Dow Jones futures tilted higher overnight, while S&P 500 futures and Nasdaq futures fell slightly. ASML and Dow giant Johnson & Johnson (JNJ) are due early Wednesday.
↑ X NOW PLAYING Small Caps, Dow Jones Continue To Lead; Toast, Uber, Woodward In Focus
The stock market rally had another generally positive session Tuesday. Small caps, the Dow Jones and many sectors continued to run higher. The S&P 500 hit a record high while the Nasdaq edged higher as megacaps generally paused. Nvidia (NVDA) fell modestly while Tesla (TSLA) rose slightly
Several more stocks flashed buy signals, including Toast (TOST), Uber Technologies (UBER), UnitedHealth (UNH), Woodward (WWD) and Flowserve (FLS).
Dow Jones Futures Today
Dow Jones futures rose 0.15% vs. fair value. S&P 500 futures declined 0.1% and Nasdaq 100 futures fell 0.2%.
Before the open, investors will get June readings on housing starts and industrial production. Just after the opening bell, Fed Gov. Christopher Waller, a hawkish policymaker, will speak.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Key Earnings
Interactive Brokers (IBKR) earnings topped views late Tuesday, with IBKR stock edging lower in extended trade. Shares are working on a 129.19 flat-base buy point. Interactive Brokers stock dipped Tuesday as larger rival Charles Schwab (SCHW) tumbled on declining interest income.
Chip-equipment giant ASML (ASML) reports before Wednesday’s open with key customer and Nvidia chipmaker Taiwan Semiconductor (TSM) due early Thursday. ASML stock is holding in range of a 1,056.34 buy point.
J&J earnings also are on tap. The Dow Jones giant has been trending lower for the past two years.
The video embedded in the article discussed Tuesday’s market action and analyzed Toast, Woodward and Uber stock.
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Stock Market Rally
The stock market rally continued to show strength, with small caps, the Dow Jones and several non-tech sectors leading the way. Markets are now fully pricing in a Fed rate cut in September, and expect three cuts by year-end.
The Dow Jones Industrial Average leapt 1.85% in Tuesday’s stock market trading, another record best and the biggest percentage gain since June 2023. The S&P 500 index rose 0.6%, just barely marking a record high. The Nasdaq composite advanced 0.2%, only slightly below all-time high levels.
The Magnificent Seven stocks were mixed. Nvidia stock was the biggest loser, down 1.6%, but holding the 21-day line ahead of ASML and Taiwan Semi earnings. Tesla stock rose 1.55%, within a recent range with earnings due next week.
Overall breadth remained strong. The small-cap Russell 2000 jumped 3.5%, a fresh multiyear high. The S&P MidCap 400 index popped 2.5% to a record high.
The Invesco S&P 500 Equal Weight ETF (RSP) rallied 1.8% to a record high.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) gained 1%, also a new high, easily besting the Nasdaq 100’s fractional advance.
Homebuilders, financials, industrials, energy names, infrastructure plays and a variety of medicals all continued recent runs.
The megacaps pausing while lagging areas of the market ramp higher is close to ideal. The Nasdaq closed Tuesday 6.8% above its 50-day line, still somewhat extended. Continued sideways action for the tech-heavy index would be constructive.
U.S. crude oil prices fell 1.4% to $80.76 a barrel.
The 10-year Treasury yield fell six basis points to 4.17%, right at four-month lows.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) climbed 0.3%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 0.4%. The VanEck Vectors Semiconductor ETF (SMH) dipped 0.1%. Nvidia stock is the No. 1 holding in SMH, with ASML stock and Taiwan Semiconductor big members as well.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) popped 3.4% and ARK Genomics ETF (ARKG) soared 7.5%. Tesla stock is the top holding across Ark Invest’s ETFs.
The Industrial Select Sector SPDR Fund (XLI) gained 2.55%, the SPDR S&P Homebuilders ETF (XHB) spiked 5.85%, the Health Care Select Sector SPDR Fund (XLV) rose 1.4% and the Financial Select SPDR ETF (XLF) rose 1.4%, all hitting record highs. The SPDR S&P Regional Banking ETF (KRE) jumped 4.57% to a 52-week high.
SPDR S&P Metals & Mining ETF (XME) climbed 1.4% and the Global X U.S. Infrastructure Development ETF (PAVE) jumped 3%, both just below all-time highs.
The Energy Select SPDR ETF (XLE) rose 0.45%, its fifth straight gain.
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Stocks In Buy Areas
Toast stock rose 1.55% on Tuesday to 256.56 clearing a 26.29 buy point from a short cup-with-handle base next to a longer consolidation. The restaurant software play is set to turn profitable in 2024. Keep in mind that TOST stock has had multiple failed breakouts over the past year.
Uber stock climbed 2.8% to 74.30, clearing several weeks of trading within a consolidation with an official 82.14 buy point.
UnitedHealth stock jumped 6.5% to 548.87 after the Dow Jones health insurer beat views and reaffirmed guidance. Rising expectation that Donald Trump will regain the White House has also buoyed big Medicare Advantage players. UNH stock decisively cleared a trendline and topped various short-term highs on Tuesday. Shares aren’t far from an official consolidation buy point of 554.70. UnitedHealth is still within range of its 200-day line, cleared on Friday.
Woodward stock popped 4.6%, rebounding from the 50-day line and coming up to a trendline. WWD stock has a 188.34 buy point from a flat base. The company makes energy control products for the aerospace and industrial markets.
Flowserve stock rallied 3.5% to 51.52, clearing a 50.49 flat-base buy point, according to MarketSurge. The industrial firm have risen for five straight sessions, with Monday’s bounce off the 50-day line offering an early entry.
What To Do Now
The stock market rally has broadened dramatically, with a large number of buying opportunities in the past week. Meanwhile, most of the Big Tech leaders are holding up reasonably well.
Investors should be diversifying into the new areas of market strength. Don’t go chasing extended stocks however. Work hard on those watchlists and pay close attention to earnings season.
Nvidia, ASML and Taiwan Semiconductor stock are on IBD Leaderboard. Toast stock is on SwingTrader. UnitedHealth stock is on IBD Long-Term Leaders. Nvidia and Interactive Brokers stock are on the IBD 50. Nvidia stock is on IBD Big Cap 20. Toast was Tuesday’s IBD Stock Of The Day.
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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