dow-jones-futures:-cpi-inflation-report-due;-stock-market-flashes-biggest-warning-in-a-year

Dow Jones Futures: CPI Inflation Report Due; Stock Market Flashes Biggest Warning In A Year

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Dow Jones futures edged lower early Thursday, along with S&P 500 futures and Nasdaq futures, with the CPI inflation report due before the open. The S&P 500 and Nasdaq hit record highs Wednesday, with the latter the most extended in over a year. That’s a notable warning for investors.

consumer price index (CPI) and producer price index (PPI) reports both measure the rate of change for goods and services and impact the stock market. On this IBD Explains, Jed Graham and Meredith Heyman discuss what investors need to know about the data.” vid-name=”What Investors Need To Know About How The CPI Report And PPI Report Influence The Stock Market” vid-cat=”IBD Explains” vid-date=”07/08/2024″ vid-date-tmsp=”1720430899″ vid-image=”https://www.investors.com/wp-content/uploads/2024/07/UMF8pnT7-640×360.jpg” vid-authors=”MEREDITH HEYMAN”> X NOW PLAYING What Investors Need To Know About How The CPI Report And PPI Report Influence The Stock Market

Key Stock Market Movers

Nvidia (NVDA) had another solid session Wednesday as Nvidia chipmaker Taiwan Semiconductor Manufacturing (TSM) reported robust June sales. Tesla (TSLA) extended its win streak to 11 sessions.

Cameco (CCJ), Carvana (CVNA) and GE Aerospace (GE) flashed buy signals.

Software and restaurant stocks struggled, with leaders CrowdStrike (CRWD) and Cava (CAVA) coming under pressure.

Costco Wholesale (COST) rose early Thursday after announcing its first membership fee hike since 2017.

Delta Air Lines (DAL) slightly missed second-quarter earnings views and guided lower on Q3 EPS. Delta stock sold off, with other carriers also sliding.

Nvidia, Cava and Taiwan Semiconductor stock are on IBD Leaderboard. Nvidia, CrowdStrike stock is on the IBD 50. GE Aerospace was Wednesday’s IBD Stock Of The Day.

Dow Jones Futures Today

Dow Jones futures were 0.15% below vs. fair value. S&P 500 futures declined 0.1% and Nasdaq 100 futures lost a fraction.

The 10-year Treasury yield edged up to 4.29%.

The June CPI inflation report will swing Dow futures and Treasury yields before the open.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

CPI Inflation Report

The Labor Department releases the June consumer price index at 8:30 a.m. ET Thursday. Economists expect a 0.1% overall CPI increase vs. May. Core CPI is seen rising 0.2%.

Markets see a 73.3% chance of a quarter-point rate cut at the Sept. 17-18 meeting.


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Stock Market Rally

The stock market rally had a solid, broad advance. The Dow Jones Industrial Average jumped 1.1% in Wednesday’s stock market trading to its best levels since late May. The S&P 500 index gained 1% and the Nasdaq composite leapt 1.2%, both rising for a seventh straight session to fresh highs.

The small-cap Russell 2000 popped 1.1%. The Invesco S&P 500 Equal Weight ETF (RSP) rose 0.8%. Both reclaimed their 50-day lines.

The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) climbed 0.8%, hitting a record high.

U.S. crude oil prices rose 0.85% to $82.10 a barrel.

The 10-year Treasury yield fell 2 basis points to 4.28%.

Extended Nasdaq Is Warning To Investors

The Nasdaq is now 9% above its 50-day moving average, the most since closing 10.1% above that key level on June 15, 2023. The risks of a pullback are mounting. But, as the past few days and weeks have shown, that doesn’t have to happen right away, and it doesn’t have to be sharp or lengthy.

The S&P 500, at 5.4% above its 50-day, is now slightly extended.

ETFs

Among growth ETFs, the Innovator IBD 50 ETF (FFTY) dipped 0.1%. The iShares Expanded Tech-Software Sector ETF (IGV) lost a fraction, with CRWD stock a holding. The VanEck Vectors Semiconductor ETF (SMH) rallied 2.35%. Nvidia and TSM stock are the biggest SMH components.

Reflecting more-speculative stocks, ARK Innovation ETF (ARKK) fell 0.2% and ARK Genomics ETF (ARKG) declined 0.4%. Tesla stock is the No. 1 holding across Ark Invest’s ETFs.

SPDR S&P Metals & Mining ETF (XME) climbed 0.9% and the Global X U.S. Infrastructure Development ETF (PAVE) popped 1.5%. U.S. Global Jets ETF (JETS) rose 0.6%, with Delta Air a big holding. SPDR S&P Homebuilders ETF (XHB) rebounded 2.2%. The Energy Select SPDR ETF (XLE) added 0.7% and the Health Care Select Sector SPDR Fund (XLV) advanced 0.95%.

The Industrial Select Sector SPDR Fund (XLI) gained 0.9%, with GE stock a major holding.

The Financial Select SPDR ETF (XLF) rose 0.4%.


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Tesla Stock Win Streak Goes To 11

Tesla stock edged up 0.35% to 263.26 on Wednesday, its 11th straight advance. Shares are up 44% in that win streak, its longest since a 13-day run in June 2023. Nearly all of the gains have come on strong volume. TSLA stock is greatly extended from a late June breakout.

Nvidia Stock

Nvidia stock popped 2.7% to 134.91, now up 7.2% for the week. Shares are approaching the June 20 intraday peak of 140.76, but the consolidation is far too short to offer a buying opportunity.

NVDA stock is rallying on renewed AI optimism, notably from Taiwan Semiconductor.

Taiwan Semi reported strong June sales early Wednesday on AI chip demand, with Q2 revenue up 40% vs. a year earlier. Nvidia is huge customer for the foundry giant, which also makes chips for Apple (AAPL), Broadcom (AVGO) and many more.

TSM stock climbed 3.5% to 191.01, a record close. Shares hit 192.80 Monday morning, briefly giving Taiwan Semi stock a $1 trillion market cap. It closed Wednesday at $990.72 billion.

Stocks In Buy Areas

Cameco stock jumped 9.6% to 53.71, blasting above the 50-day moving average in heavy volume on a strong day for uranium plays. CCJ stock has a 56.24 buy point from a flat base, base-on-base pattern. However, buying Cameco off the 50-day line has been a better bet over the past year than traditional breakouts.

Carvana stock popped 4.2% to 130.97, retaking a 129 buy point from a cup base, buoyed by bullish analyst comments. However, the volatile CVNA stock has been hard to hold from traditional breakouts.

GE Aerospace stock climbed 1.6% to 165.74, moving off the 50-day line, offering an early entry. Investors also could use short-term highs of 167.50 and 169.15 as additional entries, with 170.80 the official flat-base buy point.

CrowdStrike And Cava Stock Pressured

Software and restaurant stocks are coming under pressure, starting to hit real leaders in those areas.

CrowdStrike stock fell 3% to 374.45, closing off lows but below its 21-day moving average for the first since early June. Shares had been trading tightly just above a buy zone from a cup-with-handle base since the June 8 breakout. CRWD stock tried to clear that trading range Tuesday, but reversed lower.

Cava stock slumped 5.5% to 85.30, testing its 50-day line after skidding 4.75% on Tuesday. That’s after briefly trying to clear a messy flat base Monday.

It’s still unclear if these moves are the start of a long slide, or if CrowdStrike and Cava are having shakeouts that are ultimately constructive.

What To Do Now

The market rally looking extended heading into inflation data and the start of earnings season carries extra risks. Investors have to be ready for big market and sector moves, and especially individual stock swings.

Stocks continue to flash buy signals, while others are flashing potential sell signals.

Investors can still have solid-to-heavy exposure in the current market, though you could consider taking some profits. It’s definitely a time to stay engaged and ready to act.

Underlying stock and sector swings mean watchlists have to be updated frequently.

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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