Dow Jones futures rose modestly Thursday morning, while S&P 500 futures rose solidly and Nasdaq futures surged, with Treasury yields undercutting key levels. The stock market rally attempt had another split session Wednesday.
The Dow Jones rallied to a record high as the Biden stimulus bill cleared Congress. Meanwhile, the Nasdaq erased strong gains to close fractionally lower despite Treasury yields falling for a second straight session.
The stock market arguably is in both an uptrend and correction, with the Dow Jones and real economy names thriving while the tech-led Nasdaq slumps. Can a stock market divided stand for an extended period?
As for real economy names, Dow Jones giant Boeing (BA) cleared a buy point Wednesday. D.R. Horton (DHI) and Flagstar Bancorp (FBC) are in buy zones with Treasury yields retreating. CF Industries (CF) also is actionable.
Oracle earnings topped views while revenue grew 3%, the best in years, with the software giant adding $20 billion. Oracle stock fell sharply in Thursday’s premarket, signaling a move back into a buy zone from an early March breakout. Bumble reported strong revenue and user growth and a solid outlook. Bumble stock rose solidly overnight but has fallen sharply since the second day of trading. Cloudera stock retreated on weak full-year guidance.
JD.com earnings topped forecasts as revenue growth accelerated for a third straight quarter. JD.com stock jumped, signaling a move back above its 50-day moving average.
Biden Stimulus Bill Passes
The House narrowly approved the $1.9 trillion Biden stimulus bill. The stimulus bill now goes to the White House, with President Joe Biden planning to sign it Friday. The stimulus bill include $1,400 checks for many Americans, expanded jobless benefits and aid to schools and state and local governments. It also has significant spending boosts on anti-poverty programs, ObamaCare and private pension bailouts. It features a little money for coronavirus vaccinations and testing.
After the huge Biden stimulus bill — weeks after a second coronavirus aid package — congressional Democrats are mulling an even-bigger spending package later this year focused on infrastructure. That legislation also will likely include major tax increases.
Dow Jones Futures Today
Dow Jones futures rose 0.3% vs. fair value. S&P 500 futures advanced 0.75%. Nasdaq 100 futures soared 1.9%.
The 10-year Treasury yield dipped to just under 1.50%, following two days of declines.
Coronavirus cases worldwide reached 118.72 million. Covid-19 deaths topped 2.63 million.
Coronavirus cases in the U.S. have hit 29.86 million, with deaths above 542,000.
Treasury Yields Fall
The 10-year Treasury yield fell 3 basis points to 1.52%.
At 1 p.m. ET, results from a 10-year Treasury auction were released. Demand was just so-so for the $38 billion worth of the long-term debt, but Treasury yields continued to drift lower after falling significantly Tuesday. A poorly received seven-year auction on Feb. 25 sent the Nasdaq tumbling below its 50-day line, pushing the struggling market rally to “uptrend under pressure.”
On Thursday, the Treasury will auction 30-year debt.
Before the open, the consumer price index showed inflation remained tame in February, especially excluding food and energy.
Stock Market Rally
The stock market rallied, with the Dow leading and the Nasdaq lagging. On Tuesday, the Dow faded to close with a slim gain while the Nasdaq surged.
Stocks opened strongly following the tame CPI data, but the Nasdaq quickly faded.
The Dow Jones Industrial Average rose 1.5% in Wednesday’s stock market trading, hitting a record high for a third straight session. The S&P 500 index climbed 0.6%. The Nasdaq composite reversed to close a fraction lower.
Growth stocks were mixed.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.3%, while the Innovator IBD Breakout Opportunities ETF (BOUT) clmbed 0.6%. The iShares Expanded Tech-Software Sector ETF (IGV) reterated 0.7%. The VanEck Vectors Semiconductor ETF (SMH) sank 2%.
Reflecting more-speculative story stocks, Ark Innovation ETF edged up 0.3% and Ark Genomics ETF dipped 0.5%.
The Bitcoin price traded above $55,000 Thursday morning after topping $57,000 intraday. The cryptocurrency is closing in on its Feb. 21 record high of $58,356.27. On Feb. 28, Bitcoin fell to nearly $43,000 but has trended higher in March.
GameStop (GME) shot up as high as 348.50, but reversed to 172 in a matter of minutes before closing up 7% to 265. GME stock is still up 90% just this week. Express (EXPR), which reported mixed quarterly results early Wednesday but touted big digital sales plans, rose 26% to 4.25.
AMC stock fell 6.2% to 9.85 but has benefited from an easing of coronavirus restrictions as vaccinations ramp up and cases tumble. AMC reported better-than-expected Q4 revenue late Wednesday.
GameStop has gotten a boost after tapping Chewy co-founder Ryan Cohen, a big GME stock investor, to help lead a shift to e-commerce.
AMC stock rose solidly early Thursday, with GME stock retreating and Express little changed.
Where and when will the GME stock and AMC roller-coaster finally end? Who knows? The potential for huge gains or losses is massive. But investing is hard enough with an investing edge. What’s your edge for buying GME stock?
Roblox Stock Jumps In Debut
Speaking of online gaming, Roblox stock soared 54% to 69.50 in Wednesday’s trading debut from its reference price of 45. An online gaming platform, Roblox stock went public via a direct listing rather than a traditional IPO. The company’s eponymous “Roblox” was 2020’s biggest mobile game by revenue. Revenue growth is soaring, but Roblox still loses money.
RBLX jumped in premarket trade.
Stocks In Buy Zones
Boeing stock jumped 6.4% on Thursday to 245.34, clearing a 244.18 cup-base buy point, according to MarketSmith analysis. On a weekly chart, BA stock had a tiny handle on the cup base, giving it a 229.71 entry.
D.R. Horton stock rose nearly 3% to 82.09. That’s back above a prior 81.31 buy point that arguably is still actionable. Investors also could use a downward-sloping trend line from the Feb. 11 peak of 84.11. DHI stock broke above that trend line last Friday.
Flagstar stock popped 4.8% to 48.50, back above a 48.02 flat-base buy point. FBC stock briefly broke out last week but reversed sharply lower as Treasury yields jumped. The savings & loan operator has seen huge earnings growth in recent quarters as low mortgage rates fueled housing demand.
CF stock climbed 2.9% to 49.33, back above a 48.98 buy point from an ascending base. It’s also actionable from recently breaking a short trend line.
Stock Market Rally Analysis
The Dow Jones hit a record intraday high for a third straight day. But this time, the Dow closed above its Feb. 24 peak. The S&P 500 index climbed 0.6%. The Russell 2000 popped 1.7%, moving toward record highs as well. GME stock and Plug Power (PLUG) are the two biggest names in the Russell 2000.
The Nasdaq rose nearly 1.6% intraday but hit resistance at its falling 21-day exponential moving average, which has dropped below its 50-day line. After briefly turning negative, the Nasdaq closed slightly higher. The action was a bit disappointing, given the falling Treasury yields, but follows Tuesday’s 3.7% jump. If the Nasdaq surges powerfully above its 21-day and 50-day lines in the coming days, Wednesday’s action won’t matter.
But right now, the stock market remains sharply divided.
The Dow Jones rose 1.5% on higher volume than the prior session. That’s strong, though not spectacular action. On the plus side, the Dow Jones has now closed above its Feb. 24 high.
The Dow Jones is literally in an uptrend, regardless of what you call it. Real economy names continue to do well, with more entering buy zones while others extend breakouts. With Treasury yields falling, housing plays such as DHI stock and Flagstar are stepping up.
The S&P 500, a mix of real economy and tech names, rose modestly after retaking its 21-day on Wednesday.
Meanwhile, the Nasdaq still appears to be in a correction, below key levels. That could change quickly, with Nasdaq futures sharply higher Thursday morning. But right now it hasn’t shown a true change of character.
The weakness in high-value growth stocks comes despite continued speculative action in Bitcoin as well as GME stock and other short squeeze plans.
It seems unlikely that the sharp stock market divergence can continue much longer. Either the Nasdaq also trends higher — even if it lags the Dow — or the Nasdaq weighs down the Dow.
What You Should Do Now
Investors can take advantage of real economy stocks breaking out. But given that the current market split is unstable, investors may not want to raise exposure too much. As for growth stocks, look for more confirmation of the current market rally, especially from the Nasdaq. Even then, many tech growth names are dealing with sharp downtrends. Setting up proper bases will take time.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
YOU MAY ALSO LIKE: