The Dow Jones Industrial Average surged Thursday, with Goldman Sachs (GS) and Caterpillar (CAT) shining. Chip stock Arm (ARM) rocketed on its IPO debut. Famed fund manager Cathie Wood loaded up on beaten down tech stock Roblox (RBLX), but sold some Tesla (TSLA).
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A number of stocks cleared buy points amid the ebullient action. Cintas (CTAS) and RELX (RELX) staged breakouts, while Booking (BKNG) offers a rebound entry.
Strong Consumer Data Bolsters Stocks
The Producer Price Index increased 0.7% in August compared with the previous month, hotter than the 0.4% estimate. Year over year, the PPI rose 1.6%, above the 1.3% annual estimate. Investors seemed to take solace in the fact core producer prices, which excludes food and energy, rose 0.2% for August, below views and that the 2.2% annual increase was slightly below views for 2.3%.
There were also signs the U.S. consumer is managing to stay resilient. Retail sales increased 0.6% in August, according to Commerce Department data, well clear of expectations for a 0.1% rise.
Oanda senior market analyst Edward Moya said the “U.S. growth story is still alive” in a note to clients.
“U.S. stocks are higher after another round of impressive U.S. economic data suggests the consumer is still doing just fine,” he said. “Wall Street seems content with the risk of one more Fed rate hike as consumer resilience is expected to gradually weaken.”
Treasury yields rose. The 10-year yield rose 4 basis point to 4.29%, while the two-year yield rose 3 basis points to 5.01%. The yield curve remains inverted.
Nasdaq Pops As Small Caps Jump
The tech-heavy Nasdaq had a strong session, rising almost 0.8% and closing above its 50-day moving average. Moderna (MRNA) stood out with a pop of 3.9%.
The benchmark S&P 500 turned in a strong gain of 0.8% as well and pulled away from its 50-day line. Mosaic (MOS) was a top performer as it lifted 4.4%.
The S&P 500 sectors were all positive. Real estate and utilities fared best in the stock market today. Technology and health turned in the slimmest gains.
Small caps gave the bears a bloody nose, with the Russell 2000 popping 1.4%. Growth stocks were relative laggards though, with the Innovator IBD 50 ETF (FFTY) gaining just 0.2%.
Dow Jones Today: Goldman Sacks Stock Surges
The Dow Jones Industrial Average impressed as it surged 332 points, or 1%. It also managed to recapture the key 50-day moving average.
The index was boosted after Goldman stock jumped 2.9%. It has now clambered clear of both the 200-day and 50-day moving averages in short order, MarketSmith analysis shows.
Caterpillar also impressed with a gain of 2.4%. It is now closing in on a flat base entry of 293.88.
Visa (V) fared worst on the Dow Jones today, shedding 2.6%. It is now testing support at its 50-day line.
Arm Stock Rockets On IPO Debut
Arm stock managed to brush off the critics in fine style on its IPO debut Thursday.
The chip stock closed toward the upper end of the day’s range, finishing the session with a muscular 24.7% gain.
The Arm IPO priced 95.5 million shares at 51 apiece. This came in at the top end of its expected range of 45 to 51. That gave Arm an initial valuation of $54.5 billion.
The IPO raised nearly $5 billion for majority owner SoftBank (SFTBY), which still owns 90% of Arm stock.
There was a great deal of skepticism heading into the debut of Arm stock.
Research firm New Constructs said the valuation of ARM is “based more on SoftBank’s self-dealing in private markets to manipulate the valuation higher than the fundamentals of the company.”
U.K.-based Arm’s chip designs are used by the likes of Apple (AAPL), AMD (AMD) and Nvidia (NVDA).
Cathie Wood Snaps Up Roblox Stock After Dip, Sells Tesla
Buying on the dip can be a risky strategy for the inexperienced investor. But famed fund manager Cathie Wood has never been shy to swoop when she sees a potential bargain.
The ARK Invest CEO was at it again when she snapped up a big chunk of Roblox (RBLX) Wednesday. It closed off session highs on Thursday as it turn in a fractional gain.
Her firm bought more than 458,000 shares for her ARK Innovation ETF (ARKK). She also bought shares for the ARK Fintech Innovation ETF (ARKF) and the ARK Next Generation Internet ETF (ARKW).
From its Aug. 19 recent high of 46.25 to Aug. 24 low of 26.24, its decline was just over 43%. The company is unprofitable for now and is seen turning in losses in 2023 and 2024. It is also trading below its 50-day and 200-day moving averages, at least for now. Sales growth has ramped up to the double-digits in the past two quarters.
Wood also trimmed her holdings of Tesla (TSLA) in her flagship ARK Innovation ETF by just over 21,000 shares Wednesday.
Outside Dow Jones: These Stocks Offer Entries
Cintas is in a buy zone after clearing a flat base entry of 518.71, though on low volume. This is a second-stage base for the stock.
Overall performance here is excellent, with its IBD Composite Rating coming in a 97 out of 99.
Cintas is a leading provider of uniforms for hospitals, hotels and other industries.
RELX is also actionable after it cleared a cup base ideal buy point of 34.49. The relative strength line is spiking.
Earnings are a key strength for the periodicals printing firm, with its EPS Rating a strong 91 out of 99.
Booking is offering an entry as it rebounds away from its 10-week moving average. It is actionable as high as 3,370.40. It is also forming a flat base.
The travel stock has been on a good run in 2023 and earnings are seen growing robustly both this year and next by Wall Street analysts.
Booking’s bullish action has won it a spot on the prestigious IBD Leaderboard list of top stocks.
Please follow Michael Larkin on X, formerly known as Twitter, at @IBD_MLarkin for more analysis of growth stocks.
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