Dow Jones futures rose modestly overnight, along with S&P 500 futures and Nasdaq futures, ahead of a slew of key economic reports. Warren Buffett’s Berkshire Hathaway (BRKB) disclosed new stakes in aerospace firm Heico (HEI) and Ulta Beauty (ULTA).
Cisco Systems (CSCO) jumped late on earnings. Walmart (WMT), Alibaba (BABA), JD.com (JD) report early Thursday.
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Market Holds Follow-Through Day Gains; Ferrari, Allstate, Netflix Flash Buy Signals
After Tuesday’s follow-through day on the major indexes, the newly confirmed stock market rally added slightly to gains Wednesday with the S&P 500 right at a key level. CPI inflation cooled slightly after Tuesday’s surprisingly tame producer price index.
A few more stocks flashed buy signals Wednesday, including Ferrari (RACE), Allstate (ALL) and Netflix (NFLX). Nvidia (NVDA) extended a strong weekly gain as it works toward key resistance. On the downside, Tesla (TSLA) and Google-parent Alphabet (GOOGL) were notable Magnificent Seven drags.
Nvidia stock is on Leaderboard. Ferrari stock has joined SwingTrader. Netflix stock is on the IBD 50. Ferrari was Wednesday’s IBD Stock Of The Day.
The video embedded in this article discusses Wednesday’s market action and analyzes Ferrari, Allstate and Netflix stock.
Dow Jones Futures Today
Dow Jones futures rose 0.2% vs. fair value. S&P 500 futures advanced 0.2% and Nasdaq 100 futures climbed 0.4%. Cisco stock is a Dow Jones, S&P 500 and Nasdaq 100 member.
The 10-year Treasury yield rose to 3.85%.
China retail sales rose 2.7% in July vs. a year earlier, just beating views for 2.6%. Industrial production grew 5.1% vs. forecasts for 5.2%. Year-to-date fixed asset investment increased 3.6%, below estimates of 3.9%, with real estate down 10.2%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Warren Buffett Discloses Ulta, Heico Buys
In its latest 13F filing, Buffett’s Berkshire Hathaway disclosed new stakes in beauty products retailer Ulta Beauty and aerospace/defense firm Heico.
Ulta stock surged 14% in overnight action after hitting a three-year low earlier this week. Heico rose 4%, eying a fresh high.
Investors already knew that Warren Buffett sold net equities yet again in Q2. That included a major cut in Berkshire’s Apple (AAPL) stake.
BRKB stock rose 1.4% to 438.47 on Wednesday, moving within a buy zone.
Meanwhile, Bill Ackman built new stakes in Nike (NKE) and investment management company Brookfield (BN), in Q2, according to a 13F filing by Ackman’s Pershing Square. Nike stock, which hit a four-year low earlier this month, rose modestly late Wednesday. BN stock, already in a buy zone, edged higher.
Key Earnings
Cisco earnings topped views with the long-lagging networking giant guiding higher on fiscal Q1 EPS. The Dow giant also said it will cut 7% of staff. CSCO stock jumped in late trade. Shares edged higher on Wednesday after hitting a 21-month low on Monday.
Walmart earnings are due early Thursday, with its results, guidance and commentary offering insight into the economy and consumers. WMT stock rose 0.8% to 68.66 on Wednesday, eking above the 50-day line. The Dow discount giant is working on a new consolidation above a prior double-bottom base cleared on May 16 on a Q1 earnings gap-up. A strong move above the 50-day line would offer a buying opportunity.
Chinese e-commerce giants Alibaba and JD are on tap before the open as well. BABA stock is trying to build the right side of a base but has work to do. JD stock is below its 50-day and 200-day lines.
Economic Data On Tap
At 8:30 a.m. ET, investors will get July retail sales, weekly jobless claims as well as August readings for the Philly Fed manufacturing index and the New York Fed’s Empire State manufacturing index.
The July industrial production report is due at 9:15 a.m., followed by the NAHB Housing Market Index at 10 a.m.
Walmart earnings and comments about consumer spending will also be important for assessing current economic conditions.
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Stock Market Rally
The stock market rally wavered Wednesday morning, but ultimately held and slightly extended Tuesday’s bullish gains. Before the open, the July consumer price index showed overall and core inflation cooling slightly vs. June.
The Dow Jones Industrial Average rose 0.6% in Wednesday’s stock market trading, moving further above its 50-day and 21-day lines. The S&P 500 index added 0.3%, topping the 50-day line by the smallest of fractions. The Nasdaq composite edged higher, holding its 21-day line. The small-cap Russell 2000 fell 0.5%, falling back from the 50-day line.
The Invesco S&P 500 Equal Weight ETF (RSP) climbed 0.2%, extending its move from the 50-day line.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) dipped 0.1%, just below the 21-day line after retaking its 200-day on Tuesday.
While the market rally is now a confirmed uptrend, it still faces key resistance. A V-shape market recovery would be unusual. An S&P 500 pause around the 50-day line over several days or weeks could be constructive. It would also let a lot of stocks forge better bases and perhaps handles.
U.S. crude oil prices fell 1.75% to $76.98 a barrel.
The 10-year Treasury yield fell three basis points to 3.82%, down 18 basis points in the past four sessions.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) dipped 0.2%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 0.6%. The VanEck Vectors Semiconductor ETF (SMH) edged up 0.1%. Nvidia stock is the No. 1 holding in SMH.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) slumped 2.7% and ARK Genomics ETF (ARKG) declined 1.7%. Tesla stock is a significant holding across Ark Invest’s ETFs. TSLA stock sank 3.1% to 201.38 on Wednesday, back below the 200-day line.
SPDR S&P Metals & Mining ETF (XME) retreated 1.8%. SPDR S&P Homebuilders ETF (XHB) fell 0.4%. The Energy Select SPDR ETF (XLE) advanced 0.6% and the Health Care Select Sector SPDR Fund (XLV) gained 0.4%.
The Industrial Select Sector SPDR Fund (XLI) was up 0.4%.
The Financial Select SPDR ETF (XLF) popped 1.2%. Berkshire stock is the No. 1 holding in XLF, with Allstate also a member.
Time The Market With IBD’s ETF Market Strategy
Nvidia Stock
Nvidia stock rose 1.6% to 118.01, closing in on the 50-day moving average. On Tuesday, shares jumped to close above the 21-day moving average for the first time since June 16. NVDA stock has surged 12.7% so far this week and it’s rallied strongly from the Aug. 5 low of 90.69. A move above the 50-day line could offer an entry, though a longer pause could be helpful.
Nvidia earnings are due Aug. 28.
Stocks In Buy Areas
Ferrari stock jumped 4.9% to 452.90, clearing a four-month consolidation to a record high. RACE stock cleared early entries of 433.98 and 436.54, then the official buy point of 442.80.
Allstate stock leapt 5.2% to 180.95, back above the 177.37 cup-base buy point. The property and casualty insurer is selling its employer voluntary benefits business for about $2 billion to StanCorp Financial, with the two companies forging an alliance. Allstate earnings are skyrocketing in 2024 amid spiking insurance premiums, with revenue growth slowly accelerating.
Netflix stock climbed 2.1% to 661.68, moving above the 50-day moving line in an emerging base. That could serve as an early entry. After this week, NFLX stock will have a cup base with a 697.49 buy point.
What To Do Now
The stock market rally is in a confirmed uptrend, which means investors have a green light, but it’s not time to step on the gas. There were some caveats with Tuesday’s follow-through day, while the S&P 500 and Nasdaq face resistance.
But investors should be taking part in this new rally, even if only with modest exposure in stocks or ETFs.
If the market picks up steam, you’ll have a least an early toehold in the advance, and you can keep building your portfolio over time. If the market rally falters, you can step back as appropriate.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
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