Futures: Inflation Report Due Amid Broad Market Strength


Dow Jones futures rose slightly Wednesday morning, along with S&P 500 futures and Nasdaq futures. The June CPI inflation report is on tap before the open.




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The stock market rally saw decent gains on the S&P 500 and Nasdaq on Tuesday. The rest of the market was even better, with a number of actionable stocks.

Salesforce.com (CRM) said it would raise prices for the first time in seven years. That sent CRM stock in a buy area and likely provided a boost to several other software names. Datadog (DDOG), Dynatrace (DT), Procore Technologies (PCOR) and HubSpot (HUBS) broke out or flashed buy signals.

ROKU stock broke out powerfully as Roku (ROKU) unveiled an alliance with Shopify (SHOP). Caterpillar (CAT) and United Rentals (URI) broke out as well, while Boeing (BA) offered an early entry. Expedia (EXPE) cleared a traditional buy point, while Booking Holdings (BKNG) is actionable.

DT stock and HubSpot are on IBD Leaderboard. CAT stock and Boeing were added to SwingTrader on Tuesday, joining Dynatrace. URI stock is on the IBD 50. HubSpot, Dynatrace, United Rentals and DDOG stock are on the IBD Big Cap 20.

Caterpillar was Tuesday’s IBD Stock Of The Day.

The video embedded in the article looked at Tuesday’s market action and reviewed CRM stock, Caterpillar and Booking.

Chip News

Nvidia (NVDA) could be an anchor investor for Arm Holding as the Softbank-owned wireless chip designer moves toward an IPO later this year, the Financial Times reported overnight. The chip giant and Softbank reportedly are arguing on Arm’s valuation.

The European Commission approved the $61 billion Broadcom (AVGO) takeover of VMware (VMW), with conditions. VMW stock jumped 5.2% to 151.33 on Tuesday, in anticipation of EU approval.

CPI Inflation Report

The Labor Department will release the June consumer price index at 8:30 a.m. ET. Economists expect the overall CPI to rise 0.3%, with the CPI inflation rate tumbling to 3.1% from May’s 4%. Core CPI should climb 0.3% vs. May, with the core CPI inflation rate slipping to 5% from 5.3%.

Dow Jones Futures Today

Dow Jones futures rose 0.1% vs. fair value. S&P 500 futures climbed 0.15%. Nasdaq 100 futures were up 0.2%.

The 10-year Treasury yield fell 3 basis points to 3.95%.

The CPI inflation report is sure to swing Dow futures and Treasury yields shortly before the open.

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


Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live


Stock Market Rally

The stock market rally saw small gains on the Nasdaq and S&P 500 masking broad, strong gains elsewhere for a second straight session.

The S&P 500 index rose 0.7%. The Nasdaq composite was up 0.55%. Meanwhile, the Dow Jones Industrial Average climbed 0.9% in Tuesday’s stock market trading, helped by Caterpillar, Boeing and CRM stock. The small-cap Russell 2000 climbed 1%, hitting a four-month high.

The Invesco S&P 500 Equal Weight ETF (RSP) climbed 1.1% to its best levels since February.

The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) advanced 0.8% after Monday’s 1.8% jump, hitting a fresh 14-month high.

Advancers beat decliners by 3-to-1 on the NYSE and nearly 2-to-1 on the Nasdaq. New highs dominated new lows.

U.S. crude oil prices jumped 2.5% to $74.83 a barrel, the highest close since May 1.

The 10-year Treasury yield fell 3 basis points to 3.98%, backing off 2023 highs further. The U.S. dollar fell for a fourth straight session, hitting the lowest levels since mid-May.

ETFs

Among growth ETFs, the Innovator IBD 50 ETF (FFTY) lost a fraction, while the Innovator IBD Breakout Opportunities ETF (BOUT) climbed 0.7%. The iShares Expanded Tech-Software Sector ETF (IGV) gained 1.5%. CRM stock is a major IGV holding, with Datadog, Dynatrace, HubSpot and Procore also in the ETF. The VanEck Vectors Semiconductor ETF (SMH) edged up 0.1%.

Reflecting stocks with more speculative stories, the ARK Innovation ETF (ARKK) rose 1.3% and ARK Genomics (ARKG) leapt 3.7%. ROKU is a top-10 holding across Ark Invest’s funds.

SPDR S&P Metals & Mining ETF (XME) rose 0.6%. The Global X U.S. Infrastructure Development ETF (PAVE) climbed 1%, with URI stock a key holding. U.S. Global Jets (JETS) was up 0.6%. SPDR S&P Homebuilders (XHB) popped 1.3%. The Energy Select SPDR ETF (XLE) jumped 2.2% and the Health Care Select Sector SPDR Fund (XLV) edged higher.

The Industrial Select Sector SPDR Fund (XLI) climbed 1.2%. Boeing and CAT stock are major XLI holdings, with United Rentals also in the ETF.

The Financial Select SPDR ETF (XLF) rose 1.2%. The SPDR S&P Regional Banking ETF (KRE) was up 1.3%.


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Stocks In Buy Zones

CRM stock rose 3.9% to 221.17, breaking a downtrend line and clearing short-term levels, while still being in range from the 50-day line. Salesforce stock has a 225 flat-base buy point, according to MarketSmith analysis. Salesforce said it would hike its software prices by 9% in August, the Dow giant’s first increase in list prices in seven years.

DDOG jumped 3.5% to 104.98, clearing a 103.80 buy point after flashing an early entry on Monday. The buy point is for a cup-with-handle base going back 11 months. Investors could view the handle as its own flat base above a bottoming base that started in mid-February.

DT stock gained 4.2% to 54.97, clearing a 52.99 flat-base buy point that’s part of a base-on-base formation. Monday’s 3.2% pop offered an early entry.

HUBS stock climbed 1.9% to 540.21, clearing a 535.12 consolidation buy point after testing the 10-week line on July 16

PCOR stock leapt 5.7% to 68.99, clearing a 68.68 buy point, with an early entry available in the morning.

ROKU stock leapt 11% to 75.43, closing just below a 75.45 cup-with-handle buy point in massive volume. Investors could have seen an early entry on Monday or early Tuesday. At this point, ROKU stock is 23.5% above its 50-day line. Roku’s new Shopify partnership will let users buy from Shopify merchants directly via their TVs. SHOP stock popped 2%, continuing to bounce from the 50-day line but perhaps not quite actionable.

CAT stock rose 1.6% to 252.85, clearing a 250.39 cup-with-handle buy point.

URI stock stepped up 2.8% to 457.32, topping a 450.65 cup-with-handle entry on a weekly chart.

BA stock popped 2.55% to 218.76 in above-average volume, rebounding from near the 21-day and 10-week lines in above-average volume. A June 12 breakout fizzled, but Boeing is setting up again. Investors can use 223.91 as an official buy point.

EXPE stock climbed 2.3% to 116.96, topping a 114.37 cup-with-handle buy point.

BKNG stock rose 2% to 2,783.40, building on Monday’s 3.5% bounce from the 50-day line. Shares cleared short-term highs, offering an early entry. Shares briefly topped a 2,786.85 flat-base buy point intraday. Booking stock is seen as a winner from the upcoming Nasdaq 100 special rebalance.

Market Rally Analysis

The Nasdaq and megacaps moving sideways, or at least lagging, as market breadth improves and leadership expands seems almost ideal.

The Nasdaq is still 5.7% above its 50-day line. That’s not extended, but it wouldn’t take much to get there. On the flip side, a 21-day line test could be constructive,.

Software and industrial names were big winners Tuesday. Travel also continues to do well, along with home furnishings and a growing number oil services providers, drillers and machinery firms.

Chips had a tough session, especially semiconductor equipment makers.


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What To Do Now

After a few head fakes last week, a number of leaders —such as Dynatrace, Datadog and CRM stock — are making more convincing moves this week. That reflects broad market strength, with software a standout.

This week’s action shows why investors should listen to market signals and take advantage of buying opportunities in a healthy uptrend. But last week’s head fakes are why investors shouldn’t ramp up exposure too quickly on a single day, and be ready to step back if new buys aren’t working.

Wednesday’s inflation report could upend recent gains for recent winners like Roku, Caterpillar and HubSpot.

Your watchlists should be swelling in the past few weeks, with names from a variety of sectors.

Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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