Dow Jones futures rose overnight, along with S&P 500 futures and Nasdaq futures, ahead of a series of major economic reports. Warren Buffett’s Berkshire Hathaway (BRKB) Announces New Stake in Aerospace Company Heico (HEI) and Ulta Beauty (ULTA member).
Cisco systems (CSCO) jumped to gains later in the day. Walmart (WMT system), Alibaba (BABA), JD.com (JD) reports Thursday morning.
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Market maintains follow-through day gains; Ferrari, Allstate, Netflix give buy signals
After Tuesday’s follow-through day on the major indexes, the newly confirmed stock market rally contributed modestly to Wednesday’s gains, with the S&P 500 right at a key level. CPI inflation cooled slightly after Tuesday’s surprisingly dovish producer price index.
On Wednesday, a few more stocks gave buy signals, including Ferrari (RACE), Allstate (Only Netflix (NFLX). Nvidia (NVDA) extended a strong weekly gain as it heads toward key resistance. On the downside, Tesla (TSLA) and Google parent company Alphabet (GOOGL) were notable Magnificent Seven drags.
Nvidia stock is on Leaderboard. Ferrari stock has been added to SwingTrader. Netflix stock is on the IBD 50. Ferrari was IBD Stock Of The Day on Wednesday.
The video embedded in this article discusses Wednesday’s market activity and analyzes shares of Ferrari, Allstate and Netflix.
Dow Jones Futures Today
Dow Jones futures rose 0.2% vs. fair value. S&P 500 futures rose 0.1% and Nasdaq 100 futures rose 0.25%. Cisco shares are a Dow Jones, S&P 500 and Nasdaq 100 member.
Please note that trading Dow futures and other markets overnight does not necessarily result in actual trading during the next regular trading session.
Warren Buffett Unveils Ulta, Buys Heico
In its latest 13F filing, Buffett’s Berkshire Hathaway disclosed new stakes in beauty products retailer Ulta Beauty and aerospace/defense company Heico.
Ulta shares rose 14% in overnight action after hitting a three-year low earlier in the week. Heico rose 4%, eyeing a new high.
Investors already knew that Warren Buffett again sold net shares in Q2. That included a big cut to Berkshire’s Apple (AAPL) interest.
BRKB shares rose 1.4% to 438.47 on Wednesday, putting them in a buy zone.
Meanwhile, Bill Ackman built new poles in Nike (NKE) and asset manager Brookfield (BN), in Q2, according to a 13F filing from Ackman’s Pershing Square. Nike shares, which hit a four-year low earlier this month, rose slightly late Wednesday. BN shares, which were already in a buy zone, rose slightly.
Key Wins
Cisco earnings beat expectations, with the long-lagging networking giant raising its guidance for fiscal first-quarter earnings per share. The Dow giant also said it will lay off 7% of its workforce. CSCO shares rose in late trading. Shares were up slightly Wednesday after hitting a 21-month low on Monday.
Walmart’s earnings are due Thursday morning, with results, guidance and commentary offering insight into the economy and consumers. WMT shares rose 0.8% to 68.66 on Wednesday, breaking above their 50-day line. The Dow discount giant is working on another consolidation above a previous double bottom set on May 16 on a gap in first-quarter earnings. A strong move above the 50-day line would provide a buying opportunity.
Chinese e-commerce giants Alibaba and JD are also on sale before the open. BABA shares are trying to build the right side of a base, but still have work to do. JD shares are below the 50-day and 200-day lines.
Economic data available
At 8:30 a.m. ET, investors will get July retail sales, weekly jobless claims, and August numbers 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’s earnings figures and comments on consumer spending are also important in assessing current economic conditions.
Join IBD experts as they analyze leading stocks and the market on IBD Live
Rally on the stock market
The stock market rally faltered Wednesday morning but ultimately held, extending Tuesday’s bullish gains slightly. Ahead of the open, the July consumer price index showed headline and core inflation cooling slightly from June.
The Dow Jones Industrial Average rose 0.6% in stock market trading Wednesday, further above its 50-day and 21-day lines. The S&P 500 index rose 0.3%, surpassing its 50-day line by the smallest fraction. The Nasdaq Composite rose slightly, holding its 21-day line. The small-cap Russell 2000 fell 0.5%, falling back from its 50-day line.
The Invesco S&P 500 Equal Weight ETF (RSP) rose 0.2%, extending its move from its 50-day line.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) fell 0.1%, just below the 21-day line, after reclaiming the 200-day line on Tuesday.
Although the market rally is now a confirmed uptrend, it still faces significant resistance. A V-shaped market recovery would be unusual. A break of the S&P 500 around the 50-day line for several days or weeks could be constructive. It would also allow many stocks to form better bases and perhaps handles.
US crude oil prices fell 1.75% to $76.98 a barrel.
The 10-year US 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) fell 0.2%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 0.6%. The VanEck Vectors Semiconductor ETF (SMH) rose slightly, 0.1%. Nvidia shares are the No. 1 holding in SMH.
Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) fell 2.7% and ARK Genomics ETF (ARKG) fell 1.7%. Tesla shares are a major holding in Ark Invest’s ETFs. TSLA shares fell 3.1% to 201.38 on Wednesday, back below their 200-day line.
SPDR S&P Metals & Mining ETF (XME) fell 1.8%. SPDR S&P Homebuilders ETF (XHB) fell 0.4%. The Energy Select SPDR ETF (XLE) rose 0.6% and the Health Care Select Sector SPDR Fund (XLV) gained 0.4%.
The Industrial Select Sector SPDR Fund (XLI) rose 0.4%.
The Financial Select SPDR ETF (XLF) rose 1.2%. Berkshire shares are the No. 1 holding in XLF, with Allstate also a member.
Time The Market with IBD’s ETF Market Strategy
Nvidia stock
Nvidia shares rose 1.6% to 118.01, close to their 50-day moving average. On Tuesday, the shares jumped to close above their 21-day moving average for the first time since June 16. NVDA shares have risen 12.7% so far this week, and are up sharply from a low of 90.69 on Aug. 5. A move above the 50-day line could provide an entry, though a longer pause could be helpful.
Nvidia’s earnings figures are scheduled to be announced on August 28.
Stocks in buy areas
Ferrari shares rose 4.9% to 452.90, breaking a four-month consolidation to a record high. RACE shares broke through early entry points of 433.98 and 436.54, and then the official buy point of 442.80.
Allstate shares rose 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 to StanCorp Financial for about $2 billion, with the two companies forming an alliance. Allstate’s profits are surging in 2024 amid rising insurance premiums, with revenue growth slowly accelerating.
Netflix shares rose 2.1% to 661.68, 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 buy point of 697.49.
What to do now
The stock market rally is in a confirmed uptrend, meaning investors have the green light, but it’s not time to step on the gas just yet. There were some caveats to Tuesday’s follow-through day, with the S&P 500 and Nasdaq facing resistance.
But investors should still participate in this new rally, even if only with modest exposure to stocks or ETFs.
If the market picks up steam, you will at least have an early foothold in the uptrend and can continue to build your portfolio over time. If the market rally falters, you can step back if necessary.
Read The Big Picture every day to stay up to date on market developments and the most important stocks and sectors.
Follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
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