Dow Jones futures rose slightly Sunday night, along with futures for the S&P 500 and Nasdaq futures. The banking crisis remains in focus. The headlines have been relatively muted so far this weekend, though a deal could be close for the FDIC-controlled Silicon Valley bank.
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The stock market rally is still going on, but the indicators have been volatile while its breadth has been narrowing.
Major indices have risen modestly this week, but came in far from weekly highs. The Russell 2000 hit 2023 lows with bank stocks, but small-cap stocks and banks rose for the week.
The attempt to rally relied heavily on large-cap Nasdaq stocks. Apple Stock Microsoft (MSFT), Tesla (TSLA), Regeneron Pharmaceuticals (rain), Free market (millie) And Palo Alto Networks (Banu) are the Nasdaq 100 stocks that have held up quite well.
REGN stock exploded into buy territory late in the week on positive drug testing news. apple (AAPL) and Microsoft are just above buy while Palo Alto is just below entry. MercadoLibre and Tesla stocks hold key support levels, not far from actionable. All boast strong relative strength lines. MercadoLibre and PANW inventory is running IBD Leaderboard. AAPL stock is on SwingTrader. MSFT stock is listed on the IBD Long-Term Leaders List. MELI stock is located at defect 50.
Just because individual stocks are potential buys doesn’t mean investors should act on them. Attempting to rise in the market still needs to confirm its bullish trend.
bank news
This weekend was relatively quiet for banking news, at least compared to the previous two weekends. The news was generally about the decision versus frantic efforts to avoid a systemic crash.
First Citizens BancShares (FCNCA) is in advanced talks to buy Silicon Valley bank SVB Financial, Bloomberg reported Sunday night.
The FDIC has been looking to offload Silicon Valley Bank since it took over two weeks ago. Reports last week indicated that the regulator may hold some assets underwater to pave the way for a deal.
US regulators could expand banks’ emergency lending facilities, aiming to help The first republic (FRC) propping up its balance sheet, Bloomberg reported Saturday, citing sources. The authorities are considering various options. They don’t see any First Republic needing urgent new help as the California-based bank is trying to work out solutions with its advisors.
Late Friday, the Fed reported that deposits at small, locally chartered banks fell by $120 billion in the week of March 15, but rose by $67 billion at large, locally chartered banks.
On Friday, many banks rebounded from their 2023 lows after concerns expanded, at least briefly, to Deutsche Bank (DB). Even the giants of Wall Street like c. B. Morgan Chase (JPM) And Morgan Stanley (Ms) undercuts recent lows before closing better.
The video embedded in this article discusses the week’s market movements in depth, while also analyzing MELI stock Meritage Homes (MTH) And pagerduty (P.D), and are two of IBD’s newest stock picks today.
Dow jones futures today
Dow futures rose 0.3% against fair value. S&P 500 futures rose 0.3% and Nasdaq 100 futures rose 0.2%.
Crude oil futures rose slightly.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable shares in the bullish stock market on IBD Live
Stock market rise
The stock market rally has stabilized with strong gains for the major indexes but with big swings along the way.
The Dow Jones Industrial Average rose 1.2% in last week’s trading on the stock market. The S&P 500 rose 1.4%. The Nasdaq Composite rebounded 1.7%. Small Capital Russell 2000 rose 0.5%.
US crude oil futures rose 3.5% to $69.26 a barrel last week, and fell on Friday but came in well off the intraday lows. Copper prices rose 4.8% last week, but snapped a six-day winning streak on Friday.
The 10-year Treasury yield fell 2 basis points to 3.38%, hitting a six-month low of 3.295% during the day Friday. The 2-year Treasury yield fell 7 basis points to 3.78%, after falling to 3.555% on Friday morning.
The Federal Reserve raised interest rates by a quarter point on Wednesday and indicated that only one hike remained. However, markets are overwhelmingly expecting a pause in May, followed by several Fed rate cuts starting in July. Expectations of a Fed rate hike depend heavily on whether the banking contagion is contained. Even if the crisis ends, banks will likely rein in further lending, slowing the economy and reducing the need for further Fed tightening.
Exchange Traded Funds
Among the ETFs, the Innovator IBD 50 ETF (fifty(up 1.4% last week, while the Innovator IBD Breakout Opportunities ETF)fit) gained 2.7%. iShares Expanded Technology and Software ETF (IGV) advanced 1.7%, and MSFT stock was a major component. VanEck Vectors Semiconductor Corporation (SMH) was also up 1.7%, but back from an 11-month high.
Reflecting more speculative stories, the ARK Innovation ETF (ARK)ark(down 2.5% last week while ARK Genomics ETF)ARKG) increased by 0.5%. Tesla stock is a staple property via Ark Invest’s ETF, but there are also big weekly losers. Coinbase (currency) and the square parent roadblock (mint). In fact, Cathie Wood sold a tranche of TSLA stock on Thursday to buy more coins and SQ.
SPDR S&P Metals & Mining ETFs (XME(up 1.6% and US Global X Infrastructure Development Fund (ETF) )cradle) 1.5%. US Global Gates Foundation ETF (Planes) fell 1.3%, extending its recent steep losses. SPDR S&P Homebuilders ETF (XHB) increased by 0.4%. Energy Defined Fund SPDR ETF (xle) increased by 1.2%. SPDR Health Care Sector Selection Fund (XLV) advanced 1.1%, with REGN stock an XLV.
SPDR Financial Selection Fund (45It rose 1 cent last week after hitting a five-month low on Friday. JPM and Morgan Stanley stocks are notable XLF holdings. SPDR S&P Regional Banking ETF (Creates) rose 0.2%, after sliding to its lowest level since late 2020 Backwest Bancorp (PACW) among several components of KRE.
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Market rally analysis
Major indices posted strong weekly gains, building on last week’s reversals to the upside. But the stock market rally attempt has had a series of big choppy swings and divergent moves. On Wednesday and Thursday, the indices rose sharply, but retreated from the resistance level.
Stocks fell sharply on Wednesday after the Fed’s interest rate hike and Treasury Secretary Janet Yellen’s comments. On Thursday, major corporate indices rose, but came in off their highs, while the Russell 2000 slid to a 2023 low as bank stocks tumbled. On a more positive note, the index reversed modestly higher on Friday.
The Nasdaq Composite rose strongly, holding above all moving averages despite pulling back at the 12,000 level. The S&P 500 retraced the 200-day line this past week, but then hit resistance at the 50-day line and tested the 200-day line again late in the week. However, it held 200 days and is back above the 21 days line. The Dow Jones also posted decent gains, despite dipping below 200 a day. Even Russell 2000 finished slightly higher.
The bid to climb has been focused on growth, and even that has been concentrated in a relatively small number of big chip names and chip names like Apple and Microsoft. The market breadth was thin, with the losers outnumbering the winners.
Chips were strong, but did experience some selling on Friday. This wasn’t that big of a deal for such stretch winners nvidia (NVDA), but it was damaging to the likes of Harmonious energy systems (MPWR) And STMicroelectronics (STM).
House builders and some related plays look solid. Some restaurants are doing well. Makers of medical products and systems are starting to bounce back. Some programs that run alongside Microsoft work just fine, including Salesforce.com (CRM) and the PANW stock.
Gold has been a huge winner in the midst of the banking crisis.
If the banking crisis fades, the market bull run is likely to broaden and strengthen, with one or more major indicators starting a follow-up day. In this scenario, investors may also want to see the Nasdaq move above 12,000, the S&P 500 to regain the 50-day level and the Dow Jones back above the 200-day level. Keep in mind that if the banks’ problems abate and Treasury yields rebound, the big corporate growth names may not be seen as safe havens.
Many bank stocks pared losses on Friday or even turned higher for the day or week, which is a glimmer of hope on that front. But financial institutions held up or rebounded at various points in the past few weeks, only to decline decisively soon after.
If the banking crisis worsens, even market leaders may begin to collapse. It is also possible for the market to continue to show choppy movement, going higher or lower and then reversing.
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What are you doing now
There has been some strong performance in recent weeks. If you get some of these names, it could be a solid start to the year. But many stocks that show promising action have stalled, declined, or collapsed. Although the major indices are up for the week, anyone buying near the highs on Wednesday or Thursday is likely to take losses.
Investors should maintain exposure to light and be very careful about any new purchases. You might consider taking partial profits from winners, even those who did well, to maintain winnings in a volatile environment. Be quick to cut losses.
Market conditions can change quickly, so investors should be prepared to work with up-to-date watch lists. When the market starts to show real strength, investors should step in gradually.
Read the big picture every day to stay in sync with market trend, leading stocks and sectors.
Please follow Ed Carson on Twitter at @employee For stock market updates and more.
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