Dow Jones futures experienced a slight overnight increase, mirroring the upward movement of S&P 500 futures and Nasdaq futures. There was an overnight surge in Salesforce.com (CRM) stock due to positive earnings results, and anticipation surrounds the upcoming release of the Federal Reserve’s preferred inflation report.
The stock market rally saw a modest increase on Wednesday, building upon Tuesday’s follow-through day that confirmed the initiation of a new uptrend. A softer-than-anticipated ADP Employment Report followed Tuesday’s surprisingly lackluster job openings data.
Alongside Salesforce, other software producers including CrowdStrike (CRWD), Okta (OKTA), and Veeva Systems (VEEV) also released their reports, as did Pure Storage (PSTG).
Both CRM and Okta stocks experienced significant gains overnight, pointing towards favorable opportunities for buying. Veeva, Pure Storage, and CRWD stocks also made progress.
During the same time span, Shopify (SHOP) exhibited substantial growth after Amazon revealed a more profound integration between the two major e-commerce entities. Amazon is set to introduce the Buy with Prime app for Shopify, enabling merchants to provide shoppers with the choice to make purchases utilizing their Prime benefits.
Four of the “Magnificent Seven” stocks—namely Tesla (TSLA), Amazon.com (AMZN), Meta Platforms (META), and Apple (AAPL)—are currently trading in proximity to the 50-day line, which presents potential entry points.
PCE Inflation Report
At 8:30 a.m. ET on Thursday, the Commerce Department is scheduled to unveil the July PCE price index, which stands as the Federal Reserve’s preferred measure of inflation.
Economists are anticipating a modest 0.2% increase in both the Personal Consumption Expenditures price index and the core PCE compared to the figures from June. The overall PCE inflation rate is projected to rise to 3.3%, up from June’s 3%, primarily due to more challenging year-over-year comparisons. Meanwhile, the core PCE inflation rate is expected to show a slight uptick to 4.2%.
Federal Reserve Chair Jerome Powell has expressed his focus on a supercore inflation reading within the report, specifically centered around service prices while excluding energy and housing costs.
Simultaneously, at 8:30 a.m. ET, the Labor Department will release its weekly jobless claims data. This data release precedes the forthcoming September jobs report scheduled for Friday. These developments follow the unexpected weakness observed in job openings data on Tuesday, along with the soft ADP Employment Report released on Wednesday.
Dow Jones Futures Today
Dow Jones futures showed a 0.25% climb compared to fair value, including CRM stock as a constituent of the Dow index. S&P 500 futures experienced a 0.1% advancement, while Nasdaq 100 futures saw a rise of 0.2%.
The forthcoming PCE inflation report is anticipated to exert an influence on both Dow futures and Treasury yields prior to the market’s opening.
In the month of August, China’s factory activity sustained its fifth consecutive month of contraction. The official manufacturing PMI registered at 49.7, slightly below the breakeven threshold. This figure demonstrated a 0.4-point increase from July and outperformed expectations set at 49.4. Conversely, the non-manufacturing gauge decreased to 51, down from 51.5 in July and 53.2 in June.
It’s important to note that the activity observed overnight in Dow futures and other markets may not necessarily translate directly to the actual trading behavior in the upcoming regular stock market session.
Key Earnings
In after-hours trading, Salesforce’s stock exhibited a strong increase, indicating a potential entry above the 50-day line. This surge followed the release of Salesforce’s Q2 earnings, which surpassed expectations, and the positive outlook provided by the prominent business software company. During the regular session on Wednesday, Salesforce’s value climbed by 1.45% to reach 215.04. According to the analysis conducted by MarketSmith, CRM stock is identified to have a buy point at 238.22.
CRWD stock initially pulled back Wednesday evening but later showed a slight upward trend. CrowdStrike reported earnings that exceeded expectations, and the cybersecurity company offered an improved earnings per share (EPS) outlook. On Wednesday, CrowdStrike stock experienced a 1.7% increase, reaching 149.18, positioning it just below the 21- and 50-day trendlines. Should CRWD stock surpass the previous high of 155.55 from August 24, it would present an early entry opportunity as part of an emerging base.
During the overnight period, OKTA stock surged, indicating a potential early entry following the cybersecurity firm’s impressive outperformance of EPS projections. On Wednesday, OKTA stock saw a 2.4% rise, reaching 73.57, rebounding from the 50-day line and reclaiming the 200-day line. A robust movement from these levels, potentially exceeding the July 31 peak of 76.94, would offer an early entry chance. OKTA stock is marked by a 91.50 buy point.
Veeva stock saw a slight late-stage increase after Veeva’s earnings slightly exceeded expectations, although the life sciences software manufacturer provided mixed guidance. Shares experienced a minor 0.2% decline on Wednesday, settling at 192.59, still positioned below the 50-day trendline. Veeva stock’s flat-base buy point stands at 211.95; however, surpassing the 50-day line could potentially present an early entry occasion.
Overnight, PSTG stock inched higher following Pure Storage’s slight beat of expectations. Pure Storage stock demonstrated a 0.4% rise on Wednesday, reaching 36.48, encountering resistance at the 50-day line. The data storage company has formed a flat base with a 39.19 buy point. An ascent beyond the previous high of 38.49 from August 23 would provide a slightly early entry chance.
Stock Market Rally
The stock market rally experienced modest increases on Wednesday, building upon the significant gains achieved on Tuesday.
During Wednesday’s trading session, the Dow Jones Industrial Average exhibited a 0.1% rise. The S&P 500 index saw a 0.4% climb, while the Nasdaq composite demonstrated a 0.5% advancement. The small-cap Russell 2000 also registered a gain of 0.4%.
U.S. crude oil prices increased by 0.6%, reaching $81.63 per barrel. These prices have risen by 3.5% during their five-session winning streak.
Following a decline of 9 basis points on Tuesday, the 10-year Treasury yield remained steady at 4.12%.
ETFs
Within the realm of growth exchange-traded funds (ETFs), the Innovator IBD 50 ETF (FFTY) experienced a 0.6% increase. The iShares Expanded Tech-Software Sector ETF (IGV) saw a 0.9% climb. Notably, CRM stock holds a significant position within IGV, and CrowdStrike is also included in its holdings. The VanEck Vectors Semiconductor ETF (SMH) advanced by 0.5%.
In the category of more speculative narrative-driven stocks, the ARK Innovation ETF (ARKK) gained 0.7%, while the ARK Genomics ETF (ARKG) added 0.8%. It’s worth noting that Tesla stock holds the top position across Ark Invest’s various ETFs.
The SPDR S&P Metals & Mining ETF (XME) experienced a 0.3% decline, while the Global X U.S. Infrastructure Development ETF (PAVE) edged up by 0.2%. On the other hand, the U.S. Global Jets ETF (JETS) descended by 0.7%. The SPDR S&P Homebuilders ETF (XHB) exhibited a 0.9% increase. The Energy Select SPDR ETF (XLE) moved up by 0.5%, while the Health Care Select Sector SPDR Fund (XLV) showed a slight decrease of 0.1%.
The Industrial Select Sector SPDR Fund (XLI) recorded a gain of 0.45%.
The Financial Select SPDR ETF (XLF) experienced a fractional increase, and the SPDR S&P Regional Banking ETF (KRE) fell by 0.7%.
Megacaps To Watch
Tesla stock experienced a slight decline of 0.1%, settling at 256.90. This marked the end of a brief three-day winning streak, which had been highlighted by Tuesday’s substantial 7.7% surge. Interestingly, TSLA stock did manage to conclude the trading day just slightly above a diminishing 50-day moving average. An opportunity for an early entry would arise if the stock were to surpass Tuesday’s peak of 260.51. Presently, Tesla stock is establishing a new base, with a buy point positioned at 299.29.
According to a report from The Wall Street Journal on Wednesday evening, Federal prosecutors and the SEC are engaged in an investigation of a confidential Tesla project that was internally referred to as a special residence for CEO Elon Musk. The details were revealed based on information from sources cited in the report.
Apple stock saw a 1.9% increase, reaching 187.65, and managed to reclaim the 50-day line while trading in slightly above-average volume. This situation provides an opportunity for an early entry. AAPL stock is accompanied by a flat-base entry at 198.23. Notably, the Dow Jones tech giant declared that it will be hosting an event on September 12, during which it is widely anticipated to introduce the Apple iPhone 15.
Meta stock encountered a 1% decline, settling at 295.10, as it encountered resistance at the 50-day line. A clear and distinct movement beyond the 50-day line would present an early entry prospect within an emerging consolidation phase.
In the case of AMZN stock, there was a slight 0.1% uptick, bringing it to 135.07, positioning it just above both the 21- and 50-day lines. Notably differing from the other three major companies mentioned, Amazon stock has been retracing towards the 50-day line, where it has found a supportive level. Should a substantial rebound occur in this region, it could provide an entry point. Amazon stock currently exhibits a concise consolidation phase that holds the potential to evolve into a flat base. Investors might interpret this as a handle formation within a yearlong consolidation.
AMZN stock remained relatively unchanged overnight, despite the announcement concerning Shopify.
Market Rally Analysis
Following Tuesday’s significant surge, the stock market rally experienced a relatively subdued trading session. However, this is not necessarily a cause for concern. In cases where a confirmed uptrend is on the brink of faltering, the decline tends to happen swiftly. In contrast, during Wednesday’s trading, the major indexes remained above their 50-day moving averages and managed to achieve marginal gains.
Having rebounded from testing its 200-day moving average on Friday, the Russell 2000 index surged, reaching out to touch its 50-day moving average before ultimately concluding the session just slightly below that level.
Simultaneously, several stocks presented favorable opportunities for investment. On Tuesday, only a handful of prominent stocks displayed signals indicating entry points, mostly concentrated within the growth sector. However, on Wednesday, a broader range of growth-oriented stocks as well as those from various industries indicated buy signals.
Visa (V) successfully broke out, while Uber Technologies (UBER), SLB (SLB), Atkore (ATKR), Oceaneering (OII), Toll Brothers (TOL), Duolingo (DUOL), Valaris (VAL), and Howmet Aerospace (HWM) all exhibited entry points.
Numerous other stocks are in the process of forming setups. Consequently, if this current market rally continues to demonstrate resilience, it is likely that a substantial number of buying opportunities will emerge across diverse sectors.
The market rally’s resurgence has been notably influenced by declining Treasury yields spurred by weak economic data. Therefore, the PCE inflation report scheduled for Thursday and the jobs report on Friday are anticipated to significantly impact both Treasury yields and the trajectory of the stock market rally.
What To Do Now
Investors had the opportunity, and it’s advisable, to make purchases during Tuesday’s follow-through day. They could have further expanded their investment exposure on Wednesday.
When engaging in such actions, it’s wise to adopt a gradual approach, allowing the evolving market rally to guide your decisions. It’s important to remain mindful of the fact that the significant economic reports scheduled for the week’s end introduce potential risks for a market pullback. This is especially relevant considering how the upturn this week has been fueled by the weaker labor data.
At present, we find ourselves within a confirmed uptrend, witnessing notable performance from leading stocks. It’s prudent to keep your watchlists updated and prepared to capitalize on the most promising opportunities that arise.
For staying aligned with the market’s direction, as well as staying informed about leading stocks and sectors, it’s recommended to read The Big Picture on a daily basis. This will aid in maintaining a well-informed perspective.
