Stock Market Rallies As 11 Bank Giants Aid First Republic, But FRC Dives Late; Apple, Microsoft Flash Buy Signals

Dow Jones futures tilted lower after hours, along with S&P 500 futures and Nasdaq futures. FedEx (FDX) reported earnings late Thursday, signaling a possible FDX stock breakout.

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The stock market rally attempt had a strong session, reversing higher from morning lows. The Nasdaq led the way, fueled by big caps such as Apple stock, Microsoft (MSFT), Advanced Micro Devices (AMD) and Nvidia (NVDA).

But Thursday’s market catalyst was news of a $30 billion deposit infusion for embattled California-based First Republic Bank (FRC). JPMorgan Chase (JPM), Citigroup (C), Bank of America (BAC) and Wells Fargo (WFC) announced that they will each make a $5 billion uninsured deposit into First Republic. Goldman Sachs (GS) and Morgan Stanley (MS) are contributing $2.5 billion each. Bank of New York Mellon (BK), PNC Financial (PNC), State Street (STT), Truist (TFC) and U.S. Bancorp (USB) are each making an uninsured deposit of $1 billion.

FRC stock, down over 36% intraday and up as much as 28%, closed up 10.3% to 34.38. Shares are off more than 70% this month. Several other regional banks moved higher as well, including Western Alliance Bancorp (WAL) and Pacific Western Bank (PACW), often called PacWest.

But FRC stock plunged more than 15% in late trading as First Republic suspended its dividend. WAL stock and PACW stock retreated solidly overnight.

JPM stock closed up 1.9%, rebounding from just above the 200-day moving average. Citi and BAC stock also closed up nearly 2%.

The First Republic rescue report followed Wednesday night news that Credit Suisse (CS) would borrow up to $53.7 billion from the Swiss National Bank while also buying back debt. CS stock rose solidly intraday, but closed flat at 2.16. Shares hit a record low of 1.75 intraday Wednesday.

Banks tapped $164.8 billion from the central bank’s backstops in the week ended March 15, the Federal Reserve data showed late Thursday. That includes a record $152.85 billion from the discount window, up from $4.58 billion in the prior week. Also, banks borrowed $11.9 billion from the Bank Term Funding Program. Under that new Fed facility, banks can take out one-year loans under favorable terms in exchange for quality collateral.

Apple (AAPL) and Microsoft stocks flashed buy signals Thursday, along with Lantheus (LNTH), Workday (WDAY) and Lennar (LEN).

Apple stock is on SwingTrader. MSFT stock is on the IBD Long-Term Leaders list. LNTH stock and Workday are on the IBD 50. Lantheus was Thursday’s IBD Stock Of The Day.

Investors could have chosen to add a little exposure Thursday, but remain cautious. The major indexes showed strength, but volume fell vs. Wednesday. So it’s still a market rally attempt, not a confirmed uptrend.

Dow Jones Futures Today

Dow Jones futures fell 0.15% vs. fair value. S&P 500 futures declined 0.2% and Nasdaq 100 futures lost 0.1%.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

FedEx Earnings

FedEx earnings topped fiscal Q3 views but missed on revenue. The shipping giant raised full-year EPS guidance. FedEx stock soared 11% to 227 in after-hours action, signaling a possible breakout. Shares rose 4.5% to 204.05 in Thursday’s regular session, back above the 200-day and 50-day lines. FedEx stock is working on a 217.48 flat-base buy point, but investors could use a move above the March 9 intraday high of 213.31 as an early entry.

United Parcel Service (UPS) rose modestly in extended trade on FedEx earnings, suggesting a breakout or at least an early entry. Shares rose 1.9% to 187.90 on Thursday, rebounding from near the 50-day and 200-day lines and flirting with short-term resistance and a trendline going back a year. UPS stock is in a flat base with a 193.81 buy point within a yearlong consolidation.

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Stock Market Rally

The stock market rally had a strong day, rebounding to close near session highs as bank crisis fears ebbed.

The Dow Jones Industrial Average rose 1.2% in Thursday’s stock market trading. The S&P 500 index popped 1.8%, with First Republic and AMD stock the top performers. The Nasdaq composite jumped 2.5%. The small-cap Russell 2000 bounced 1.4%.

U.S. crude oil prices rose 1.1% to $68.35 a barrel after plunging to a 2023 low on Wednesday. Copper prices edged up 0.75%.

The 10-year Treasury yield popped 9 basis points to 3.58%, rebounding from 3.37% intraday. The two-year yield reversed higher to jump 16 basis points to 4.13%.

Markets are now expecting quarter-point Fed rate hikes in March and May, and project more rate cuts after that. Needless to say, Fed rate projections are in flux.

The European Central Bank went ahead with a half-point rate hike on Thursday.

ETFs

Among growth ETFs, the Innovator IBD 50 ETF (FFTY) popped 2.7%, while the Innovator IBD Breakout Opportunities ETF (BOUT) gained 2.1%. The iShares Expanded Tech-Software Sector ETF (IGV) rallied 2.7%, with MSFT stock a major component. The VanEck Vectors Semiconductor ETF (SMH) jumped 4%.

SPDR S&P Metals & Mining ETF (XME) climbed 1% and the Global X U.S. Infrastructure Development ETF (PAVE) 1.3%. U.S. Global Jets ETF (JETS) and SPDR S&P Homebuilders ETF (XHB) both gained 1.8%. The Energy Select SPDR ETF (XLE) advanced 1% and the Health Care Select Sector SPDR Fund (XLV) 0.9%

The Financial Select SPDR ETF (XLF) rebounded 1.9%. JPM stock is a key XLF holding, along with Citigroup stock and BofA. SPDR S&P Regional Banking ETF (KRE) bounced 3.5%, with FRC stock, Western Alliance, PacWest and many larger regional names.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) ran 3.1% higher and ARK Genomics ETF (ARKG) advanced 1.7%.

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Stocks In Buy Areas

AAPL stock rose 1.9% on Thursday to 155.85, rebounding from its 21-day line, rising for the fourth straight day in above-average trade. The iPhone giant is not extended from its 200-day and 50-day lines. Shares, which had their best close in nearly six months, also came up to a trendline from early February. Apple stock has a 1,547.48 flat-base buy point.

MSFT stock popped 4.05% to 276.20, rising for a fourth straight day in heavy volume. Up 11% for the week, shares are close to the 276.86 flat-base buy point. But Microsoft is also getting close to being extended from the 200-day and 50-day lines. The relative strength line is already at a 52-week high, a bullish sign. The RS line, the blue line in the charts provided, tracks a stock’s performance vs. the S&P 500 index.

Along with general market optimism and safe-haven flows into tech giants, Microsoft appears to be benefiting from its AI chatbots, which could offer a chance to gain market share in the internet search sector.

LNTH stock jumped 7.6% to 78.83, breaking out into a buy zone. While 75.20 was still arguably a buy point, the 77.04 cup-with-handle entry on a weekly chart seems more relevant.

WDAY stock rose 4% to 191.72, extending Monday’s bounce from the 50-day line. Shares are still in range from a prior cup base, with a 184.60 buy point. Investors could use that or the bounce from the 50-day and 21-day lines. Workday stock is on track to have a new flat base with a 193.74 buy point after Friday’s close.

LEN stock also advanced 4%, to 104.20. The rebound from near the 50-day line offered an early entry. The homebuilder has a 109.38 flat-base buy point, according to MarketSmith analysis. On Wednesday, shares initially rose following strong Lennar earnings and guidance, but reversed lower. Thursday’s move pushed above Wednesday’s intraday high. The RS line for LEN stock is already at a 52-week high.

Market Rally Analysis

The stock market rally attempt enjoyed a broad-based, robust advance Thursday, fueled by optimism that bank woes will be contained.

The Nasdaq composite rebounded strongly from a convergence of all the major averages, breaking a trendline from the early February highs. The Nasdaq 100, which includes Apple stock and Microsoft, decisively broke its trendline.

The S&P 500 index moved back above its 200-day line. It’s not that far from the 50-day line. Breaking above that would likely mean the S&P 500 would clear its own trendline. Of course, it wouldn’t take much for the S&P to fall back below its 200-day or test recent lows.

The Dow Jones rebounded toward its 200-day line, but the 50-day is some ways off. The Russell 2000 climbed, but has work to do.

Nasdaq’s price action was impressive, but volume was lighter than on Wednesday. So Thursday didn’t qualify as a follow-through day. Investors can look for a follow-through day on the Nasdaq or S&P 500 now. Friday will be a quadruple-witching day, so volume will likely be higher.

Leading stocks stood out once again. Many are extended, such as Nvidia, AMD and Arista Networks (ANET). But a number of stocks flashed buy signals or moved back into position.

While Thursday’s headlines were positive, that could all change if there’s another shoe to drop in the banking sector.

Meanwhile, big shifts in Treasuries, Fed rate hike expectations and other markets will feed back into stocks.

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What To Do Now

The stock market rally attempt has not yet been confirmed, but the big price gain and technical action in the Nasdaq were bullish. The action of leading stocks was even more so.

Investors could have added some exposure Thursday. But be careful of ramping up quickly in this volatile, news-driven market. There’s also nothing wrong with waiting for a FTD before stepping back in. Many top stocks are still in range or moving into position.

Remember, if you’re quick to jump into stocks and rally attempts, you have to be just as quick stepping out.

In any case, make sure your watchlists are ready.

Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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