Soaring equity markets highlight bullish week for indices; Dow gains 700 points

Major equity indices closed sharply higher on Friday and ended the week with gains of around 2%. May’s jobs report provided a big surprise that supported stocks.




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May non-farm payrolls rose by 339,000, better than expected, compared to the Econoday consensus of 190,000. Private sector payrolls increased by 283,000 against the 165,000 expected, while the private sector payroll manufacturing fell 2,000 against an expected increase of 8,000.

The unemployment rate climbed to 3.7%, above the forecast of 3.5%.

The US Senate passed the bill to raise the debt ceiling Thursday night, and is now awaiting President Biden’s signature.

The 10-year US Treasury yield added 8 basis points to 3.69%. The CME FedWatch tool shows about a 75% chance of no rate hike at the Federal Reserve’s June meeting, and the rest of Fed watchers expect a rate hike by a quarter point.

Market rallies in afternoon trading

The Nasdaq gained 1.1%. The Dow Jones Industrial Average showed the most strength, rising 2.1% and reclaiming its 50-day moving average in a bullish fashion. The S&P 500 rebounded 1.5%.

The iShares Russell 2000 ETF (IWM) outperformed the major indices, rising 3.6%. The Dow and Russell 2000 posted their best one-day gains since November, according to Dow Jones Market Data. The Dow posted a gain of 701 points for the day.

The Dow Jones and Nasdaq each posted weekly gains of 2%, and the S&P 500 was right behind them at 1.8%.

The First Trust Nasdaq 100 Equal Weighted ETF (QQEW) rose 1.1%, indicating broader participation in the rally.

The Nasdaq 100-tracking Invesco QQQ Trust ETF (QQQ) rose 0.8%. And the Innovator IBD 50 (FFTY) ETF climbed 1.9%.

NYSE and Nasdaq volume was down slightly from the same time Thursday, in preliminary numbers.

Crude oil rose 2.6% to $71.92 a barrel. Gold futures fell 1.5% and remained below the psychological level of $2,000 an ounce. Bitcoin price, meanwhile, edged up 1.7% to $27,375.

Stock market earnings drivers: MongoDB earnings skyrocket 180%

IBD Stock 50 Broadcom (AVGO) rose 2.8% after reporting stronger-than-expected second-quarter earnings and sales. He gave third-quarter revenue forecasts that beat analysts’ forecasts. The stock is in the 20% profit zone of a flat base with a buy point of 648.60.

Lululemon Athletica (LULU) rose 11.3% in strong volume, after reporting higher-than-expected first-quarter EPS and adjusted sales. Comparable store sales increased 13% over last year. Inventory at the sportswear and yoga apparel retailer rose 24%.

Stocks retreated after bigger gains in the morning, but are still on course to recover their 50-day moving average.

IBD Stock 50 MongoDB (MDB) soared 28% in volume after easily beating its profit and adjusted revenue for the quarter ended April. It also raised its EPS and sales guidance for the year. MongoDB earnings soared 180% from the prior year period to 56 cents per share.

IBD Stock 50 Asana (ASAN) reversed lower, falling 2.8% in heavy volume, after reporting a smaller-than-expected loss for its April quarter on Thursday evening.

cloud connectivity provider samsara (IOT) climbed 27.9% after posting a lower-than-expected first-quarter loss and rising revenue. The stock broke from a base, crossing the buy point of 22.69 in intense trading.

EV charging stock Charging point (CHPT) fell 7% after reporting a bigger-than-expected first-quarter loss and a sales beat Thursday night. Management gave second-quarter revenue guidance lower than analysts’ estimates.

Breakout Movers: Cathie Wood adds more of this stock

Other Friday stock market breakouts included UiPath (PATH), which exceeded the buy point of 18.22 by a cup base. The shares gained 1.7% and are at the bottom of the 5% buy zone, which is at 19.13.

The move came after Ark Invest CEO Cathie Wood sold shares of Nvidia (NVDA) and bought more PATH for its ARK Innovation ETF (ARKK). PATH is the fund’s fourth largest holding.

Extreme networks [ticker symb=EXTR] jumped 4.9% and came out of a saucer base with a buy point of 21.13. Shares hit a record high on Friday. EXTR has been on an uptrend since the network software company reported better-than-expected earnings and sales and raised its June quarter revenue forecast above analyst estimates on April 26.

Aehr test systems (AEHR) climbed 7.3% and exited a cup base that shows a buy point of 40.79. The move came after the semiconductor test system maker announced that an unnamed new customer had placed an order for a system that makes silicon carbide metal transistors for vehicles. Analysts expect EPS growth of 51% in the fiscal year that ended in May and an impressive 77% increase in the next fiscal year.

ATI (ATI) climbed 6.9% and broke above a trendline entry as it definitely regained its 50-day line. The entry is around 37, and the stock is still forming a double bottom with an entry of 39.93.

The specialty metals company rose after the Senate passed the debt ceiling bill, prompting renewed economic optimism. Separately, China is reportedly working on ways to boost its real estate market, which could increase demand for industrial metals.

Sale of telecommunications shares

Telecom stocks took a hit after a Bloomberg report said Amazon (AMZN) is in talks with cellphone providers to offer low-cost or no-cost cellphone service to its U.S. Amazon Prime members. But Amazon and Verizon Communications (VZ) denied the report. T-Mobile United States (TMUS) also reportedly denied having any discussions.

AMZN jumped 1.2%, while T-Mobile lost 5.6%, AT&T (T) fell 3.8% and Verizon lost 3.2% on the news. Verizon is the biggest loser in the Dow today.

A Wall Street Journal article previously reported that the wireless and satellite service provider Dish Network (DISH) was in talks to sell its wireless plans to Amazon. DISH catapulted 16.2% in big volume today.

Follow Kimberley Koenig for more stock market news on Twitter @IBD_KKoenig.

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