The Dow Jones Industrial Average touched the 40,000 mark before it and the other indexes flirted with break-even territory Thursday afternoon. Some blue chips led the stock market today as Walmart (WMT) jumped in heavy volume on solid earnings, while Chubb (CB) climbed as it became the latest major Warren Buffett holding.
The Dow crossed the 40,000 mark several times throughout the morning as it lifted marginally after rallying 0.9% on Wednesday. On Thursday, it hit 40,051 intraday, aiming for its 11th rise in 12 sessions, but drifted down to around 39,910 in recent action. The popular blue chip index has gained 6% so far in 2024.
The Dow’s move came one day after a pivotal rally spurred a boost in Investor’s Business Daily’s suggested exposure to stocks. Some market observers highlighted the positive impact that artificial intelligence — in addition to a growing economy and healthy corporate earnings — is having on the market.
“We are living through the fourth innovation boom since the 1960s tied to AI, automation and profitability,” Scott Helfstein, head of investment strategy at Global X, wrote in an email sent to IBD. “Those booms worked out well for companies and stocks in the past. Expansion to new highs usually last two years and delivers returns of 50%.”
AI and datacenter-related companies including SMCI (SMCI), Dell Technologies (DELL) and Microsoft (MSFT) backtracked in reasonable form after posting big gains on Wednesday. These companies got some airtime during Thursday’s IBD Live show.
Stock Market Today: Transport Stocks Trim Losses
The Dow Jones transportation average, which lagged the major indexes on Wednesday, fell as much as 0.5% early Thursday. But the index nearly wiped away those losses.
Meanwhile, the Nasdaq composite edged lower. The S&P 500 was flat. Both raced to all-time highs on Wednesday following an inflation report that showed U.S. consumer prices did not continue to accelerate. The consumer price index rose 0.3% month on month in April, meeting the Econoday consensus forecast. It gained 3.4% vs. a year earlier, slowing from a 3.5% increase in March.
Volume bulged vs. the same time Wednesday on the Nasdaq and fell on the New York Stock Exchange.
Breadth in the stock market Thursday was also roughly even. According to ThinkorSwim, 1,984 stocks rose on the Nasdaq while 2,099 companies fell. On the NYSE, decliners led advancers 1,570 vs. 1,338.
In other financial markets, crude oil futures rose 0.8% to $79.26 a barrel while natural gas surged 3.1%. Gasoline futures rallied 1.7% while gold edged 0.4% lower.
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Retailer Breaks Out In Stock Market Today
Walmart, the discount retailing titan, added fuel to the bullish story in stocks with solid growth in same-store sales. The company also reported solid year-over-year increases in other segments such as digital ads and global e-commerce revenue.
Walmart blasted more than 6% higher to top a mild double-bottom chart pattern that showed a 60.89 entry point. Earnings in the April-ended fiscal first quarter jumped 22% to 60 cents a share on a 6% pickup in total sales.
In a double bottom, the second sell-off must show a low that undercuts the first sell-off low.
In the case of Walmart’s chart, the stock made a first low of 58.88 and a second low of 58.55. That means the middle peak between the two lows, or 60.89, marks a buy point within the bullish chart pattern seen among many past big stock market winners.
Growth investors generally should prefer companies in the large-cap and megacap arena that can grow their profits at a faster rate than sales. This implies firm pricing power or the ability to reduce costs, boosting margins.
Insurance Sector Leader A New Buffett Holding
Insurance giant Chubb became the latest major Warren Buffett holding, according to filings with the Securities and Exchange Commission. Chubb shares jumped nearly 4%.
One of the day’s early big movers, Chubb rose more than 4% and hit a session high 270.16. Shares also surged above a 260.58 proper buy point in a nine-week flat base. The 5% buy zone from 260.58 goes up to 273.61.
The company has enjoyed stout profit gains amid an industry that has sharply raised premiums. Chubb’s earnings have grown 17%, 58%, 108% and 23% vs. year-ago levels in the past four quarters. MarketWatch reported that Buffett’s holding company, Berkshire Hathaway (BRKA), owned 25.9 million Chubb shares as of March 31.
However, Wall Street expects the firm, now based in Switzerland, to see a 4% decline in earnings this year to $21.67 a share. Following Thursday’s boost, CB now has a market value of $107 billion.
According to IBD Stock Checkup, Chubb holds a respectable 91 Composite Rating out of a best-possible 99. The IBD Composite Rating combines fundamental, technical and fund ownership metrics into a single easy-to-use score. However, it’s best used as a stock selection tool, not for timing buys and sells in an individual stock market leader.
Bloomberg Intelligence reported that Buffett may have been attracted to Chubb’s sizable reinsurance business.
Stock Market Today: Deere, Dillard’s Fall
Meanwhile, some individual companies including Deere (DE) and Dillard’s (DDS) fell due to disappointing quarterly reports.
Farm equipment supplier Deere sank more than 3.7% and dipped below 400 in heavy turnover. The stock tried to pass a 414.80 buy point within a long, winding base. Deere shares are trying to gain buying support at a key technical level on its chart, the 50-day moving average. Volume zoomed four times the stock’s typical level.
Deere beat reduced top- and bottom-line views but issued a soft outlook.
Dillard’s fell 1.3% to 449.81 in heavy volume. Earnings fell 6% to $11.09 a share on a 4% dip in sales to $1.55 billion. The department store chain, primarily located in the South, nevertheless is building a new base with a 476.48 correct buy point.
Building and road construction-related firms also fell en masse. For sure, such stocks have made strong runs in recent years. Eagle Materials (EXP) dropped 5% in above-average volume. The gypsum and cement supplier has achieved a 36% gain year to date and attempted a breakout from a narrow base with a 272.72 buy point.
Now, Eagle is testing critical support at the 50-day moving average. Irish asphalt and cement firm CRH (CRH) dropped 3%, losing much of its gains over the prior two sessions.
China Stock Market Laggard
Further, China electric-vehicle maker Li Auto (LI), a true laggard so far this year, lopped off more than 2% and fell for the fourth time in five sessions after announcing an 18% staff cut. Shares have dropped 32% year to date.
Li Auto, a former highflier after the pandemic stock market bottom in April 2020, dropped 2.6%. Shares remain pinned below their falling 50- and 200-day moving averages on the stock market today, a bearish sign.
Li hosts a weak Relative Strength Rating of 12 on a scale of 1 to 99. In general, favor those growth leaders in the stock market with an RS Rating of 90 or higher.
Earnings After The Close
After the close, the stock market will pay close attention to earnings from Applied Materials (AMAT), with a Relative Strength Rating of 92, and salvaged car auctioneer Copart (CPRT) and its 81 RS score.
Analysts see Applied Materials, the chip equipment giant, posting earnings of $1.84 a share in the April quarter, up 3%, on sales of $6.04 billion.
The highest individual earnings estimate is at $1.96 a share, which would mark a 10% year-over-year gain.
Please follow Chung on X/Twitter: @saitochung and @IBD_DChung
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