Market Rally Rebounds: Dow Jones Futures

Dow Jones futures fell after hours, along with S&P 500 futures and Nasdaq futures, while the Boeing 737 slid into woes. JP Morgan Chase (JPM), Citigroup and UnitedHealth were the big earnings reports on Friday.




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The stock market rally rebounded strongly following another slower-than-expected inflation reading, along with rising jobless claims. Major indices recovered Wednesday’s losses or more. The S&P 500 hit its best level in nearly two months, joining the Dow Jones. The Nasdaq continued its one-day session.

Leading stocks had solid gains but not many buy signals.

Megacap shares had a strong session. Apple (AAPL), Amazon.com (AMZN), Google Parents letters (Google), Meta platforms (Meta), Microsoft (MSFT) and Tesla shares all rose more than 2%. Google stock rebounded above a buy point. Shares of Apple and Microsoft rose into buy zones. Tesla (D.S.L.A) and Amazon shares rallied into the bottoms formed below the 200-day moving average. Meta stock hits 11-month high

Amazon is joining Microsoft and Google in the field of generative AI, the e-commerce and cloud computing giant said on Thursday.

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Investors should participate in this market boom. But big bank income is huge.

Dow Jones Futures Today

Dow Jones futures fell 0.1% vs. fair value. S&P 500 futures were lower and Nasdaq 100 futures were down 0.1%.

Late Thursday, Boeing (B.A) cited a parts issue from a supplier and warned of lower 737 Max production and deliveries in the short term. BA shares fell 5%, weighing on Dow Jones futures.

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

Bank income

JP Morgan, Citigroup (C) and Wells Fargo (WFC) with superregion PNC Financial Services (PNC) All reports are Friday morning.

In the midst of a banking crisis, investors are more concerned about balance sheets: deposits, loans, and more. They will be interested in the guidance of bank executives.

Bank deposits fell for a 10-week straight, according to Fed data, although smaller banks saw a slight increase in the latest week. New weekly figures will be released later on Friday. Fears of bank failures have faded, but deposit rates — especially at big banks — are still low for money market funds and short-term Treasury bills.

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If banks start paying significantly more for deposits, net interest margins will come under pressure. This is especially true for smaller banks, as depositors are still looking for safe havens in big-failed giants. Low and high cost deposits affect lending and hence the economy. Over the last few weeks, bank loans have started to decline.

According to minutes from the central bank’s March 21-22 policy meeting released Wednesday, Federal Reserve staff saw a “slight slowdown” later this year due to bank stress.

All of this explains why the broader market will pay close attention to Friday’s bank results and earnings calls.

Banking stocks are clear laggards. JPM stock rose 0.4% on Thursday, hovering above its 200-day line but below its 21-day line and knitting below its 50-day. Citi stock is below its 50-day and 200-day. WFC stock remains below those key levels, but recently retook a 21-day streak.

PNC stock rose 1.4% on Thursday, but after hitting its worst level since November 2020.

Several major funds are due next week, including Bank of America (BAC), Charles Schwab (Black), Goldman Sachs (GS) and Morgan Stanley (Mrs), as well as multiple regions and superregions.

United Health Revenue

Report before opening, UnitedHealth Group (UNH) is a Dow Jones firm like JP Morgan.

UnitedHealth Revenue starts making decisions for health insurers. UNH stock rose nearly 1% to 526.21 on Thursday, moving toward a 558.20 buy point. Stocks have rallied over the past two weeks as health insurance premiums are expected to rise. UNH stock has a 558.20 buy point, but is not far from a potential trendline entry. A pause around the trendline is welcome.

UNH stock rejoins long-term leaders


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Stock market rally

The stock market’s rally rebounded from Wednesday’s slump, with major indices gaining momentum during Thursday’s session and closing near intraday highs.

The Dow Jones Industrial Average rose 1.1% in stock market trading Thursday. The S&P 500 index rose 1.3%. The Nasdaq composite rose 2%. The small-cap Russell 2000 advanced 1.3%.

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U.S. crude oil prices fell 1.1% to $82.16 a barrel, retreating from their best levels in nearly five months.

The 10-year Treasury yield rose 3 basis points to 3.45%.

ETFs

Among growth ETFs, the innovator IBD 50 ETF (FFTY1.55% up. iShares Expanded Technology-Software Sector ETF (IGVShares of ServiceNow and MSFT rose 1.9% with major players. VanEck Vectors Semiconductor ETF (SMH0.8% improved.

Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKKrose 4% and the ARK Genomics ETF (ARKG) 5.6% Tesla shares are the dominant holding across Arc Invest’s ETFs.

SPDR S&P Metals & Mining ETF (XME) rose 2.2%, with FCX shares significantly higher. Global X US Infrastructure Development ETF (sidewalkrose 0.3%. US Global Jets ETF (JETS) pushed 0.2% higher. SPDR S&P Homebuilders ETF (XHBrose 0.4%. Energy Select SPDR ETF (XLE0.6% higher and the Health Care Select Sector SPDR Fund (XLV1.3% up.

Fund Selection SPDR ETF (45Closed up 0.9%. JPMorgan, Wells Fargo and Citigroup are all large XLF holdings. SPDR S&P Regional Bank ETF (Create) received 1.5%. PNC stock is a KRE component.


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Market rally analysis

The stock market rebounded from Wednesday’s setback with even stronger gains.

The Nasdaq led on Thursday. The tech-heavy index bounced back above the 12,000 level. It is close to its March 31 high, just above the 2023 peak. Volume was slightly higher on the Nasdaq, giving the tech-heavy index a rally day after three delivery days in the previous five sessions.

Strong gains on higher prices continued the next day for the Nasdaq.

NYSE volume fell vs. Wednesday. However, the S&P 500 peaked in early April, not since mid-February at its best since 2023. The Dow Jones regained the 34,000 level with a 2023 high. The Russell 2000 moved above its 21-day line, but remains below the 50-day and 200-day lines.

Winners beat losers by nearly 5-to-2 on the NYSE and Nasdaq

But despite the broad breadth and strong price gains of the major indices, many stocks did not flash buy signals.

Southern Copper (SCCO) and Freeport McMorran (FCX) showed positive activity Service now (Now) is flirting with a breakout. STMicroelectronics (STM), HubSpot (Hubs) and Flying wire (Feather) all redeemed purchase points.

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Invesco S&P 500 Equal Weight ETF (RSP) was up 0.8%, a nice gain, but certainly lagging the S&P 500. And RSP is still below its bearish 50 days.

Megacap shares performed strongly on Thursday and remain so throughout 2023. AMZN stock rose 4.7% and retook its 50-day line. Apple shares rose 3.4%, while Meta rose 3%. Google stock advanced 2.7% as the tech titan topped its buy zone. Tesla stock rebounded 3%, but it was an inside day for the EV company, which is below all of its moving averages. Microsoft shares trailed with a 2.2% advance.

Reaching the peak of 2023 would be a big step for the market rally. Ideally, with the RSP gaining some ground in the SPY, the breadth will continue to improve.

Silver’s earnings reports, particularly from JP Morgan and fellow banks, can move the broader market up or down.


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What to do now

Thursday’s action was a positive step for the stock market rally despite relatively low buying opportunities.

Investors can gradually add exposure assuming market trends are higher. It won’t be long before major indexes and leading stocks are damaged once again.

The market is still in a sideways structure, with sectors and individual names prone to large swings at times. Try building a portfolio with positions in leading stocks from different sectors or themes.

Be prepared to take profits quickly and minimize losses. Investors should always be flexible, but this is certainly not the time to be locked into a bearish or bearish mindset.

Read the big picture every day to stay in tune with market direction and leading stocks and sectors.

Follow Ed Carson on Twitter @IBD_ECarson For stock market updates and more.

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