Tag Archives: Megacap

Business

Tesla, megacap growth stocks pull Nasdaq lower; Dow rises

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  • Tesla slumps on report of reduced output plan
  • China ADRs rise on reopening optimism
  • Indexes mixed: Dow up 0.40%, S&P down 0.11%, Nasdaq down 0.80%

Dec 27 (Reuters) – The tech-heavy Nasdaq came under pressure on Tuesday following declines in some megacap growth stocks and Tesla, while optimism around an economic recovery in China after the country further eased its COVID-19 curbs helped cap losses.

Tesla Inc (TSLA.O) tumbled 8.1% to hit a more than two-year low after Reuters reported that the electric vehicle maker plans to run a reduced production schedule at its Shanghai plant into January. The stock has lost more than two-thirds of its value this year.

Megacap growth stocks Apple Inc (AAPL.O), Alphabet Inc (GOOGL.O) and Amazon.com Inc (AMZN.O) slipped between 1% and 1.5% as U.S. Treasury yields rose.

The declines made consumer discretionary (.SPLRCD) and technology (.SPLRCT) the worst performers among major S&P 500 (.SPX) sector indexes.

However, sectors closely tied to the economy, such as industrials (.SPLRCI), materials (.SPLRCM) and energy (.SPNY), advanced, helping the Dow Jones (.DJI) to eke out gains.

“What you’re seeing is a battle between investors who are doing year-end tax selling and investors that believe that normal inflows in January will lead to a better market,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

Meckler also pointed to thin trading volumes playing its part in market volatility.

Growth stocks have been under pressure this year from a rise in U.S. Treasury yields after the Federal Reserve embarked on an aggressive interest rate hike campaign to tame a surge in inflation, with investors turning to high dividend-yielding value stocks such as energy.

The S&P 500 growth index (.IGX) has tumbled 30% this year, compared with a 7% drop for the value index (.IVX).

U.S.-listed shares of Chinese firms such as JD.Com Inc , Alibaba Group Holding Ltd and Pinduoduo Inc (PDD.O) climbed between 2% and 3.8% after China said it would stop requiring inbound travelers to go into quarantine starting Jan. 8.

Investors are hoping for a so-called “Santa rally” at the end of what has been a largely disappointing month for U.S. equities.

The S&P 500 (.SPX) and the Nasdaq (.IXIC) have lost around 5.7% and 9% so far in December and are on track for their biggest yearly loss since 2008 as the monetary policy tightening sparked worries of the economy tipping into a recession.

Economic data so far has offered little hope. Inflation has cooled further, but not enough to discourage the U.S. central bank from driving interest rates to higher levels next year.

Money markets are pricing in 59% odds of a 25-basis-point interest rate hike at the Fed’s February meeting and expect rates peaking at 4.98% in May. .

At 11:52 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 133.48 points, or 0.40%, at 33,337.41, the S&P 500 (.SPX) was down 4.22 points, or 0.11%, at 3,840.60, and the Nasdaq Composite (.IXIC) was down 83.89 points, or 0.80%, at 10,413.97.

Southwest Airlines Co (LUV.N) shed 4.9% after cancelling thousands of flights, piling more pressure on the S&P 500.

Declining issues outnumbered advancers for a 1.01-to-1 ratio on the NYSE and 1.43-to-1 ratio on the Nasdaq.

The S&P index recorded five new 52-week highs and three new lows, while the Nasdaq recorded 61 new highs and 311 new lows.

Reporting by Amruta Khandekar and Ankika Biswas in Bengaluru;
Editing by Vinay Dwivedi and Sriraj Kalluvila

Our Standards: The Thomson Reuters Trust Principles.

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Business

A low-key headwind for the mega-cap tech stocks: Morning Brief

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This article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Tuesday, Nov. 15, 2022

Today’s newsletter is by Sam Ro, the author of TKer.co. Follow him on Twitter at @SamRo. Read this and more market news on the go with Yahoo Finance App.

Every big company would love to invent the next hot good or service that becomes a key driver of sales and earnings growth.

Unfortunately, this can be a costly, money-losing endeavor if your R&D department stinks.

But companies with access to financing have another option: acquire growth.

Acquiring a company for its intellectual property will almost always cost more than if you had invented it on your own. But developing products comes with lots of costly failures in the same way that many startups fail. And so it may effectively be cheaper to acquire a company that has established some success.

These deals can be particularly lucrative if the acquirer has better resources to scale up an acquisition target while cutting out redundant costs.

Indeed, this helps to partly explain how the world’s largest tech companies came to be so big. Google-parent Alphabet didn’t always own YouTube, a business that generated $7 billion in revenue in Q3.

In a research note published on Friday, Goldman Sachs’ David Kostin noted that the acquisitive tendencies of Apple, Amazon, Microsoft, and Alphabet have “slowed sharply.”

These companies continue to acquire a lot of businesses — Microsoft said this year it plans to buy video game giant Activision Blizzard for an eye-popping $68 billion. But the volume of acquisitions has trended lower in recent years.

The mega-cap tech companies made half as many acquisitions so far in 2022 as they did in 2014.

“Tighter antitrust scrutiny appears to have slowed acquisition activity among the group,” Kostin wrote. “Thus far in 2022, the four firms have announced just 22 acquisitions, less than half the number five years ago.”

The higher interest rate environment can’t be helping either as financing deals has become more costly.

Kostin notes that it’s “difficult to estimate the role acquisitions in prior years played in driving the sales growth of the major tech firms.”

But the slow-down in acquisitions probably isn’t helping growth.

“The one characteristic most associated with large cap tech stocks — superior sales growth — has vanished, at least for this year,” Kostin wrote. “Mega-cap tech firms generated remarkably high average annual sales growth of 18% during the past decade… Aggregate sales growth for mega-cap tech is forecast to rise by 8% this year…”

Of course, not all acquisitions work out. Many prove to be less profitable than expected, which often leads to big write-downs. And so, not being able to acquire a big company isn’t necessarily the worst thing in the world.

In the end, the effect of tighter antitrust scrutiny and higher interest rates might have only a small impact on the growth prospects for these tech giants. Still, every headwind — even a low-key one like this — makes it more difficult for these companies to meet the high growth expectations of investors.

What to Watch Today

Economy

  • 8:30 a.m. ET: Empire Manufacturing, November (-6.0 expected, -9.1 during prior month)

  • 8:30 a.m. ET: PPI Final Demand, month-over-month, October (0.4% expected, 0.4% during prior month)

  • 8:30 a.m. ET: PPI Excluding Food and Energy, month-over-month, October (0.3% expected, 0.3% during prior month)

  • 8:30 a.m. ET: PPI Excluding Food, Energy, and Trade, month-over-month, October (0.3% expected, 0.4% during prior month)

  • 8:30 a.m. ET: PPI Final Demand, year-over-year, October (8.4% expected, 8.5% during prior month)

  • 8:30 a.m. ET: PPI Excluding Food and Energy, year-over-year, October (7.2% expected, 7.2% during prior month)

  • 8:30 a.m. ET: PPI Excluding Food, Energy, and Trade, year-over-year, October (5.6% expected, 5.6% during prior month)

  • 9:00 a.m. ET:  Bloomberg Nov. United States Economic Survey

Earnings

  • Home Depot (HD), Walmart (WMT), Advance Auto Parts (AAP), Energizer (ENR), Krispy Kreme (DNUT), Tencent Music (TME)

—

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Business

This tech stock could be a ‘new home’ for mega-cap investors, MoffettNathanson says

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Business

Dow drops nearly 600 points, Nasdaq slumps ahead of megacap tech earnings

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U.S. stocks were trading sharply lower Tuesday afternoon, failing to build on the previous session’s bounce, as investors sift through a raft of company results and await earnings reports due after the bell from tech giants including Microsoft Corp. and Google parent Alphabet Inc.

How are stock indexes performing?
  • The Dow Jones Industrial Average
    DJIA,
    -2.14%
    dropped 589 points, or 1.7%, to 33, 460.
  • The S&P 500
    SPX,
    -2.47%
    fell 83 points, or about 2%, to 4,212.
  • The Nasdaq Composite
    COMP,
    -3.51%
    lost 375 points, or 2.9%, to trade at about 12,630.

Monday saw the biggest intraday reversal since February for the Dow, which rose 238 points, or 0.7%, erasing a loss of nearly 500 points. The S&P 500 rose 0.6%, and the Nasdaq Composite gained 1.3%.

Also read: U.S. stocks ended a Manic Monday in the green — but intraday bounces like this aren’t bullish

What’s driving markets?

Stocks were sinking Tuesday afternoon, with all three major benchmarks down after Monday’s rally.

“Investors are not necessarily secure” in the strength of the market, with “fragility” on display since the beginning of the year, said Aoifinn Devitt, chief investment officer at Moneta, in a phone interview Tuesday. “There is this fear of slowing growth.” 

The CBOE Volatility Index
VIX,
+14.62%
jumped about 15% to around 31 Tuesday afternoon, according to FactSet data. That compares with a 200-day moving average of around 21.

Consumer discretionary
SP500.25,
-4.08%,
information technology
SP500.45,
-2.79%
and communication services
SP500.50,
-2.00%
were the hardest hit sectors of the S&P 500 in early afternoon trading Tuesday, according to FactSet data. Tech and communications services had posted the strongest performance for the S&P 500 in Monday’s stock market rally.

“Now we have this giveback today,” said Devitt. “Markets are trying to figure out a level.”

The S&P 500 is trading not far off its closing low this year of 4,170.70 on March 8, according to Dow Jones Market Data. The Nasdaq was trading near its 2022 low of 12,581.22, hit March 14.

U.S. stocks were falling as investors wade further into the busiest week of the U.S. company-earnings reporting season, digesting results from a number of corporate heavyweights released before the opening bell. They’re also looking ahead to results from megacap tech companies Microsoft Corp.
MSFT,
-3.23%
and Google parent Alphabet Inc.
GOOG,
-2.58%
after the closing bell.

Tech giants are “big movers in the market,” said Paul Nolte, a portfolio manager at Kingsview Investment Management, by phone Tuesday. Both the S&P 500 and Nasdaq are “dramatically impacted by tech.” 

Formerly high-flying Netflix
NFLX,
-4.49%
shares have dropped more than 40% since announcing last week that it had lost 200,000 subscribers in the first quarter.

While around 80% of companies so far reporting earnings for the quarter have beaten profit expectations, including General Electric Co., United Parcel Service Inc. and Pepsico Inc., disappointing earnings forecasts are weighing on shares.

Read: First major Wall Street bank to call for a recession now sees clear outside risk it could be `more severe’

In U.S. economic data, orders at U.S. factories for durable goods rose 0.8% in March and business investment rebounded after the first decline in a year, signaling the economy is still growing at a steady pace. The rise in durable-goods orders matched the consensus expectation produced by a survey of economists by The Wall Street Journal.

 A survey of consumer confidence dipped in April to 107.3 from 107.6, but Americans signaled they are optimistic enough about the economy to keep buying big-ticket items such as news cars and appliances.

The S&P CoreLogic Case-Shiller 20-city house price index posted a 20.2% year-over-year gain in February, up markedly from 18.9% the previous month, but U.S. new-home sales decreased 8.6% to an annual rate of 763,000 in March, the government said Tuesday. 

The Federal Reserve’s policy meeting next week is meanwhile weighing on investors, who are anticipating the central bank may announce a large rate hike, potentially of 50 basis points, in an effort to tame hot inflation, according to Nolte.

“The Fed will raise rates until something breaks, and that will be the economy,” he said. “Concerns may be rising for the potential for a recession.”

Which companies are in focus?
  • Twitter Inc.
    TWTR,
    -3.28%
    shares fell about 2.7% Tuesday to around $50 after its board agreed Monday to accept Tesla chief Elon Musk’s $54.20 a share bid for the social-media platform.
  • 3M Co.
    MMM,
    -3.00%
    shares dropped 2.8% after the maker of post-it notes and industrial equipment posted better-than-expected first-quarter earnings.
  • Shares of PepsiCo Inc.
    PEP,
    -0.06%
    rose 0.3% after delivering earnings and revenue that exceeded Wall Street forecasts.
  • United Parcel Service Inc.
    UPS,
    -3.02%
    shares fell 2.6% after the package-delivery giant reported first-quarter profit and revenue that beat expectations.
  • General Electric Co.
    GE,
    -10.91%
    shares plunged 10.6% after the industrial conglomerate reported first-quarter adjusted profit and revenue that beat expectations, but missed on free cash flow and provided a somewhat downbeat outlook.
  • Shares of JetBlue Airways Corp.
    JBLU,
    -10.60%
    plummeted 10.1% after the air carrier reported a narrower-than-expected loss and revenue that more than doubled to match forecasts, but said it planned to reduce capacity growth further to help restore operational reliability. United Airlines Holdings Inc.
    UAL,
    -4.22%
    said Tuesday it is launching the biggest transatlantic expansion in its history with 30 new or resumed flights coming from mid-April through early June. United Airline shares fell 3.5%.
How are other assets are faring?
  • The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    2.774%
    fell about 5 basis points to around 2.77%. Yields and debt prices move opposite each other.
  • The ICE U.S. Dollar Index
    DXY,
    +0.56%,
    a measure of the currency against a basket of six major rivals, rose 0.5%.
  • Bitcoin
    BTCUSD,
    -4.79%
    fell 4.6% to trade around $38,314.
  • Oil futures
    CL.1,
    +3.01%
    climbed, with West Texas Intermediate crude for June
    CLM22,
    +3.01%
    delivery rising 2.8% to trade around $101.37 a barrel.
  • In gold futures
    GC00,
    +0.11%,
    gold for June delivery
    GCM22,
    +0.11%
    rose 0.1% to trade at $1,898.10 an ounce.
  • In European equities, the Stoxx Europe 600
    SXXP,
    -0.90%
    closed 0.9% lower, while London’s FTSE 100
    UKX,
    +0.08%
    gained 0.1%.
  • In Asia, the Shanghai Composite
    SHCOMP,
    -1.44%
    fell 1.4%, while the Hang Seng Index
    HSI,
    +0.33%
    rose 0.3% in Hong Kong and Japan’s Nikkei 225
    NIK,
    +0.41%
    gained 0.4%.

—Steve Goldstein contributed to this report.

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Business

Tech, megacap growth shares boost Wall St; Twitter surges

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Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., April 4, 2022. REUTERS/Brendan McDermid

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  • Twitter soars after Elon Musk reveals 9.2% stake
  • Starbucks falls amid plan to halt stock buybacks
  • Defensive sectors weak, utilities biggest decliner
  • Indexes up: Dow 0.3%, S&P 0.81%, Nasdaq 1.9%

April 4 (Reuters) – Wall Street’s main indexes rose on Monday, boosted by megacap tech and growth stocks and a surge in Twitter after Elon Musk revealed his stake in the company, amid cautionary signals in the bond market and talk of more sanctions against Russia over Ukraine.

Gains were relatively concentrated as the financial sector (.SPSY) fell, as did defensive groups such as utilities (.SPLRCU) and healthcare (.SPXHC).

Shares of Twitter surged 27.1% after Tesla Inc (TSLA.O) Chief Executive Musk revealed a 9.2% stake in the micro-blogging site, making him its largest shareholder. Shares of other social media companies also rose. read more

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Tesla shares rose 5.6% after the company on Saturday reported record electric vehicle deliveries for the first quarter. read more

“A lot of the news we are seeing today is generally positive for technology,” said Mona Mahajan, senior investment strategist at Edward Jones.

The Dow Jones Industrial Average (.DJI) rose 103.61 points, or 0.3%, to 34,921.88, the S&P 500 (.SPX) gained 36.78 points, or 0.81%, at 4,582.64 and the Nasdaq Composite (.IXIC) added 271.05 points, or 1.9%, at 14,532.55.

Along with Tesla, gains in Apple Inc (AAPL.O), Amazon.com Inc (AMZN.O) and Microsoft Corp (MSFT.O) gave boosts to the S&P 500.

However, seven of the 11 S&P 500 sectors were weaker, with utilities and healthcare both falling about 0.8%.

The S&P 500 growth index (.IGX) gained 1.7% while the S&P 500 value index (.IVX) dipped 0.1%.

In the bond market, the benchmark U.S. 10-year Treasury yield ticked up on Monday and the 2-year/10-year yield curve remained inverted. The curve inversion is seen as a harbinger of a recession in the next two years or so.

“All this talk about an inverted yield curve and what that may be predicting in terms of possible economic slowdown, that puts a premium on growth stocks again,” said Chuck Carlson, CEO of Horizon Investment Services in Hammond, Indiana.

Stocks have rebounded in recent weeks after a rocky start to the year amid concerns about the Federal Reserve tightening monetary policy to fight inflation and the war in Ukraine. The S&P 500 is down about 4% so far in 2022, after being down as much as 12.5%.

Investors remained concerned about the Ukraine crisis, which has led to a spike in commodity prices that has worsened the outlook for already high inflation.

Global outrage spread on Monday at civilian killings in northern Ukraine, where a mass grave and tied bodies shot at close range were found in a town taken back from Russian troops. The deaths are likely to galvanize the United States and Europe into additional sanctions against Moscow. read more

In company news, Starbucks Corp (SBUX.O) shares fell 3.7% after former CEO Howard Schultz announced the suspension of the company’s stock repurchasing program. read more

U.S.-listed shares of Chinese companies such as Alibaba jumped after China proposed revising confidentiality rules involving offshore listings. read more

Advancing issues outnumbered decliners on the NYSE by a 1.32-to-1 ratio; on Nasdaq, a 1.74-to-1 ratio favored advancers.

The S&P 500 posted 12 new 52-week highs and three new lows; the Nasdaq Composite recorded 51 new highs and 59 new lows.

About 11 billion shares changed hands in U.S. exchanges, compared with the 13.5 billion daily average over the last 20 sessions.

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Reporting by Lewis Krauskopf in New York, Bansari Mayur Kamdar and Praveen Paramasivam in Bengaluru; Editing by Shounak Dasgupta and Richard Chang

Our Standards: The Thomson Reuters Trust Principles.

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Business

Tesla adds to wave of megacap stock splits

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A driver recharges the battery of his Tesla car at a Tesla Super Charging station in a petrol station on the highway in Sailly-Flibeaucourt, France, January 12, 2019. REUTERS/Pascal Rossignol/File Photo/File Photo

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March 28 (Reuters) – Tesla’s (TSLA.O) announcement on Monday that it will seek shareholder approval to increase its share count in order to enable a stock split adds to a recent wave of megacap companies splitting their shares in a bid to attract more investors.

Tesla said in a filing it would hold a vote at its upcoming annual shareholder meeting to increase the number of authorized shares in order to enable a stock split. read more

A stock split by Tesla, which would have be approved by its board of directors, would be the electric car maker’s second since 2020, and it would follow stock split announcements by other major U.S. companies in recent years.

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In the past two years, Apple (AAPL.O), Nvidia (NVDA.O) and Tesla (TSLA.O) have split their shares, while Amazon (AMZN.O) and Google-parent Alphabet (GOOGL.O) have recently announced upcoming share splits.

Megacap stock splits

Companies split their shares to make their stock prices appear less expensive and appeal to more investors. However, splitting a stock does not affect its underlying fundamentals.

Still, BofA Global Research said in recent research note that stock splits “historically are bullish” for companies that enact them, with their shares marking an average returns of 25% one year later versus 9% for the market overall.

Tesla’s stock surged 8% on Monday, adding over $100 billion to its stock market value.

Reuters Graphics

Amazon has gained about 20% since March 9, when the ecommerce heavyweight announced a stock split that will take effect on June 6. That compares to a 7% gain in the Nasdaq (.IXIC) during the same period. During that time, Wall Street has also seen a broad rebound in megacap growth stocks following losses earlier this year, as well as volatility related to rising interest rates and Russia’s invasion of Ukraine.

Tesla was the most traded stock among Fidelity’s online brokerage customers on Monday, with buy and sell orders almost evenly split, suggesting retail investors are cautious about the company.

Reuters Graphics

Since joining the S&P 500 in December 2020, Tesla has been one of its most heavily weighted stocks, currently accounting for over 2% of the index. It has gained about 300% since announcing its first stock split in August 2020.

Other S&P 500 companies with nominally high share prices, which analysts say could hint at a future stock split announcement, include Chipotle Mexican Grill (CMG.N), up 0.1% on Monday at $1,558, as well as Booking Holdings (BKNG.O), trading near flat at about $2,247.

Reuters Graphics
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Reporting by Noel Randewich; Editing by Cynthia Osterman

Our Standards: The Thomson Reuters Trust Principles.

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Business

Dow Jones Futures Rise: Beware The Megacap Rally; AMAT Stock Leads 5 Key Earnings

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Dow Jones futures rose modestly Thursday night, along with S&P 500 futures and Nasdaq futures, with a House vote on a huge reconciliation bill as well as Applied Materials (AMAT) and Palo Alto Networks (PANW) earnings in focus.




X



The stock market rally was mixed Thursday, but it was a strong day for tech giants. Nvidia (NVDA) surged on earnings, also lifting up rival Advanced Micro Devices (AMD) and providing a tailwind for chip names. Amazon.com (AMZN) and Google parent Alphabet (GOOGL) flashed buy signals, joining Apple stock, which extended Wednesday’s breakout amid fresh Apple Car buzz.

With Apple, Amazon, Nvidia and other megacaps leading the charge, the Nasdaq 100 hit a record high. It’s looking extended from the 50-day line once again, raising the risk of another pullback. Those tech titans also are masking some weakness beneath the surface.

Meanwhile, several retailers boomed on earnings. Macy’s (M) shot up 21% to a three-year high. Kohl’s (KSS) jumped nearly 11%, breaking out of a double-bottom base handle entry. Bath & Body Works (BBWI) popped 5%, perhaps offering an add-on entry. Former sister company Victoria’s Secret (VSCO) leapt 14%, breaking a trend line and gapping above its 50-day line.

EV Stocks Losing Charge

Rivian (RIVN) and Lucid (LCID) sold off for a second straight session, down 15.5% and 10.5%, respectively. At 123.38, Rivian stock is still up 58% from its $78 IPO price, but it’s 31% off Tuesday’s intraday high. Lucid stock is 18.5% off Wednesday’s intraday high.

Tesla stock edged up 0.7% to 1,096.38. A report that Apple (AAPL) is accelerating car efforts, aiming for a 2025 launch of a fully-autonomous electric car helped push Tesla into the red briefly intraday. TSLA stock is up 6.1% for the week.

Other EV stocks, from startups such as Fisker (FSR) to China plays like Xpeng (XPEV), retreated significantly.

Key Earnings

Applied Materials, Palo Alto Networks, Workday (WDAY), Williams-Sonoma (WSM) and Intuit (INTU) were key earnings late Thursday.

AMAT stock fell 5% overnight, back toward its buy point, after Applied Materials missed on EPS and sales. The chip-equipment giant blamed supply-chain issues.

WDAY stock and Williams-Sonoma fell hard despite beating views, signaling moves back toward or below recent buy points.

PANW stock, initially down slightly, rose modestly overnight following positive earnings and guidance. Shares are signaling a new high after finding support near their 50-day line. INTU stock jumped on strong Intuit earnings.

IBD Watchlist Stocks

Tesla, Google, Nvidia and AMD are on IBD Leaderboard. Apple stock is on SwingTrader. Google stock is on IBD Long-Term Leaders. Tesla stock, AMD, Nvidia and Williams-Sonoma are on the IBD 50.

The video embedded in this article analyzed the market action as well as Amazon stock, Kohl’s and ServiceNow (NOW).

Dow Jones Futures Today

Dow Jones futures rose 0.3% vs. fair value. S&P 500 futures advanced 0.4% and Nasdaq 100 futures climbed 0.5%.

The House is moving toward passing a reconciliation bill Thursday night with $1.64 trillion in spending and $1.27 trillion in tax revenue, boosting federal deficits by $367 billion over 10 years, according to CBO estimates. The bill includes EV tax credits of $7,500, or $12,000 for union-made EVs. However, the Senate is likely to make significant changes to the reconciliation package.

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 had a mixed session, with megacap techs powering higher.

The Dow Jones Industrial Average fell 0.2% in Thursday’s stock market trading. The S&P 500 index climbed 0.3%. The Nasdaq composite advanced 0.45%, with the Nasdaq 100 up 1%, fueled by Apple stock, Amazon and Nvidia. The small-cap Russell 2000 dipped 0.4%.

Nvidia stock popped 8.25% to 316.75 even though it closed off intraday highs. With a market cap approaching $800 billion, NVDA stock is definitely a Nasdaq driver.

Apple stock rose 2.85% to 157.87, hitting a record high and still in range from a 153.26 cup-with-handle buy point, according to MarketSmith analysis. Volume was strong after Wednesday’s above-average trading. The relative strength line, while not at consolidation or record highs, did hit a short-term peak. The RS line, the blue line in the charts provided, tracks a stock’s performance vs. the S&P 500 index.

Amazon stock popped 4.1% to 3,696.06, moving above a 3,605.55 handle buy point in heavy volume. The RS line for AMZN stock has been moving up in the past couple of weeks, but has been trending lower since July 2020. Amazon stock has been rangebound over that time, with a series of failed breakouts.

Google stock climbed 1.2% to 2,996.77, hitting a new high intraday. Shares are within range of a 2,925.17 flat-base buy point, consolidating around that entry for the past few weeks. In fact, GOOGL stock has formed a three-weeks-tight pattern, with a 3,012.40 entry. That could give investors a bit more confidence buying Google stock higher in the flat base’s buy zone.

ETFs

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) climbed 0.8%, while the Innovator IBD Breakout Opportunities ETF (BOUT) edged up 0.2%. The iShares Expanded Tech-Software Sector ETF (IGV) sank 0.9%. The VanEck Vectors Semiconductor ETF (SMH) jumped 2.5%, with Nvidia stock and AMD major components, along with AMAT.

SPDR S&P Metals & Mining ETF (XME) was just above break-even and Global X U.S. Infrastructure Development ETF (PAVE) edged up 0.2%. U.S. Global Jets ETF (JETS) sank 1.6%. SPDR S&P Homebuilders ETF (XHB) advanced 0.3%. WSM stock is a big XHB holding.

The Energy Select SPDR ETF (XLE) dipped 0.6% but came off lows as crude oil futures reversed higher. The Financial Select SPDR ETF (XLF) sank 0.5%.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) slid 2.5% and ARK Genomics ETF (ARKG) 3.4%, with ARKG at a 52-week low. Tesla stock remains ARK Invest’s top holding across its ETFs.

Five Best Chinese Stocks To Watch Now

Market Rally Analysis

The stock market rally is getting top heavy again. The big-cap Nasdaq 100, led by Apple, Google, Amazon, Nvidia and Tesla, hit a new high, up 1.8% this week. The Nasdaq composite and S&P 500, with more-modest gains, are just below all-time high levels. The Dow is down slightly this week, while the Russell 2000 is off 1.9%, both trading near 21-day lines

The Nasdaq is now 5.5% above its 50-day line, not quite at the 6% level that raises concerns of a pullback. But the Nasdaq 100 is 6.7% over the 50-day.

If Apple, Google and Amazon march higher, joining Microsoft (MSFT), it’s going to be hard to keep the Nasdaq and especially Nasdaq 100 from getting significantly extended. That’s true even if Nvidia and Tesla take a breather.

If that’s the case, then the market rally may not have much room to run before hitting resistance.

Meanwhile, a lot of leaders are extended. Some are continuing to run, like Nvidia, while others are pulling back, such as Lucid stock. The EV sector, which was overheating amid the Rivian IPO, seems to be powering back down. TSLA stock is holding up better than most four-wheeled rivals, though that’s after last week’s sell-off.

Some stocks are gapping up on earnings, but gap-ups have been tricky.

Aside from megacap techs and retail names, shipping stocks still look intriguing. Housing-related stocks are doing well.

But Apple et al. are masking weakness. Losers led winners by two-to-one on the Nasdaq on Thursday. There were 264 Nasdaq stocks hitting 52-week lows vs. 116 new Nasdaq highs.

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What To Do Now

It may sound like a broken record (what’s a record, Webby?), but investors can do a lot worse than letting their positions work. Yes, the market rally is looking a little extended, so it’s not an ideal time to be adding much exposure. But stocks are generally doing well, so investors needn’t slash exposure.

Consider taking partial profits in stocks when they are greatly extended from their 10-day or 50-day moving averages. That’s especially true with recent IPOs. The odds of a major pullback, even erasing all your gains — see Dutch Bros (BROS) — are just too high.

Investors should work on their watchlists, keeping an eye on stocks that are building handles and short consolidations. A few decent bases are out there, but the market rally may need a few weeks of sideways action or pullbacks for more good setups.

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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