Dow Jones Rebounds as Inflation Report Emerges; Cathie Wood buys chip stock and sells Tesla

The Dow Jones Industrial Average shrugged off rising yields as fresh inflation data emerged. Famed fund manager Cathie Wood bought some chip stocks while selling Tesla (TSLA). Warren Buffett stock Occidental Petroleum (OXY) rose after the outturn Berkshire Hathaway (BRKB) had increased its stake.




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Meanwhile, three stocks surpassed the buy points. New IBD Leaderboard Stock rambus (RMBS) passed a trendline entry while Medpace (MEDP) and Atkore (ATKR) attempted a breakout on weak volume.

Stocks held up even as government bond yields surged on mixed economic data. The 10-year yield rose 13 basis points to 3.84%, while the two-year yield rose 14 basis points to 4.86%, inverting the yield curve more.

The rise in yields came as initial jobless claims unexpectedly fell to 239k from 264k the previous week, Labor Department data showed. Analysts had expected an increase to 270,000. The labor market continues to look strong.

The Commerce Department’s final estimate of GDP rose to 2% in the first quarter, ahead of the 1.4% expected by economists. Consumer spending rose 4.2%, the highest quarterly growth since the second quarter of 2021. This is a double-edged sword because while the economy remains resilient, it also reinforces the case for further monetary tightening by the Fed.

Meanwhile, the latest index data on personal consumption spending is expected tomorrow. This (particularly the core measurement) is the Fed’s preferred indicator of inflation.

Nasdaq lags as small caps emerge on bank boost

The Nasdaq lagged the other major indices but fought its way out of negative territory and ended flat. micron (MU) was the biggest laggard, down 4.1% after the earnings report was released.

The benchmark S&P 500 struggled to gain 0.5%. Wells Fargo (WFC) was the top performer here, up 4.5%.

S&P 500 sectors ended mixed on an upside. Finance and materials were the front runners. Communication Services and Consumer Staples lagged the most.

Small caps benefited from a rally in bank stocks after the Federal Reserve said top lenders had done well in its latest stress test. The Russell 2000 ended the session up 1.2%.

Growth stocks were also up modestly, with the innovator IBD 50 ETF (FFTY) up 0.4%.

Dow Jones today: JP Morgan and Goldman Sachs lead index higher

The Dow Jones Industrial Average performed best among the major indices. It ended the session up nearly 300 points, or 0.8%.

It was also helped by the performance of financials.

JPMorgan Chase (JPM) was the top Dow performer, up 3.5%. It followed closely followed by Goldman Sachs (GS), which rose 3%.

Visa also had a solid session, up 2.8%. Walgreen’s Boots Alliance (WBA) struggled the most on the Dow Jones today as it fell 2.4% intel (INTC) is also lagging behind.

Cathie Wood buys chip stock and sells Tesla

Investors are always interested in keeping track of top fund managers.

Cathie Wood, head of Ark Invest, bought a few chip stocks yesterday as she sold more Teslas.

She bought 6,542 shares Taiwan Semiconductor (TSM) and 4,576 inches modern micro devices (AMD) for its ARK Autonomous Technology & Robotics ETF (ARKQ).

TSM stock has retreated to a buy point of 98.98 and was little changed on Thursday. AMD stock came close to making sizeable gains on a cup basis entry of 102.43 but is currently being extended.

Meanwhile, Wood sold 17,967 Tesla shares from her ARKQ fund and another 10,401 from her ARK Next Generation Internet ETF (ARKW).

Wood sold more than 500,000 shares of EV stock across her various funds this month.


Futures: Rate hike chances rise as inflation data is due; Apple is targeting $3 trillion


Warren Buffett increases OXY share

Warren Buffett hasn’t shied away from adding to his energy stocks over the past year.

And he’s at it again. His Berkshire Hathaway acquired 2.1 million shares of oil stock Occidental Petroleum June 26-28, according to a filing with the SEC.

This helped boost OXY stock. On Thursday, it was up 1.8%, back above the 21-day exponential moving average. Still, Occidental remains stuck in a longer-term downtrend and is below its 50-day falling MA.

Berkshire Hathaway shares ended the day up 0.8%. It is in a buy zone above a cup and handle entry of 331.84, according to MarketSmith analysis.

Outside of Dow Jones: 3 stock test entries

Rambus managed a trendline entry near 61 amid excitement for chip stock. RMBS stock has performed strongly so far in 2023, up more than 80%.

Overall performance is strong and the IBD Composite Rating is a perfect 99. The move has earned the stock a spot on the prestigious IBD Leaderboard list of top stocks.

Medical research company Medpace is in a buy zone after making a cup-with-henkel entry from 231.63. It ended up up 2.6%. MEDP stock has an EPS rating of 99 while the price performance is also strong.

Atkore broke through a cup basis buy point of 154.86 on its weekly chart to end the session up 2%. Since this is an early phase, the chances of success are greater. Atkore is in the top 6% of stocks in terms of price performance over the last 12 months.

Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.

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