The S&P 500 index hit a 14-month high as the stock market rally roared back this past week. The Dow Jones and Nasdaq composite are back near 2023 highs, as Apple (AAPL) closed Friday with a $3 trillion market cap for the first time.
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Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures. Tesla (TSLA) will be in focus, reporting second-quarter deliveries this weekend, along with EV and battery giant BYD (BYDDF). China EV startups Li Auto (LI) Nio (NIO) and XPeng (XPEV) reported June deliveries on Saturday.
Nvidia (NVDA), HubSpot (HUBS), Marriott International (MAR), General Electric (GE) and JPMorgan Chase (JPM) are all flashing buy signals.
The only concern is that the Nasdaq is already extended again, raising the risk of another market pullback in the near future.
Tesla stock, Nvidia and HubsSpot are on IBD Leaderboard. HubSpot is on the IBD 50. HubSpot and Tesla stock are on the IBD Big Cap 20.
The video embedded in this article discussed the big market moves and analyzed Nvidia, HubSpot and JPM stock.
Dow Jones Futures Today
Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
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 extended a brief pullback on Monday, but then rebounded strongly.
The Dow Jones Industrial Average gained 2% in last week’s stock market trading. The S&P 500 index climbed 2.35%. The Nasdaq composite advanced 2.2%. The small-cap Russell 2000 leapt 3.7%
In the first half of 2023, the S&P 500 has jumped 15.9%, its best six-month start since 2019. The Nasdaq surged 31.7%, its best since 1983.
The Dow is up a modest 3.8% and the Russell 2000 7.4%.
AAPL stock rose 3.9% last week and 49% so far this year, giving it a $3.05 trillion market cap. It’s the first time that Apple or any company has closed with a $3 trillion valuation.
The 10-year Treasury yield rose 8 basis points to 3.82%, hitting a three-month high Friday morning.
U.S. crude oil futures rose 2.1% to $70.64 a barrel last week, though it tumbled 6.65% for the quarter. Copper futures slumped 1.6% for the week, but snapped a six-day losing streak on Friday.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) bolted 5.3% last week to a seven-month high while the Innovator IBD Breakout Opportunities ETF (BOUT) leapt 5.25%. The iShares Expanded Tech-Software Sector ETF (IGV) bounced 2.7%, with HUBS stock an IGV holding. The VanEck Vectors Semiconductor ETF (SMH) rallied 3.2%. Nvidia stock is the No. 1 holding in SMH.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) ran up 4.75% last week and ARK Genomics ETF (ARKG) 4%. Tesla stock is the No. 1 holding across Ark Invest’s ETFs. Cathie Wood’s Ark also owns a small amount of BYD stock.
SPDR S&P Metals & Mining ETF (XME) climbed 4.4% last week, regaining its 200-day line for the first time in two months. The Global X U.S. Infrastructure Development ETF (PAVE) popped 4.6% to a fresh high. U.S. Global Jets ETF (JETS) soared 6% to a 52-week best. SPDR S&P Homebuilders ETF (XHB) stepped up 4.5% for its fifth straight weekly gain. The Energy Select SPDR ETF (XLE) bounced 4.9% and the Health Care Select Sector SPDR Fund (XLV) edged up 0.55%. The Industrial Select Sector SPDR Fund (XLI) revved up 3.9% to just below record highs. GE stock is a key XLI component.
The Financial Select SPDR ETF (XLF) rose 3%, closing above its 200-day line for the first time since early March. JPM stock is a major holding. The SPDR S&P Regional Banking ETF (KRE) gained 3.2% after tumbling 8.1% in the prior week.
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Stocks In Buy Zones
Nvidia stock edged up 0.2% to 423.02 last week, but rebounded 3.6% on Friday, moving from near the 21-day line and breaking a short downtrend. That offered a place to start a position or perhaps add a few shares to an existing position. During the week, Nvidia shrugged off reports that the Biden administration will expand its chip export curbs to China, adding more Nvidia products.
HUBS stock popped 3.9% to 532.09 last week, rebounding from the 21-day line and clearing the bulk of a four-weeks-tight pattern. Intraday Friday, HubSpot briefly topped the 535.12 buy point.
MAR stock leapt 7.1% to 18.69, staging a big upside week, retaking the 50-day line and clearing buy points just above 183 to hit a 52-week high. Marriott’s volume was below average throughout the week.
GE stock jumped 5.85% to 109.85, rebounding from the 10-week line and clearing a three-weeks-tight buy point of 108.90, according to a weekly MarketSmith chart.
JPM stock rallied 4.75% to 145.44 last week, with all of the gains coming on Thursday-Friday. That cleared a 143.37 flat-base buy point and set a 16-month high. JPMorgan and other big banks passed Fed stress tests late Wednesday, as expected. Banking giants, and especially JPMorgan, may have a long-term competitive edge over regional banks following the recent crisis.
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China EV Sales
Li Auto reported June sales of 32,575, topping 30,000 for the first time. That’s up 150% from a year earlier and 15.2% vs. May. Second-quarter sales were 86,533, up 201.65% vs. Q2 2022, when Covid shutdowns crippled China production and consumption. That easily exceeded a prior target of 76,000-81,000
Li Auto CEO Li Xiang said Friday that June sales topped 32,000.
For Q3, the hybrid SUV maker aims for monthly deliveries for the L8 and L9 of more than 10,000, and hoping to reach 15,000 monthly sales of the L7. For Q4, Li is looking for monthly deliveries of 40,000. It’ll also roll out its first all-electric model in Q4.
Nio delivered 10,707 vehicles in June, up 74% from May’s 6,155, off 17.4% vs. a year earlier. Sales are picking up with deliveries of the revamped ES6 SUV, as well as the ET5 Touring and overhauled ES8 began to be delivered. Nio also has made some price cuts in the past few weeks.
Nio delivered 23,520 vehicles in Q2, in the lower half of its target for 23,000 to 25,000.
Xpeng delivered 8,620 vehicles in June, up 14.8% vs. May. That’s the fifth straight month-to-month gain, though sales tumbled 44% vs. a year earlier. Q2 deliveries of 23,205 vehicles sank nearly one-third vs. a year earlier. But they were above XPeng’s guidance range for 21,000 to 22,000 vehicles.
The EV maker has high hopes for its G6 crossover, which will begin deliveries in July. It’s priced to sell, significantly cheaper than its direct rival, the Tesla Model Y.
Meanwhile, EV giant BYD is expected to report record monthly and quarterly sales, perhaps around 250,000 EVs in June.
Li Auto stock rose 5.7% to 35.10 last week, at its best levels in nearly 10 months. Nio stock surged almost 15% to 9.69, nearing its 200-day line. Xpeng stock vaulted 36% to 13.42, clearing a seven-month consolidation.
BYD stock fell 1.7% to 32 last week, but did bounce from its 50-day line on Friday. Shares are in range from a 31.07 buy point.
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Tesla Deliveries
Tesla deliveries for the second quarter are expected to rise to roughly 445,000, according to FactSet. That would be up from 422,875 in Q1 and 405,278 in Q4.
After huge price cuts worldwide in Q1, Tesla made some official price cuts and a few modest price hikes in Q2. But it offered substantial discounts on inventory, along with other incentives that could further pressure gross margins. But that won’t be clear until the second-quarter earnings report in late July.
Production likely exceeded deliveries once again, even with Tesla curbing output well below capacity. That suggests Tesla will need to keep cutting prices, especially if it wants to increase deliveries. An updated Model 3 and the Cybertruck are coming, but not quite yet.
Tesla stock rose 2% to 261.77 this past week, even after tumbling 6.1% on Monday. Shares have more than doubled in 2023 and are well extended from recent buy points.
Market Rally Analysis
The stock market rally staged an almost-textbook bullish rebound this past week. The Dow Jones, S&P 500 and Nasdaq composite all staged upside, outside weeks after testing or undercutting their 21-day moving averages. The S&P 500 hit a 14-month high while the Nasdaq reached a 14-month closing high. The Dow is just below its 2023 highs.
The Russell 2000 didn’t quite have an outside week, but roared toward recent highs.
The Invesco S&P 500 Equal Weight ETF (RSP) jumped 3.4%, hitting its best levels in nearly four months and outpacing the S&P 500.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) gained 2.8%, outpacing the Nasdaq 100’s 1.9% advance.
The Advance/decline lines, after weakening during the recent pullback, improved this past few days, especially on the NYSE.
A large number of leading stocks from a variety of groups — chips, software, travel, housing, industrial, retail/restaurants and even some financials — broke out or flashed various buy signals.
The only yellow flag is that the strong market rally is too strong.
When the Nasdaq gets 6%-7% above its 50-day line, the risks of a pullback mount. In the past couple of years, the Nasdaq has sometimes stretched to 10% or more, as it did at its mid-June top. Because the market pullback was so shallow and brief, the Nasdaq is already 7.6% above its 50-day line. The Nasdaq 100, which includes Apple stock, Nvidia, Tesla and other big-cap players, is 8.3% above the 50-day line.
The S&P 500, at 5.3% above the 50-day line, is close to being extended as well.
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What To Do Now
The short-lived stock market pullback created a slew of buying opportunities from a variety of sectors.
Investors could have added some exposure in the past few days. You can still do so, but do so gradually, and be ready to cut losses quickly. There is already an elevated risk of another market pullback.
In Mike Webster’s return to IBD Live on Friday, he discussed the importance of grading your stocks or potential buys via a variety of fundamental and technical factors. Review your portfolio to see which stocks you may want to cut loose and which you’d like to add to.
Run your screens and beef up your watchlists. Pay close attention to stocks near or in buy zones that merit an A grade.
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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