Dow Jones futures rose modestly early Tuesday, along with S&P 500 futures and Nasdaq futures. Domestic flights in the US have been suspended due to an FAA glitch. Prior to the launch, WWE, Wells Fargo, Axcelis Technologies, Impinge and Tesla were also in the spotlight.
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The stock market rally was indecisive for most of Tuesday, but major indexes gained steam as the S&P 500 moved above its 50-day moving average. Investors await the December CPI inflation report on Thursday morning.
Medspace (MEDP) rose strongly on Tuesday, signaling a fresh buy after a similar move at the end of 2022. First Sun (FSLR) bounced back from its 50-day line, also providing an early entry. But elf beauty (elf) and Super Micro Computer (SMCI) collapsed after their comeback on Monday.
MEDP fund and ELF Beauty are active IBD Leaderboard. on SMCI shares IBD 50. Medspace was on Tuesday IBD Stock of the Day.
Tesla (TSLA) and UnitedHealth (UNH) edged lower on Tuesday as many large caps continued to struggle.
Investors should be cautious, especially with the CPI inflation report looming.
Dow Jones Futures today
Dow Jones futures rose 0.3%. fair value. S&P 500 futures rose 0.4%, while Nasdaq 100 futures rose 0.4%.
The 10-year Treasury yield fell 5 basis points to 3.57%.
Crude oil futures rose more than 1% despite the American Petroleum Institute forecasting a big weekly increase in US inventories. The Energy Information Administration will release US crude and oil products data at 10:30 a.m. ET.
Don’t forget that it’s a one night stand dow futures and elsewhere does not necessarily become the actual trade on a regular basis Stock market session.
Business news
The FAA grounded all domestic flights until 9 a.m. due to a significant system failure, except for some flights from Newark and Atlanta due to congestion. The FAA expects to “re-populate” the system soon, but airlines will have to scramble to get back on schedule. including aviation resources Delta Airlines (DAL) and United Airlines (UAL) was flat and slightly lower.
Vince McMahon is once again the chairman of the organization World Wrestling Entertainment (WWE), after her daughter Stephanie stepped down as chairman and CEO on Tuesday evening. Mr. McMahon, a major shareholder, resigned last year amid allegations of sexual abuse. WWE shares rose solidly in premarket trading after rising in recent days on news of an expected return to lead the company’s sales.
In the meantime, Wells Fargo (WFC) will largely exit the mortgage business amid regulatory pressure, CNBC reported Tuesday. It will offer home loans only to existing banking and wealth management customers and borrowers in minority communities. WFC shares were little changed in extended trading.
Axcelis Technologies (ACLS), which has moved strongly in the last few sessions), said revenue for the fourth quarter ended in late December exceeded $250 million. the chip equipment maker’s previous guidance of $232 million to $240 million. ACLS shares rose on Tuesday.
Imping (IP) says Q4 sales exceeded $76 million vs. The RFID-chipmaker’s previous guidance was $71.5 million to $73.5 million. Already just above the 50-day line, PI shares rallied strongly overnight. This could offer an early entry or close to a flat base buy point for Impinj shares. PI shares are also on the Leaderboard.
Earnings season also starts to pick up from the end of the week. Taiwan Semiconductor (TSM) reports Thursday morning. on Friday, JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (Ch) and Wells Fargo reports pre-open, along with Delta Air and UnitedHealth.
Tesla Expansion
Shares rose 2% before the open on Wednesday.
Tesla has turned to Texas for a major expansion of its Austin assembly plant, the Austin Business Journal reported Tuesday evening. Tesla Austin is still expanding its current capabilities.
Bloomberg reports that Tesla is close to a preliminary agreement to build a factory in Indonesia. In late December, Bloomberg reported that Tesla would announce a new plant in northeastern Mexico, but there was no official word on that.
Tesla shares were down 0.8% on Tuesday after rising 5.9% on Monday. Shares rallied after paring a bearish low of 101.06 on Friday after the EV giant announced big price cuts in China and other key Asian markets. TSLA stock needs a lot of maintenance.
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Stock market rally Tuesday
After a disappointing decline on Monday, the stock market rallied on Tuesday afternoon and neared session highs.
The Dow Jones Industrial Average rose 0.6% on Tuesday stock trading. The S&P 500 index rose 0.7%. The Nasdaq composite rose 1%. The small-cap Russell 2000 gained 1.5%
UNH shares fell 0.8%, their worst level since last June. The Dow Jones health insurer is already down 8.3% in 2023 after finishing 2022 on a fairly strong note. UnitedHealth’s earnings and guidance on Friday will be important for the suddenly troubled sector.
The price of crude oil in the United States increased by 0.7% to $75.12 per barrel. Natural gas prices fell by 6.9%.
The 10-year Treasury yield rose 10 basis points to 3.62% after dropping 20 basis points in the previous two sessions.
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ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.1%, while the Innovator IBD Breakout Opportunities ETF (ABOUT) increased by 0.15%. iShares Expanded Tech Software Sector ETF (IGV) gained 0.1%. VanEck Vectors Semiconductor ETF (SMH) advanced 1.3%, crossing the 200-day line after clearing the 50-day on Friday. TSM shares is a large SMH holding company.
Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) rose 2.5% and the ARK Genomics ETF (ARKG) 3.6%. Tesla shares are still a key holding at Ark Invest, with Kathy Wood consolidating her position in recent weeks.
SPDR S&P Metals & Mining ETF (XME) rose 2.5% and the Global X US Infrastructure Development ETF (HANG) rose 1.6%. US Global Jets ETF (JETS) rose 2.4% with DAL shares among prominent holdings. SPDR S&P Homebuilders ETF (XHB) increased by 1%. Energy Select SPDR ETF (XLE) advanced 0.7% and Financial Select SPDR ETF (XLF) increased by 0.6%. Healthcare Select Sector SPDR Fund (XLV) rose 0.8%, and UNH shares are the top XLV holding.
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Market rally analysis
The stock market rallied for most of the morning, but ended with a relatively strong performance on Tuesday.
The S&P 500 rose above its 50-day line. The 200-day moving average is slightly above that.
The Dow Jones rebounded from a test of its 50-day line after breaking above that key level on Friday. The Nasdaq rose above its 21-day line, well above its 50-day line.
The Russell 2000 is back above its 50-day line and just below its 200-day line.
The S&P MidCap 400 rose on Tuesday after finding 50-day support. This after it broke above the 21-day, 50-day and 200-day lines on Friday. Invesco S&P 500 Equal Weight ETF (RSP) looks very similar.
It highlights large caps like RSP and MidCap 400 apple (AAPL), Tesla and UNH shares gained weight in the market.
A sustained stock market rally may not materialize until there is clarity on when the Federal Reserve will stop raising rates. Markets expect only a quarter-point increase in February. 1 political meeting and again at the end of March.
Thursday’s CPI inflation report may cap expectations for a quarter-point increase. Inflation should continue to trend lower in the coming months, if only because year-on-year comparisons are so stark.
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Leading Stocks Blend
A number of leading stocks have issued buy signals in recent days and weeks. But most fell quickly. In some cases, such as MEDP shares, they bounce back after a few days.
Medpace rose 5.9% to 223.29 on heavy volume, breaking above the 50-day line and clearing Dec. 2. 29 high, when trying to move MEDP.
First Solar continued its mini-winning streak, rising 7.4% to 171.01. A move from the 50-day line suggested an early entry into a new base, but it now looks a bit stretched. But the official buy point of 173.78 is not far away.
Other names remain in the jam.
ELF shares enjoyed a promising bounce on Friday, but gave up most of those gains on Monday and fell 8.3% to 51.15 on Tuesday, falling below the 50-day line and paring a flat base.
SMCI shares rose on Monday morning, offering an early entry, but closed only slightly higher. Shares traded 7.55% below the 50-day line on Tuesday after a short-seller report.
Many other stocks are hovering around potential buy points.
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What to do now
The stock market rally is still in effect, but the major indices, sectors and especially the leading stocks tend to turn around. Thursday’s CPI inflation report could lead to big gains, with major indexes pushing decisively above some key levels. But it can go the other way.
Investors should be cautious about their exposure and be especially wary of new purchases ahead of the CPI report.
If you make new purchases, know your exit strategy before you get in. Consider taking partial profits quickly to lock in some gains.
It’s still a window-shopping market. But there are some very interesting stocks to watch from different sectors. Make those watch lists.
Read it The Big Picture daily to stay in sync with market direction and leading stocks and sectors.
Follow Ed Carson on Twitter @IBD_ECarson for stock updates and more.
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