Today: More Breakouts Emerge
In the retail sector, Birkenstock is a strong performer in the stock market today. Shares strode quickly past a flat base with a 61.83 entry. The stock shot more than 5% higher to an all-time high of 63, which was still in the 5% buy zone. The sandal and closed-toe clog leader pulled back slightly beneath the buy point.
Shares have rallied nicely since its NYSE debut on Oct. 11. It closed that day at 40.20.
The relative strength line is close to breaching its June peak, a bullish sign. Analysts surveyed by FactSet see earnings jumping 81% in the fiscal year ending in September to $1.39 a share, and up 36% in fiscal 2025.
Shake Shack joined as a new stock on SwingTrader on Thursday, and it's clearly a retail sector leader in the stock market today. Shake Shack spurted past a cup with handle that served up a 105.68 proper buy point. The 5% buy zone goes up to 110.96.
A few weeks ago, the hamburger and premium shake chain reported a 50% bulge in second-quarter earnings to 27 cents a share vs. a year ago. Sales grew 16% to $316.5 million. Over the past four quarters, Shake Shack's top line rose on average 18% vs. year-ago levels.
The cup with handle shows a high degree of asymmetry. However, the 30% decline from the cup's left-side high to low falls within the normal range for this bullish pattern. Also, a B- Accumulation/Distribution Rating hints at net institutional buying in Shake Shack shares over the past 13 weeks.
10:49 a.m. ET
Walmart Emerges As 2024 Leader
Meta had cleared an early trendline entry near 519 as a new base forms and is still in the 5% buy zone.
And Microsoft, for long-term holders with a nice cushion of gains, could decide to add to their position as the cloud computing and AI pioneer strives to bottom out at its 200-day moving average.
Leading the Dow Jones: Walmart, which had already cleared a double bottom at 60.89 in mid-May following a good quarterly report. In recent weeks, Walmart hugged its 50-day moving average, a sign of institutional demand. On Thursday, the retailing titan reported further growth. Earnings for the July-ended fiscal second quarter rose 10% on a 5% gain in sales to $169.3 billion.
Gross margin at Walmart of 24.8% remained stout and was the highest in at least four quarters. The higher margin reflects the company's ability to either command good prices or achieve a lower cost of goods sold.
As a weekly chart shows, Walmart has surged off its rising 10-week moving average. This rebound offers a follow-on entry. IBD rules recommend buying no more than 5% above the value of the 10-week line, which in this case goes from 69.20 to 72.66.
Stocks On The Move In The Stock Market Today
Other large caps in the stock market also rose on earnings. But the machinery sector has gotten damaged amid the sell-off that hit stocks in early August.
Deere, a laggard in the stock market today, rallied more than 4% in volume running quadruple usual levels. The company beat second-quarter views. But Titan Machinery, which operates farm equipment stores, nose-dived again following weak results. Titan dropped 14% to 13.14 and is down more than 54% year to date.
Caterpillar, however, was among at least seven companies within the Dow Jones Industrial Average to rally three points or more.
Caterpillar, which holds a 76 Relative Strength Rating, attempted a breakout past a double-bottom base at 364.43 nearly four weeks ago. But the breakout fizzled immediately. Watch for a new base to possibly set up.
In general, true leaders in the stock market today hold an RS Rating of 90 or higher. But IBD research has found the average RS score among the biggest winners is 87 at the start of their huge price runs.
A New Options Trade For This Megacap Tech
Beyond The Stock Market Today
Crude oil futures on the NYMEX rebounded 1.3% to $77.98 a barrel after taking some big hits in recent days.
Gold inched up 0.2% to $2,484 per ounce. It has been gliding to all-time highs for much of this year.
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