China Stocks Lead as Alibaba Powers Higher
The rally in Chinese stocks gained momentum, led by a strong performance from Alibaba (BABA). Other medical stocks also showed resilience, offering pockets of strength in an otherwise cautious market environment. Meanwhile, Nvidia (NVDA) continues to tighten up near a buy point, signaling potential opportunities for investors.
Despite these positive trends, the broader market suggests that investors should be turning defensive, especially if their holdings are facing declines.
Key Stocks to Watch
Several stocks remain on investors’ radars, with notable placements across IBD’s stock lists:
- AppLovin (APP): Featured on the IBD Leaderboard.
- Palantir (PLTR) and Samsara (IOT): On the IBD 50 list.
- Palantir, Axon (AXON), and AppLovin: Featured on the IBD Big Cap 20.
A video analysis from IBD experts reviewed Thursday’s market action, providing in-depth insights into Palantir stock, Royal Caribbean (RCL), and Mastercard (MA).
Dow Jones Futures Today
Stock futures indicated a cautious start:
- Dow Jones futures edged lower versus fair value.
- S&P 500 and Nasdaq 100 futures remained relatively unchanged.
Investors should note that overnight futures movements do not always translate into regular trading session trends.
Major Earnings Movers
A host of companies reported earnings after the closing bell, influencing market sentiment:
- MercadoLibre (MELI) surged over 10% following a blowout earnings report, hinting at a possible breakout from a messy base.
- Booking Holdings (BKNG) rose modestly, testing an early entry within its base.
- Rivian (RIVN) showed an initial jump before settling with a minor gain, positioning itself for a potential bottoming base breakout.
- Block (SQ) tumbled, undercutting the low of its base.
- Sprouts Farmers Market (SFM) saw solid losses, signaling a potential test of its 21-day moving average within a buy zone.
Stock Market Rally Faces Headwinds
While the stock market rally remains intact, Thursday saw declines across major indexes:
- Dow Jones Industrial Average dropped 1%, falling below its 21-day line and nearing its 50-day moving average.
- S&P 500 fell 0.4%.
- Nasdaq Composite declined 0.5%, though both indexes pared losses after touching their 10-day lines.
- Russell 2000 slumped 0.9%, struggling below its 50-day line.
- Equal-weight ETFs: The Invesco S&P 500 Equal Weight ETF (RSP) lost 0.3%, while the First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) declined 6% but remained above December’s peak.
Growth stocks continued to struggle, with heavy declines in Palantir, AppLovin, Carvana (CVNA), and Axon. Cruise lines and banks also faced significant selling pressure.
Market Indicators:
- Crude oil rose 0.4% to $72.57 per barrel.
- 10-year Treasury yield fell four basis points to 4.5%.
ETF Performance
Sector ETFs reflected the market’s mixed sentiment:
- Growth-focused ETFs:
- Innovator IBD 50 ETF (FFTY) sank 3.4%.
- iShares Expanded Tech-Software Sector ETF (IGV) dropped 1.8%.
- VanEck Vectors Semiconductor ETF (SMH) edged up 0.2%, with Nvidia as the top holding.
- ARK Innovation ETF (ARKK) fell 2.6%, while ARK Genomics ETF (ARKG) tumbled 4.2%.
- Sector-specific ETFs:
- SPDR S&P Metals & Mining ETF (XME) gained 0.3%.
- Energy Select SPDR ETF (XLE) climbed 0.9%.
- Health Care Select Sector SPDR Fund (XLV) advanced 0.6%.
- Industrial Select Sector SPDR Fund (XLI) retreated 0.7%.
- Financial Select SPDR ETF (XLF) declined 1.5%.
Growth Stocks Take a Hit
Several high-profile growth stocks saw significant declines:
- Palantir (PLTR) fell 5.2% to 106.21, extending losses from its 10.8% drop on Wednesday. Concerns over potential U.S. defense budget cuts weighed on the stock.
- Axon (AXON) plunged 8.7% following a brutal 16.4% drop the previous day. The stock has now undercut the low of its recent cup base.
- Carvana (CVNA) plummeted 12.1% to 247.72, experiencing a clear breakout failure despite strong earnings.
- AppLovin (APP) tumbled 8.9%, undercutting its post-earnings gap-up but holding above its prior base.
- Royal Caribbean (RCL) slumped 7.6% before recovering some losses. Commerce Secretary Howard Lutnick suggested that the Trump administration could impose stricter tax policies on the cruise industry.
Investors should remain cautious as the market rally shows signs of fragility. With increased volatility in growth stocks and sector rotations in play, staying defensive and managing risk remains critical.
