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Dow Jones futures were little changed on Tuesday night, as were S&P 500 futures and Nasdaq futures, with the House ready to give the 1 , $ 9 trillion. The attempted stock rally had a strong session on Tuesday as Treasury yields retreated. The Dow Jones hit an all-time high before retreating while the S&P 500 index regained key levels. The Nasdaq has rebounded strongly but remains well above recent highs.
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Likewise, growth names such as You’re here (TSLA), Nio (NIO), Nvidia (NVDA) and Focus on video communications (ZM) were big winners on Tuesday, but are still in a deep downtrend.
New surges are coming from names in the real economy. Manufacturer of specialty chemicals Element solutions (ESI) and automotive giant Stellantis (STLA) burst, while the steelmaker Ternium (TX) and car dealership CarMax (KMX) Extended gains in buying areas. Microsoft (MSFT), less of a high-octane, high-value name than Tesla stock, picked up a buy point as well as several key levels.
Microsoft and Nvidia stocks are on the IBD rankings and the IBD 50 list. MSFT stock is also on IBD Long-Term Leaders. The KMX stock was the IBD stock of the day Tuesday.
Why this IBD tool makes it easier to find the best stocks
Biden stimulus bill vote
The House is expected to give the $ 1.9 trillion Biden stimulus bill the final pass on Wednesday, voting on the Senate version of the law. The Senate passed the Biden stimulus bill, with some adjustments, on Saturday. After the House vote, the stimulus bill will pass President Biden’s test for signing.
The stimulus bill will provide $ 1,400 in checks to many Americans, expanded unemployment benefits, assistance to schools, state and local governments, and significant increases in spending on anti-poverty programs, ObamaCare and private bailouts. It also includes some money for vaccinations and coronavirus testing.
After the massive Biden stimulus bill – the weeks to come after a second coronavirus aid package – Congressional Democrats are considering an even bigger infrastructure-focused spending package later this year. The latter package will likely also include significant tax increases.
The looming spending blitz has bolstered interest rates and real economy stocks, with rising Treasury yields weighing on growth stocks.
Dow Jones Futures today
Futures contracts on Dow Jones were stable relative to fair value. S&P 500 futures fell 0.1% and Nasdaq 100 futures fell a fraction.
The 10-year Treasury yield was at 1.53%, little changed in extended trading.
At 8:30 a.m. ET on Wednesday, the Department of Labor will release the February Consumer Price Index. The CPI hasn’t moved Dow Jones futures for some time, but Treasury markets have signaled some concern about future inflation.
Remember that an overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular trading session.
Join the IBD experts as they analyze the exploitable stocks during the stock market rally on IBD Live.
Coronavirus news
Coronavirus cases around the world have reached 118.13 million. Covid-19 deaths have exceeded 2.62 million.
Coronavirus cases in the United States have reached 29.79 million, with deaths exceeding 540,000.
Tuesday stock exchange
The attempted stock rally had a generally encouraging session on Tuesday, although the fade-out was not great. The 10-year Treasury yield fell 6 basis points to 1.53% after climbing for several days. It was a catalyst for growth stocks.
The Dow Jones Industrial Average edged up 0.1% in stock trading on Tuesday, fading severely in the closing minutes after briefly hitting another record high. The S&P 500 Index jumped 1.4%, bouncing above its 50 and 21 day lines. The Russell 2000 climbed 2.1%, above its 21 days.
The Nasdaq composite jumped 3.7%, but is still below its 50-day line.
Tesla stock climbed nearly 20%, its biggest gain percentage in 13 months, fueled by the resumption of overall growth as well as strong sales in China. The Nio stock jumped 17%. Nvidia jumped 8% and stock Zoom by 10%. But all four stocks are still well below their 50 day line and need time to repair their damaged charts. Stock Nvidia has managed to recover its 200-day average while Zoom is still below.
TSLA and Nio shares rose slightly overnight.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) jumped 4.2%, while the Innovator IBD Breakout Opportunities ETF (BOUT) gained just over 5%, both closing in on their lines. 50 days. The iShares Expanded Tech-Software Sector (IGV) ETF rose 4.4%, with Microsoft being its main stake and ZM stock being a notable component. The VanEck Vectors Semiconductor ETF (SMH) jumped 5.9%, with Nvidia a major stake.
Reflecting more speculative stocks, Ark Innovation ETF climbed 7.65% and Ark Genomics ETF 10.4%, after suffering heavy losses in recent days. Tesla share is the No. 1 ETF of ARK Investments.
The latest stock market disruptions find three key trends
Actions in shopping areas
Element Solutions stock rebounded 7.2% to 20.24, passing a buy point of 18.50 cups in high volume, according to MarketSmith analysis. The 5% pursuit zone for ESI stock extends to 20.48. The relative strength line hits a new high, reflecting its outperformance against the S&P 500 Index. The specialty chemicals maker, as far as EVs, 5G, AI and smartphones are concerned, recently announced a 41% gain in EPS for the last quarter.
Stellantis stock rose 2.6% to 17.56, breaking through a 17.31 entry in the cup. Stellantis is the result of a recent merger between Fiat Chrysler and the French Peugeot. STLA stock is behind schedule Ford (F), General Motors (GM) and above all Volkswagen (VWAGY), but profits rebound solidly and its RS line hits a new high.
Ternium stock 3.9% at 35.43 above a 34.09 cup-base high volume buy point. The TX stock erupted on March 2 and fell back a few days later. Stocks just closed in the buy range on Monday, but fell below the entry on Tuesday morning before rebounding.
CarMax stock reached 132 intraday but reversed down 0.3% to 128.82, still slightly above the buy point of 128.68. KMX stock jumped 4.85% to 129.17 on Monday. The RS line is at a high level. CarMax profits rebounded as tight supply of new cars fueled used car sales and prices. The used car giant also took a big step forward in digital sales during the pandemic.
Microsoft stock rose 2.8% to 233.78, coming back above a buy point of 232.96. Tech giant Dow Jones also recovered its 50- and 21-day moving averages, while breaking a short downtrend. In many ways, the MSFT stock chart for the past few weeks looks a lot like the S&P 500 Index. Buying Microsoft stocks near the 50-day line makes sense as a long-term leader. Investors could also start a stake here and then take the position if and when MSFT stock closes and clears a new consolidation from the all-time Feb.16 high of 246.13. The RS line for Microsoft stock has been lagging since July and off its early February levels, but has held up better than many tech names in recent weeks.
Analysis of stock market rallies
Analyzing the current stock rally attempt is difficult because the major indices are so divided. It is normal to see an index leading up or down, but they are generally all moving in the same direction. But that hasn’t been the case in recent weeks.
On Tuesday, the stock market rallied at all levels, barely. The Nasdaq led with a strong rebound, as Tesla stock and many speculative growth names soared after several days of decline. The S&P 500 Index rose sharply while the Dow Jones made a small gain after a strong intraday gain.
But the Nasdaq and many hot titles like Nvidia are still below their 50-day limits. The best day-to-day gains in history are all in bear markets, so a big day for growth stocks in a correction doesn’t mean much on its own.
Tuesday marked the third day of an attempted stock rally. Especially for the Nasdaq and growth sectors, a follow-up day to confirm the new rally is essential. A follow-up could come overnight. A strong gain by the Nasdaq from these levels could also push the high tech index to or above its 50 and 21 day lines.
The Dow Jones, despite its lackluster finish, is trading at record highs. Several other real economy stocks have entered the buy zones. To be frank, if the Dow Jones and cyclical sectors embodied the stock market, IBD would not have declared a correction last week. With the Dow Jones and related sectors at new highs, it’s easy to argue that this major segment of the market is in an uptrend – and has never been in a correction.
The S&P 500 Index also looks healthier, regaining key levels. The same goes for the Russell 2000.
IBD Stock of the Day in Buy Range as Profits Bounce Off These Trends
What to do now?
Work on your watchlists, focusing on relative strength. But from those actions with strong RS lines, pay special attention to those that set up nearby buying points.
Investors could choose to take small positions in breaking stocks or other buy signals. Aside from a few names like Microsoft stock, these will usually be real names in the economy. As for growth stocks, wait for a follow-up day. Even then, many stocks like Nio, Zoom, or Tesla could take weeks or more to create new buying opportunities.
It is an important day to read The Big Picture in order to understand the direction of the market.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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