The Dow Jones Industrial Average rose Thursday, with Goldman Sachs (GS) e caterpillar (CAT) shining. Chip warehouse Arm (ARM) skyrocketed in its IPO debut. Famed fund manager Cathie Wood has loaded up on falling tech stocks Roblox (RBLX), but has sold some Tesla (TSLA).
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A number of stocks broke above buy points amid the exuberant action. Belt (CTAS) e RELAX (RELX) staged breakout, while Reservation (BKNG) offers a rebound entry.
Strong consumer data supports stocks
The producer price index rose 0.7% in August from the previous month, higher than the estimate of 0.4%. Year over year, PPI increased 1.6%, above the annual estimate of 1.3%. Investors appeared to take comfort from the fact that core producer prices, which exclude food and energy, rose 0.2% for August, below forecasts, and that the 2.2% annual increase was slightly lower than forecast by 2.3%.
There have also been signs that US consumers are managing to remain resilient. Retail sales rose 0.6% in August, Commerce Department data showed, well above expectations for a 0.1% increase.
Edward Moya, senior market analyst at Oanda, said in a note to clients that “the U.S. growth story is still alive.”
“US stocks are higher after another round of impressive US economic data suggests consumers are still doing well,” he said. “Wall Street seems happy with the risk of another Fed rate hike as consumer resilience is expected to gradually weaken.”
Treasury bond yields rose. The 10-year yield rose 4 basis points to 4.29%, while the two-year yield rose 3 basis points to 5.01%. The yield curve remains inverted.
The Nasdaq rises while small caps jump
The tech-heavy Nasdaq had a strong session, rising nearly 0.8% and closing above its 50-day moving average. Modern (MRNA) stood out with an increase of 3.9%.
The benchmark S&P 500 also posted a strong gain of 0.8% and moved away from its 50-day line. Mosaic (MOS) was the best performer with an increase of 4.4%.
The S&P 500 sectors were all positive. Real estate and utilities fared better on the stock market today. Technology and health saw the smallest gains.
Small caps gave the bears a run for their money, with the Russell 2000 up 1.4%. Growth stocks were relative laggards, however, with the Innovator IBD 50 ETF (FFTY) gaining just 0.2%.
Dow Jones today: Goldman dismisses stocks higher
The Dow Jones Industrial Average impressed with a rise of 332 points, or 1%. It also managed to reclaim the key 50-day moving average.
The index was strengthened after Goldman shares rose 2.9%. It has now managed to break out above both the 200-day and 50-day moving averages in short order, MarketSmith analysis shows.
Caterpillar also impressed with a 2.4% gain. It is now approaching a flat-base entry of 293.88.
Visa (V) fared worse today on the Dow Jones, losing 2.6%. It is now testing support at its 50-day line.
Weapon rockets debut at IPO
On Thursday, Arm stock managed to fend off critics in a big way in its stock market debut.
The stock closed near the upper edge of its daily range, closing the session with a strong gain of 24.7%.
Arm’s IPO priced 95.5 million shares at 51 each. This came in at the high end of its forecast range of 45 to 51. This gave Arm an initial valuation of $54.5 billion.
The IPO raised nearly $5 billion for the majority owner SoftBank (SFTBY), which still owns 90% of Arm shares.
There was a lot of skepticism surrounding Arm Stock’s debut.
Research firm New Constructs said ARM’s valuation is “based more on SoftBank’s self-dealing in private markets to manipulate the valuation higher than the company’s fundamentals.”
UK-based Arm’s chip designs are used by the likes of Apple (AAPL), AMD (AMD) e Nvidia (NVDA).
Cathie Wood Takes Roblox Stock After Drop, Sells Tesla
Buying on dips can be a risky strategy for the inexperienced investor. But celebrity fund manager Cathie Wood has never been shy about stepping in when she sees a potential deal.
The CEO of ARK Invest was at it again when he grabbed a big chunk of Roblox (RBLX) Wednesday. Thursday closed session highs to post a fractional gain.
His firm purchased more than 458,000 shares for its ARK Innovation ETF (ARKK). It also purchased shares for ARK Fintech Innovation ETF (ARKF) and ARK Next Generation Internet ETF (ARKW).
From the recent Aug. 19 high of 46.25 to the Aug. 24 low of 26.24, its decline was just over 43%. The company is unprofitable for now and is expected to incur losses in 2023 and 2024. Additionally, it is trading below its 50-day and 200-day moving averages, at least for now. Sales growth has climbed double-digits over the past two quarters.
Wood also cut his holdings Tesla (TSLA) in its flagship ARK Innovation ETF by just over 21,000 shares Wednesday.
Outside of the Dow Jones: These stocks offer entries
Cintas is in buy zone after breaking out of a flat base entry of 518.71, albeit on low volume. This is a second phase basis for the title.
Overall performance here is excellent, with its IBD Composite Score coming in at 97 out of 99.
Cintas is a leading supplier of uniforms for hospitals, hotels and other industries.
RELX can also be used after exceeding a cup base ideal buy point of 34.49. The relative strength line is rising.
Earnings are a key strength for the magazine printing company, with its EPS rating of 91 out of 99.
Booking offers entry as it moves away from its 10-week moving average. It can be used up to 3,370.40. It is also forming a flat base.
The travel sector has performed well in 2023 and profits are seen growing strongly both this year and next by Wall Street analysts.
Booking’s bullish action has earned it a place in the prestigious IBD ranking of the best stocks.
Follow Michael Larkin on X, formerly known as Twitter, at @IBD_MLarkin for a deeper analysis of growth stocks.
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