Dow Jones futures: Market ignores Fed warnings as Taiwan semiconductor company, Apple jumps

Dow Jones futures: Market ignores Fed warnings as Taiwan semiconductor company, Apple jumps

Dow Jones futures were little changed after hours, along with S&P 500 futures and Nasdaq futures. Super micro computer (SMCI) jumped overnight on the back of strong preliminary results.




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The stock market surged higher Thursday, shrugging off rising Treasury yields and new comments from the Federal Reserve suggesting a slowdown in interest rate cuts. Technology companies led the way, with the Nasdaq 100 hitting a record high.

Taiwan Semiconductor Co., Ltd (TSM) led the chips higher based on 2024 upside guidance. apple (AAPL) posted strong gains, reclaiming the market cap crown from it Microsoft (MSFT) which rose into the buy zone.

It was a solid day for the Great Seven, with one exception: Tesla (TSLA) trimmed recent lows as Model 3 and Model Y prices reversed.

On the negative side too, Humana (HUM) is geared toward lower earnings per share in the fourth quarter and 2023, due to higher medical costs. HUM stock fell while the giant Dow Jones fell UnitedHealth (UNH) and other health insurance companies declined.

TSM stock exploded from the base. Recent IPO of chips Holding arm (ARM) Buy signals are flashing. And so I did Kings Project (Deking) and AppLovin (program).

ARM stock is on IBD’s leaderboard. Microsoft shares are on SwingTrader as well as long-term leading stocks. DraftKings was IBD Stock of the Day on Thursday.

Dow jones futures today

Dow Jones futures were flat against fair value. S&P 500 futures were little changed. Nasdaq 100 futures rose 0.1%.

Remember, an overnight move in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.

Super Micro Profits

Super Micro expects earnings for the fiscal second quarter ending December to come in at $5.40-$5.55 versus analyst estimates of $4.51. Revenue was $3.6 billion to $3.65 billion, with a consensus of $2.8 billion. That would be a 68% gain on EPS with revenue up 101% at their respective midpoints.

Supermicro cited “strong market and end-customer demand for end-to-end IT, AI and end-to-end IT solutions” for the raised guidance.

SMCI stock jumped 7% in late trading. Shares fell 2.1% to 311.44 in Thursday’s session, but maintained their 21-day level. Super Micro stock fell 8.3% over the week. Investors can use 357.99 as the input for the handle.


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Stock market pool

The stock market’s rally fluctuated midday, as Atlanta Fed President Raphael Bostic said he expected interest rate cuts to begin in the third quarter, much later than markets had expected. This followed similarly slow comments from Fed Governor Christopher Waller on Tuesday. European Central Bank officials also tempered their expectations for rapid and aggressive easing.

The Dow Jones Industrial Average rose 0.5% in stock market trading Thursday. Apple shares gave it a boost. And so I did Boeing (BA), which rebounded 4.2% on Thursday but is still down 18.8% in 2024.

The S&P 500 rose 0.9%. The Nasdaq Composite Index jumped 1.35%, closing above 15,000 points for the first time in 2024. The Nasdaq 100, led by Apple, Nvidia (NVDA) and other major companies, jumped 1.5% to a record level.

Market breadth was slightly positive after losers dominated the previous two sessions.

The Russell 2000 small-cap index rose 0.55%, rebounding again from near its 50-day line. The Invesco S&P 500 ETF (RSP) rose 0.5%, but below its 21-day line.

The First Trust Nasdaq 100 ETF (QQEW) lagged the Nasdaq 100 but rose 1.15%, rebounding from a 21-day line. This is a sign that technical leadership is still relatively healthy.

In addition to chips and other technology stocks, a number of travel, industrial, and housing/construction companies are setting or flashing buy signals alongside the technology names.

The yield on the 10-year Treasury note rose four basis points to 4.14%, or 19 basis points so far this week. Jobless claims fell to their lowest levels since late 2022, the latest in a series of mixed but generally strong economic reports.

Investors are still leaning toward the Fed’s first rate cut in March, but the odds are down from the previous week.

ETFs

Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) rose 1%. The VanEck Vectors Semiconductor ETF (SMH) jumped 3.25%. TSM stock is one of SMH’s top holdings, and NVDA is the largest.

Reflecting more speculative stocks, the ARK Innovation ETF (ARKK) fell 0.6% and the ARK Genomics ETF (ARKG) fell 0.5%. Tesla stock is a major holding across Ark Invest’s ETFs.

The SPDR S&P Metals and Mining (XME) fund rebounded 1.1% and the Global The US Global Jets ETF (JETS) rebounded 3.7%. SPDR S&P Homebuilders ETF (XHB) rose 1.4%. The Energy Select SPDR ETF (XLE) fell 0.2%.

The Healthcare Sector SPDR Fund (XLV) closed slightly lower. UN stock is a top XLV holding, with Humana and several other health insurance companies in the ETF.

Select Industrial Sector SPDR Fund (XLI) rose 1.35%. The Financial Select SPDR ETF (XLF) rose 0.1%.


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Taiwan semi stock

TSM stock rose 9.8% to 113.03, surpassing a 105.52 buy point from a cup-with-handle base to its best level in nearly two years. Investors could have bought the Taiwan Semi on a gap basis. At this point, investors may want to see if TSM stock consolidates for a few days.

The Taiwan Semiconductor company’s profits fell 19% while revenues remained flat, and both beat slightly. But the chip foundry giant expects a return to growth in the first quarter with revenue rising more than 20% in 2024, boosted by AI chips.

Taiwan Semi makes chips for Nvidia, Apple and several other companies. It is also a big buyer of chip equipment.

NVDA stock rose 1.9%, up 15.3% in 2024.

Chip and gear makers Applied materials (deaden), L Research (LRCX), Kosovo Liberation Army (KLAC) and ASML (ASML) jumped more than 4%, bouncing from key levels. All companies except AMAT will announce earnings next week.

Arm stock

Shares of leading wireless chip designer ARM jumped 6.3% to 74.3, breaking a sharp trend line and continuing Wednesday’s rebound from a 10-week line. This is a place to buy stocks, although perhaps as an additional entry.

DraftKings Stocks

DKNG stock rose 7% to 37.54, breaking its 50-day line. This follows Wednesday’s 4.2% gain, which also saw significant volume. The 50-day sweep provided a buying opportunity, although DraftKings stock encountered resistance at a downward sloping trend line. Investors can use Thursday’s high of 37.87 as an input. The online sports betting giant has an official buy point of 39.35.

Applovin stock

APP stock rose 4.6% to 43.09, extending Wednesday’s move away from its 50-day line. Shares also made a short-term high of 42.03, indicating an early entry. AppLovin stock has a buy point of 44.57 from a cup-with-handle base. But in the last few months it has reached the resistance level around 45 several times. So getting in early may be the safer play.

Apple vs. Microsoft

Apple stock rose 3.3% to 188.63, rebounding from near the 200-day line toward the 50-day line. A decisive move above the 50-day line could be an early entry, although there has been a lot of bearish volume in the past few weeks. The relative strength line, the blue line in the provided charts, has been lagging since mid-2023 and especially since early December.

Bank of America upgraded AAPL shares, citing artificial intelligence and the upcoming VisionPro mixed reality headset as drivers of growth. Many analysts had downgraded the technology giant Dow this year, as Apple offered rare discounts on the latest iPhones in China.

Apple’s stock market cap now stands at $2.934 trillion. Microsoft shares, worth $2.927 trillion, are once again the second most valuable company after a two-day reign. MSFT stock rose 1.1% on Thursday to a record closing high of 393.87. This is still within the buy zone, according to MarketSmith analysis.

Amazon.com (Amzn), Meta platforms (META) and Google Original the alphabet (GOOGL) shares rose by 1%-2%.

All five tech giants report earnings in about two weeks.

Tesla shares

Tesla stock fell 1.7% to 211.88, a new two-month low. Shares are down 14.7% so far in 2024, amid Tesla’s price cuts and other discounts.

Tesla is scheduled to report fourth-quarter 2023 earnings on January 24, focusing on 2024 guidance for deliveries and profit margins.

What are you doing now

The market rally emphasized the positives and ignored the negatives on Thursday. Major indices remain in a range with weak market breadth.

Some stocks are flashing buy signals. With the Nasdaq reaching above 15,000, this may be the start of another round. But it could just be a bullish day in a sideways market.

Investors can choose to add gradually, or wait for more market strength.

Earnings season will pick up next week and will be in full force the following week, so this is a reason to be cautious about new purchases. But earnings can be a catalyst for the market and many stocks to rise.

So, prepare your watch lists and exit strategies.

Read The Big Picture every day to stay on top of the market trend and leading stocks and sectors.

Please follow Ed Carson on Threads at @edcarson1971, and X/Twitter at @IBD_ECarson And Bluesky at @edcarson.bsky.social for stock market updates and more.

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