Dow Jones Futures, S&P 500 Futures and Nasdaq Futures Edge Higher
Dow Jones futures, along with S&P 500 futures and Nasdaq futures, showed slight gains on Sunday night. This comes after Warren Buffett’s Berkshire Hathaway reported a significant increase in operating profit. The stock market rally experienced its best week of 2023 due to a combination of factors, including a decline in Treasury yields, comments from Fed chief Jerome Powell, and reduced debt issuance by the Treasury. The Nasdaq, S&P 500, and Dow Jones all provided confirmation of the rally, with several stocks flashing buy signals. Investors should consider adding exposure to the market, but with caution as it still faces key resistance points. Notable stocks to watch include Nvidia, Lululemon Athletica, Shopify, DraftKings, Zscaler, NetEase, Tesla, and Cathie Wood’s Ark Invest ETFs.
Berkshire Hathaway Reports Strong Third-Quarter Operating Profit
Warren Buffett’s Berkshire Hathaway saw a 41% increase in third-quarter operating profit, reaching $10.8 billion. The conglomerate’s insurance businesses performed well, while the utilities, energy, and railroad businesses experienced profit declines. After-tax operating earnings rose by 42% to about $7,436 per class A share, surpassing the FactSet consensus of $6,540. Berkshire also increased its cash holdings to a record $157.24 billion. Buffett continued reducing equity holdings, selling a net $5 billion in Q3, bringing the year-to-date total to $23 billion. The company bought back $1.1 billion of its own stock in Q3, contributing to a total of $7 billion in buybacks this year. BRKB stock saw a 6.1% increase last week and is currently working on a flat base, with a buy point of $373.34. Apple stock remains Berkshire’s largest equity holding, and although it faced significant declines in the third quarter, it rose by 5% last week.
The Stock Market Rally Surges
Last week, the stock market rally experienced a significant resurgence, with the Dow Jones Industrial Average rising by 5.1% in stock market trading, its best week in a year. The S&P 500 index leapt 5.85% and the Nasdaq composite jumped 6.6%, both of which had their best weeks since early November 2022. All three indexes confirmed the new rally with follow-through days and cleared their 50-day lines. Market breadth improved, with advancers surpassing decliners and new highs outpacing new lows. The small-cap Russell 2000 saw a 7.6% increase, its best week in three years. Important sectors to note include technology, software, semiconductors, and story stocks, which saw significant gains. Treasury yields plummeted by 29 basis points to 4.56% and crude oil futures slightly rose. It is important to remember that overnight action in futures does not always translate into actual trading in the regular stock market session.
Stocks to Watch and ETF Performance
Nvidia stock rebounded from recent lows, rising by 11.1% to $450.05 last week. It cleared the 50-day line on Friday and has a double-bottom buy point of $476.09. Lululemon Athletica stock rose by 5.5% to $407.93 and rebounded from the 50-day line to retake a buy point of $406.94. Shopify stock experienced a significant 22% jump on Thursday, reaching $67.60, after strong earnings. DraftKings stock surged by 16.5% to $33.75 following positive earnings and guidance. Zscaler stock saw a 6.5% increase to $164.37 and offered a buying opportunity. NetEase stock rose by 5.6% to $112.72, clearing a buy point of $110.82. Notable ETF performances include the iShares Expanded Tech-Software Sector ETF, VanEck Vectors Semiconductor ETF, ARK Innovation ETF, ARK Genomics ETF, SPDR S&P Metals & Mining ETF, SPDR S&P Homebuilders ETF, Energy Select SPDR ETF, Health Care Select Sector SPDR Fund, Industrial Select Sector SPDR Fund, Financial Select SPDR ETF, and SPDR S&P Regional Banking ETF.
