Dow Jones futures rose modestly early Thursday, along with S&P 500 futures and Nasdaq futures. Target (TGT) fueled a strong stock market rally Wednesday, with more top stocks breaking out and Apple (AAPL) showing some strength. Splunk (SPLK), Keysight Technologies (KEYS) and Synopsys (SNPS) reported earnings late Wednesday.
XSplunk stock fell before the open while Synopsys stock rose modestly overnight. Keysight stock soared, signaling a move into a buy zone.
Splunk stock has a 96 IBD Composite Rating out of a best-possible 99. Synopsys stock has a 94. Keysight has a 90 Composite Rating.
Dow Jones Futures Today
Dow Jones futures were 0.3% above fair value, along with S&P 500 futures. Nasdaq 100 futures rose 0.2% above fair value, suggesting another Nasdaq composite move toward the 50-day line. Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Treasury yield curve inversion fears returned, with the 10-year Treasury yield just above the 2-year rate. That followed Wednesday's release of the July Fed meeting minutes, which suggested that policymakers might not cut rates again. But that was already largely known. Since that meeting, Trump announced new China tariffs and the Treasury yield curve inverted earlier this month.
Investors have largely priced in another quarter-point Fed rate cut at the September meeting, but some policymakers remain skeptical about further rate cuts. Kansas City Fed President Esther George told CNBC Thursday morning that the July rate cut wasn't needed. All that sets up Friday's big speech by Fed chief Jerome Powell at the annual Jackson Hole monetary conference.
Current Stock Market Rally
The stock market rally had a strong session from the start, as Target stock and Lowe's (LOW) surged on earnings. Target stock blasted out of an 11-month consolidation.
The Dow Jones Industrial Average rose 0.9%. The S&P 500 index climbed 0.8% and the Nasdaq composite 0.9%. The Nasdaq moved back above the 8,000 level but hit resistance at the 50-day line. The S&P 500 and Dow Jones are a little further below that key support level.
Apple (AAPL) continued to buoy the major averages, rising 1.1% to 212.64. Apple stock is nearly back to the old 215.41 buy point, which is no longer valid after a sharp sell-off early this month. The relative strength line for Apple stock is at a nine-month high. The RS line, the blue line in the charts below, tracks a stock's performance vs. the S&P 500 index.
The Apple stock chart still looks like a failed cup-with-handle breakout. Investors perhaps could view 221.47 as a new handle or resistance point. Perhaps Apple stock will set up for a couple more weeks and form a new flat base within the longer consolidation. Keep in mind that Apple earnings have fallen for the past two quarters with analysts betting on a slim decline in the current quarter. Longer term, Apple stock has largely moved in line with the S&P 500 index for the past seven years.
Growth Stocks Stand Tall
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.2%. The iShares Expanded Tech-Software Sector ETF (IGV) climbed 1.6%. The VanEck Vectors Semiconductor ETF (SMH) advanced 1%.
The stock market rally is still under pressure, but conditions are improving with more top stocks setting up or clearing buy points. In addition to Target stock, Pinterest (PINS) reclaimed a buy point while Paycom Software (PAYC) and HubSpot (HUBS) rose strongly after just closing in buy range Tuesday.
Splunk Earnings
Splunk earnings leapt 275% to 30 cents a share on revenue rising 30% to $517 million. Analysts expected Splunk earnings of 12 cents a share on revenue of $487 million.
The data analytics and security software maker also guided higher for current-quarter revenue.
Splunk also agreed to buy cloud-monitoring firm SignalFx for $1.05 billion.
Splunk stock fell 2.7% before Thursday's open. Shares rose 1.4% Wednesday to 128.46, just below the 50-day line. Splunk stock is in a consolidation with a 143.80 buy point. But the relative strength line has been trending lower since shares peaked in early March.
Keysight Earnings
Keysight earnings jumped 40% to $1.25 a share. Revenue grew 8% to $1.087 billion. Wall Street forecast Keysight earnings of $1.02 a share on revenue of $1.045 billion.
Keysight stock shot up 9% to 97.30 in the premarket, signaling a breaking to a buy zone and record high. Shares rose 2.1% on Wednesday to 89.14, above the 50-day line. Keysight stock has been working on a 94.62 buy point from a flat base next to a cup-with-handle pattern.
Synopsys Earnings
Synopsys earnings rose to $1.18 a share for the fiscal Q3. Revenue for the chip-design software maker climbed to $853 million. Analysts expected Synopsys earnings of $1.10 a share on revenue of $830 million.
Synopsys also guided higher for the current Q4.
Synopsys stock climbed 1% overnight. Shares advanced 1.45% to 131.84 on Wednesday just above their 50-day line. Synopsys stock has been consolidating since peaking at 138.72 on July 26, when the market hit all-time highs.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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