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Dow Jones futures erased losses from the stock market’s PPI inflation report early Thursday. That followed Wednesday’s hot CPI inflation report, which hit major indexes. Meanwhile, leaders in the field of artificial intelligence Nvidia (NVDA) and Microsoft (MSFT) take center stage.
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The S&P 500 and Nasdaq did find support at their 10-week moving averages on Wednesday, with Nvidia providing some support. But the Russell 2000 fell below the 50-day line, while the Dow Jones remained well below that key level.
Nvidia and Microsoft shares received new price target hikes early Thursday. Nvidia shares moved higher after Wednesday’s buck-the-trend rebound, while Microsoft rose.
And at another Magnificent Seven company, Amazon.com (AMZN) CEO Andy Jassy vowed to continue cost savings while working hard on artificial intelligence, including its own AI chips.
Elsewhere, Vertex Pharmaceutica (VRTX) fell lower after a takeover deal for Alpine Immunosciences (ALPN), which took off. Regeneron Pharmaceuticals (REGN) fell modestly after the Justice Department accused Medicare of overcharging for its lead drug Eylea.
Confirmation (Quick and AutoMax (KMX) was sold after missing both earnings and revenue early Thursday. Constellation brands (STZ) rose slightly after beating analyst expectations.
PPI inflation
In economic news, the Department of Labor released March’s producer price index and weekly unemployment claims data at 8:30 a.m. ET on Thursday.
March PPI rose 0.2% after February’s 0.6% jump, which is below expectations for a 0.3% gain. The core PPI, which excludes food and energy, met expectations for a 0.2% increase.
PPI inflation was 2.1% from a year earlier, up from 1.6% in February, but below expectations for 2.3%. Core PPI inflation rose to 2.4%, up from February’s 2% and slightly above expectations of 2.3%.
Key elements in the PPI report directly impact the PCE core price index, the Fed’s favorite inflation report. These details indicated slightly tamer core PCE price gains in March.
Additionally, initial unemployment claims for the week ending April 6 fell by 11,000 to 211,000, below the 215,000 figure.
Dow Jones futures
Dow Jones futures were even in line with the stock market today. S&P 500 futures rose 0.1%. Nasdaq 100 futures rose 0.3%. Before the PPI report, they were all down modestly.
The yield on ten-year government bonds fell to 4.53%. Crude oil futures fell slightly.
Keep in mind that premarket action in Dow futures and elsewhere does not necessarily translate into actual trading during the next regular trading session.
The stock market is faltering
In stock trading on Wednesday, the Dow Jones Industrial Average fell 1.1% to a two-month low as consumer inflation came in higher than expected. The S&P 500 and Nasdaq index fell 0.95% and 0.8%, respectively, both breaking the 21-day mark. The Russell 2000 fell 2.5%.
The stock market rally is under pressure.
The yield on ten-year government bonds rose by 19 basis points to 4.56%, the highest level since mid-November.
Markets now only see two rate cuts in 2024, and even that is shaky. Investors are starting to price in a slim chance that there will be no Fed rate cuts this year.
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Nvidia and Microsoft stock price targets raised
Nvidia shares rose a fraction on Thursday. Raymond James raised its price target from 850 to 1,100, which represents a 26% upside for the AI chip leader.
On Wednesday, shares rose 2% to 870.39, recovering from the 10-week line to just below the 21-day line.
Nvidia stock is on track to have a flat base soon with a buy point at 974. Investors could use a decisive move above the 21-day line and the break of a very short trendline as an early entry.
Shares of Microsoft are up 1% on the stock market today. Morgan Stanley raised its price target on Microsoft stock from 465 to 520, citing its generative AI leadership.
On Wednesday, the Dow giant fell 0.7% to 423.26, but rebounded from the 21-day high to hold a 420.82 buy point after a brief consolidation. Microsoft stock could operate on a three-week tight pattern.
Amazon is hitting a sweet spot for investors
Amazon CEO Jassy identified two sweet spots for investors in his annual shareholder letter, touting cost savings and a focus on AI. He touted Amazon’s own chips.
That follows the example of other Magnificent Seven companies. Microsoft has developed its own internal AI chips. Google parent Alphabet (GOOGL) and Metaplatforms (META) also unveiled their own AI chips this week, with Google using designs from Arm positions (ARM).
The goal is to reduce dependence on Nvidia’s advanced AI chips.
Amazon shares moved higher early Thursday. Shares rose 0.15% to 185.95 on Wednesday, a record close.
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Biotech news in the stock market today
In biotechnology, Vertex Pharmaceuticals will pay $65 per share, or $4.9 billion, for Alpine Immune Sciences, which is working on a treatment for inflammatory kidney disease. That is a premium of 67% compared to Tuesday’s closing price. Alpine shares rose 37% early Thursday after surging 21% on Wednesday on the takeover buzz.
Vertex shares lost a fraction, helped by an Evercore upgrade to outperform. The shares are on a flat base with a buy point of 448.40, but have been trending down since late January.
Regeneron Pharmaceuticals fell 2% late Wednesday after the Justice Department filed a complaint, accuses the biotech of fraudulently increasing Medicare reimbursement rates for the eye drug Eylea by hundreds of millions of dollars.
Regeneron stock has a flat-base buy point of 998.33, but is trading below the 50-day line, according to MarketSurge. Shares threaten to open at three-month lows.
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