Stock Market Extends Rally As Key Inflation Rate Lower Than Expected; Tesla, Boeing, Apple Lead Indexes

The stock market closed sharply higher Friday, extending the rally to a third day, to start the three-day weekend on encouraging inflation data. Tesla (TSLA), Apple (AAPL) and Boeing (BA) were among the blue chip winners.

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The S&P gained 2.5%. The Nasdaq composite jumped 3.3% and the Dow Jones Industrial Average closed 1.8% higher. The small-cap Russell 2000 gained 2.7%. Volume was mixed, rising on the Nasdaq but falling on the New York Stock Exchange compared to the same time Thursday.

Meanwhile, the yield on the benchmark 10-year Treasury note slid to 2.74%. West Texas Intermediate crude oil rose again and was trading around $115 per barrel.

Positive inflation data was helping stocks end the week on a high note. Core personal consumption expenditures — the Federal Reserve’s preferred inflation indicator — rose 4.9% in April, slower than March’s 5.2% increase.

The inflation data “raised expectations that inflation is peaking,” said economist Ed Yardeni. He said he still expects the Fed to raise interest rates by a half point in each of the next two meetings in June and July. “The S&P 500 should continue to move mostly sideways this year, consolidating its gains since the start of the bull market in 2009 and correcting the pandemic valuation excesses,” he wrote in a social media post.

Stock Market Gains On Earnings, Inflation Data

Lithium producer and Tesla supplier Livent (LTHM) soared 12.5% Friday and broke out past its buy point of 33.14 on a cup base. Lilium (LILM) and Livent agreed Friday to collaborate on the advancement of lithium metal technology for use in high-performance battery cells. Germany-based Lilium’s shares jumped 2%.

Meanwhile, Tesla jumped 6.4% in above average volume. Nevertheless, it has miles to go before it can come close to reaching its current consolidation pattern entry of 1,208.10, MarketSmith analysis shows. Another possible entry is at 1,152.97.

Ulta Beauty (ULTA) rose 10.5% as it beat earnings estimates and gave better-than-expected guidance. Shares climbed back above an old buy point of 408.83, more than a month after the stock scored a breakout above that entry. The breakout failed several weeks later, but the stock has rebounded.

Nordstrom (JWN) department store jumped 7.2% Friday, adding to three days of gains after it beat earnings expectations on Wednesday.

Apple stock surged 4.1% and remains below its 50-day and 200-day moving averages but retook the 21-day line, according to MarketSmith.

Aerospace giant Boeing (BA) was up nearly 3% and is on track to end the week with a gain of more than 8%. Shares remain in a deep slump, however.

Cybersecurity play Zscaler (ZS) was the top performer on the Nasdaq 100 as it soared about 12.6% following the company’s earnings report. Zscaler’s fiscal third quarter earnings and revenue topped Wall Street targets. The cybersecurity firm’s revenue outlook also came in above views.

Zscaler’s gain was the largest percent increase since December 3, 2020, when it rose 26.45%.

How Aggressive Should You Be As Market Rally Extends Gains?

Growth Stocks Gain

The S&P sectors were all moving higher. Technology, consumer discretionary and real estate were making the best gains.

The Innovator IBD 50 ETF (FFTY), a bellwether for growth stocks, rose 2.3%.

Meanwhile, several stocks broke out amid the positive market action. Leaderboard stock Eli Lilly (LLY), Cabot (CBT) and Diamondback Energy (FANG) all topped buy points.

Pharma giant Lilly said Friday it will unveil new test results for its biggest cancer drug, Verzenio, in June. LLY stock broke out to a fresh high. The presentation will take place June 6 during the American Society for Clinical Oncology meeting in Chicago.

Eli Lilly is above its 314.10 buy point from a flat base. The stock is back above its moving averages and continues to buck market weakness overall. Eli Lilly is currently a member of the prestigious IBD Leaderboard list of top stocks.

Follow Michael Molinski on Twitter @IMmolinski

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