April 12, 2024
Investors

Dow Jones Futures: Microsoft Leads New Buys, SEC OKs Bitcoin ETFs; Inflation Report Due


Dow Jones futures were little changed after hours, along with S&P 500 futures and Nasdaq futures, with the CPI inflation report on tap. The SEC finally approved the creation of spot Bitcoin ETFs. KB Home (KBH) reported earnings.




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The stock market rally saw modest gains Wednesday, with the major indexes moving back toward 52-week highs.

Microsoft (MSFT), ServiceNow (NOW), Workday (WDAY), MercadoLibre (MELI) and Howmet Aerospace (HWM) all flashed buy signals on Wednesday.

MSFT stock is closing in on overtaking the market cap of fellow Dow titan Apple (AAPL).

Microsoft and NOW stock are on the IBD 50. Microsoft and MELI stock are on SwingTrader. MSFT stock is on the IBD Long-Term Leaders list. ServiceNow, Microsoft, MercadoLibre and WDAY stock are on the IBD 50. Workday, ServiceNow and MELI stock are on the IBD Big Cap 20. Microsoft was Wednesday’s IBD Stock Of The Day.

The video embedded in the article discussed the market action and analyzed Microsoft, ServiceNow stock and GigaCloud Technology (GCT).

SEC OKs Spot Bitcoin ETFs

The Securities and Exchange Commission passed rule changes Wednesday afternoon permitting spot bitcoin exchange-traded funds.

In all, 11 spot bitcoin ETFs will begin trading Thursday.

During Wednesday’s session, CBOE Global Markets (CBOE) approved six bitcoin ETFs to begin trading Thursday. Specifically, the ETFs are the Invesco Galaxy Bitcoin ETF (BTCO), Franklin Bitcoin ETF (EZBC), ARK 21Shares Bitcoin ETF (ARKB), VanEck Bitcoin Trust (HODL), Fidelity Wise Origin Bitcoin Fund (FBTC), and WisdomTree Bitcoin Fund (BTCW).

The spot ETFs are seen drawing in a lot more institutional support for bitcoin.

The price of bitcoin edged higher Wednesday to $45,954.49 as of 5 p.m. ET, but rallied to nearly $47,000 in late trading. Earlier this week, bitcoin topped $47,000 to the highest price since March 2021.

Cryptocurrency exchange Coinbase (COIN) and bitcoin miner Marathon Digital (MARA) rose strongly after hours. Both lost a fraction in Wednesday’s session.

Dow Jones Futures Today

Dow Jones futures were flat vs. fair value, along with S&P 500 futures. Nasdaq 100 futures rose 0.1%.

The Labor Department will release the December consumer price index at 8:30 a.m. ET, along with weekly jobless claims. The CPI report is sure to move Dow futures and Treasury yields.

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

KB Home Earnings

KBH stock fell modestly in late trade after KB Home earnings and revenue modestly beat. Shares rose 1.1% to 63.20 in Wednesday’s session, briefly hitting their best levels in nearly 17 years. Housing stocks surged in late 2023 as mortgage rates tumbled. Several cleared short consolidations Wednesday.

CPI Inflation Report

Economists expect the December consumer price index to rise 0.2% vs. November, with the annual CPI inflation rate seen ticking up to 3.2%. Core CPI is forecast to rise 0.2% on the month, with core inflation rate down to 3.8% from 4%. That would be the lowest since May 2021.


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Stock Market Rally

The stock market rally showed modest gains on the major indexes, which closed near session highs. The Dow Jones Industrial Average climbed 0.45% in Wednesday’s stock market trading. The S&P 500 index rose 0.6%. The Nasdaq composite advanced 0.75%.

After a brief pullback to start 2024, the S&P 500 is just below recent peaks and almost at its January 2022 record highs. The Nasdaq is closing in on the 15,000 level, with a two-year high just above that. The Dow Jones is hovering just below its Jan. 2 all-time high.

The small-cap Russell 2000 edged up 0.1%, holding the 21-day line.

Much of the major indexes’ gains reflected tech megacaps such as MSFT stock, ServiceNow, Nvidia (NVDA) and Meta Platforms (META).

The Invesco S&P 500 Equal Weight ETF (RSP) and the First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) both rose 0.2%.

Overall, winners slightly topped losers Wednesday, but market breadth has been somewhat lacking in 2024. Yet investors haven’t had trouble this week finding a significant number of leading stocks flashing buy signals from a variety of sectors.

U.S. crude oil prices fell 1.2% to $71.37 a barrel.

The 10-year Treasury yield rose 1 basis point to 4.03%.

ETFs

Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) gained 1.4%. Microsoft stock is a huge IGV component, with ServiceNow and Workday also notable holdings. The VanEck Vectors Semiconductor ETF (SMH) edged up 0.1%

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) dipped 0.3% and ARK Genomics ETF (ARKG) slipped 0.6%. COIN stock is the No. 1 holding across Ark Invest’s ETFs.

SPDR S&P Metals & Mining ETF (XME) declined 0.9% and the Global X U.S. Infrastructure Development ETF (PAVE) rose 0.5%. U.S. Global Jets ETF (JETS) edged up 0.3%. SPDR S&P Homebuilders ETF (XHB) stepped up 1%. The Energy Select SPDR ETF (XLE) retreated 1% while the Health Care Select Sector SPDR Fund (XLV) climbed 0.5%.

The Industrial Select Sector SPDR Fund (XLI) rose 0.5% and the Financial Select SPDR ETF (XLF) inched up 0.2%.


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Microsoft Flashes Buy Signal

Microsoft stock rose 1.9% to 382.77, moving toward a 384.30 buy point from a flat base, base-on-base pattern. But shares gave three reasons to take an early entry. MSFT stock cleared a downward-sloping trendline decisively. It moved above several weeks of tight trading resistance near 377. And it’s extended its rebound from the 50-day and 10-week lines, while still being close.

Microsoft is right on the heels of Apple for the title of most valuable company. It now has a market valuation of $2.845 trillion. That’s just below Apple stock’s $2.895 trillion.

So far in 2024, MSFT stock is up 1.8%. Apple is down 3.3%, with shares up 0.6% on Wednesday. Three analysts have downgraded AAPL stock this year, mostly on iPhone concerns.

Apple sales have fallen for four straight quarters. Microsoft earnings and sales growth have slowly accelerated for the past three quarters. And Wall Street expects Microsoft growth to outpace Apple’s, buoyed by its AI leadership.

Other Stocks In Buy Zones

NOW stock rose 2.2% to 714.30, continuing to rebound from the 10-week line. Shares flirted with a downward-sloping trendline. ServiceNow stock has a four-weeks-tight pattern with a 720.68 entry, forged just below a 20%-25% profit-taking zone. But NOW stock is on track to forge a flat base with that buy point after this week. Investors should note that ServiceNow earnings are due Jan. 24.

WDAY stock edged up 0.4% to 276.81, just breaking a trendline in a short consolidation, offering an early entry. This week Workday has rebounded from just above its 10-week line, albeit in light volume. Shares have a 279.83 entry from a four-weeks-tight pattern that would be a flat base after Friday if WDAY stays in its range.

MELI stock advanced 1.6% to 1,598.16, moving off the 21-day line after rebounding from the 50-day line last Friday. MercadoLibre has a flat base that’s part of a base-on-base formation, with a 1,660 buy point. Investors could have used Monday’s move above the 21-day as an entry, with Wednesday offering a tight trendline entry.

Howmet Aerospace stock popped 3.5% to 55.57, clearing a 54.53 entry and continuing this week’s bounce from the 10-week line. The 54.53 buy point is from a shelf — technically a four-weeks-tight — forged around the top of a prior buy zone.


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What To Do Now

The overall picture is bullish and investors should be looking for ways to add exposure gradually. A few more stocks flashed buy signals Wednesday, including Microsoft, but a number are getting extended already. So don’t chase those names.

Also, consider diversifying your portfolio.

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, X/Twitter at @IBD_ECarson and Bluesky at @edcarson.bsky.social for stock market updates and more.

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