The Dow Jones Industrial Average rallied 180 points Wednesday, as inflation jumped 7% over the past year to its highest level since 1982. Jefferies Financial (JEF) slid on weak sales results ahead of the stock market open, while KB Home (KBH) plans to report after the close.
Among the Dow Jones leaders, Apple (AAPL) rose 0.4% Wednesday, bucking for a fourth straight advance. Microsoft (MSFT) moved up 1.2% in today’s stock market. Also among the Dow 30, financial leaders Goldman Sachs (GS) and JPMorgan Chase (JPM) are near new buy points.
Electric-vehicle leader Tesla (TSLA) traded up more than 1% Wednesday. EV truck rival Rivian (RIVN) gained 1.5%. Lucid Group (LCID) rose nearly 2%. And Chinese EV leaders Li Auto (LI) and Xpeng Motors (XPEV) were higher after Wednesday’s open.
Dow Jones Today: Key Inflation Report
After the stock market open Wednesday, the Dow Jones Industrial Average moved up 0.5%, while the S&P 500 gained 0.6%. The tech-heavy Nasdaq composite rose 0.8% in morning trade.
The 10-year Treasury yield traded down below 1.72% in the wake of Wednesday’s inflation data. On Tuesday, the 10-year Treasury yield dropped below 1.75%.
The Labor Department reported the consumer price index, which measures what consumers pay for goods and services. The CPI increased 7.0% in December from the same month a year ago, barely lower than estimates for a 7.1% rise, per Econoday estimates. That marked its hottest reading since June 1982. On a month-over-month basis, the CPI climbed 0.5% in December, slightly higher than the 0.4% expected climb.
Stock Market Rally Rebounds
The stock market posted a positive performance Tuesday, as the major stock indexes rallied sharply. The Nasdaq rebounded from support at its long-term 200-day line. The S&P 500 snapped a five-day losing streak and reclaimed support at its key 50-day moving average.
Tuesday’s The Big Picture commented: “In contrast, the Nasdaq has now fallen more than 10% off its peak. This makes for a healthy pullback, on the order of what IBD likes to call an intermediate-level correction. It’s not as deep as a bear market, but not as light as a mild pullback on the order of a 4% to 9% decline.”
Following Tuesday’s stock market action, it’s an important time to read IBD’s The Big Picture.
Stock Market Earnings: Jefferies, KB Home
Investment banker Jefferies reported earnings ahead of Wednesday’s open, sparking an 8% decline in morning trade. The company topped earnings estimates, but reported weaker-than-expected sales results. JEF stock is climbing the right side of a cup base below a 44.57 buy point.
Real estate developer KB Home will report late Wednesday. Wall Street expects the builder to earn $1.77 a share on sales of $1.7 billion. KBH stock closed Tuesday below its 50-day line and about 20% off its 52-week high. Homebuilders have been under selling pressure recently as mortgage rates track rising bond yields.
Dow Jones Stocks To Buy And Watch: Goldman Sachs, JPMorgan
Dow Jones stock Goldman Sachs rallied 1% Tuesday, ending just above the 50-day line. Shares are tracing a cup-with-handle base with a 412.76 buy point, according to IBD MarketSmith chart analysis. Shares were narrowly lower Wednesday.
JPMorgan shows a 173.06 buy point in a cup base after retaking the 50-day line in a 5.6% rally last week. Shares rose almost 1% Wednesday.
Stocks To Buy And Watch: Commercial Metals, Diamondback, SVB Financial, Zim
Oil producer Diamondback Energy moved slightly out of buy range past a 117.81 buy point, following Tuesday’s 2.5% gain. The 5% buy area topped out at 123.70. Bullishly, the stock’s RS line hit a new high on the breakout day, boosting the energy stock’s cred as a potential market leader. FANG stock boasts a perfect 99 IBD Composite Rating, per the IBD Stock Checkup. Shares rose 0.6% Wednesday.
SVB Financial is tracing a cup base with a 763.32 buy point. Shares could be adding a handle this week, but it’s a bit too early to be considered proper. If the handle finishes, the new buy point will be 746.80. Shares advanced 3.1% Tuesday, finding support at their 50-day moving average line. Shares were up 0.5% Wednesday.
Shipping leader and Tuesday’s IBD Stock Of The Day, Zim, broke out past a cup with handle’s 58.41 buy point, advancing nearly 5% in heavy volume. The 5% buy area went up to 61.33, so the stock is slightly extended. ZIM shares moved up 0.2% Wednesday morning.
EV Stocks: Li Auto, Xpeng, Lucid Motors, Rivian
Li Auto stock reclaimed its long-term 200-day moving average during Tuesday’s 8.2% advance. There is no new buy point at this time with the stock still below its 50-day line. Shares rose over 2% Wednesday.
Xpeng Motors rebounded 7.3% Tuesday and may be set for an attempt to retake the 50-day line. Shares were fashioning a cup with handle, but that formation is gone now. Shares gained 4% Wednesday.
Among U.S.-based EV stocks, Lucid Motors shares rose 2% Wednesday. LCID stock remains extended past a 28.49 buy point in a cup-with-handle base. Meanwhile, the stock is moving up the right side of a new base after regaining their 50-day line during Tuesday’s 9% surge.
EV-truck maker and recent initial public offering Rivian moved up 1.5% Wednesday, on pace to add to Tuesday’s 2.6% rally. RIVN shares closed Tuesday about 53% off their post-IPO highs. Continue to wait for an IPO base to form before considering a purchase. Recent sharp losses are a significant setback in the stock’s basing process and there is no new buy point in sight with the stock coming off all-time lows.
Tesla stock rose more than 1% Wednesday, set to extend a win streak to three sessions. Shares are trying to regain their 50-day moving average, which would be positive for the stock’s base-building progress. Last week, the EV leader gave up its critical 50-day moving average line and triggered the 7%-8% loss-cutting sell rule from a 1,119.10 trend line buy point.
Shares traded as high as 1,243.49 on Nov. 4, but the stock ended Tuesday about 14% off that 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple stock rallied 1.7% Tuesday, making it three straight up sessions. Shares are about 14% past a 153.27 buy point out of a cup-with-handle base, according to IBD MarketSmith chart analysis, after nearly hitting the 20%-25% profit-taking level in early January. Shares rose 0.4% Wednesday.
Software leader Microsoft rose 0.2% Tuesday, extending a win streak to three sessions. The top Dow Jones stock continues to etch a flat base with a 349.77 buy point, but the stock clearly has more work to do before a potential breakout. Shares added 1.2% Wednesday.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
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