Stock Market Forecast: Lower Ahead of Powell Remarks with Small Caps Leading; Plus, AI Stock Skyrockets 35%

The stock market experienced a turnaround following comments from Fed Chair Jerome Powell on interest rate policy, coupled with strong earnings reports from Ulta Beauty (ULTA) and other major stock moves.

At midday, indexes shifted upwards after Powell’s discussion during a fireside chat at Spelman College in Atlanta. Powell stated that job creation in the economy is moving towards a more sustainable level, cautioning against over-tightening, and warned against speculating about future policy changes. This led to a 10 basis point drop in benchmark yield to 4.25%, the lowest since Sept. 14.

The Nasdaq climbed 0.3%, S&P 500 rose 0.4%, and Dow Jones Industrial Average increased by 0.5%, reaching its highest point since January 2022. The Russell 2000 saw the strongest performance, surging by 1.8% on Friday. Volume rose on Nasdaq and fell on the NYSE compared to the same time on Thursday.

The Innovator IBD 50 ETF (FFTY) rallied 1.5% and could potentially close above the 200-day moving average for the first time since Sept. 12.

At 2 p.m. ET, Powell and Fed Gov. Lisa Cook scheduled a roundtable discussion at Spelman College.

Stock Market Gets Manufacturing Data

This morning, the revised November S&P Global US Manufacturing Purchasing Managers’ Index remained unchanged, indicating a tough month for US manufacturers. The Institute for Supply Management manufacturing index also showed no improvement, indicating continuing contraction in manufacturing activity.

Despite this, the S&P 500 and Nasdaq reported the largest one-month percentage gain since July 2022, with the S&P rallying 8.9% and the Nasdaq 10.7%. For now, IBD continues to recommend 80%-100% exposure in the stock market, advising gradual adjustments as needed for new opportunities and profit-taking.

Several companies such as United Rentals (URI), InterContinental Hotels (IHG), AerCap Holdings (AER), and Iron Mountain (IRM) also saw significant movements in the stock market.

Stock Market Earnings Movers

Elastic (ESTC) soared 31%, Samsara (IOT) jumped 18%, while Ulta Beauty surged 12% to its highest point in months. On the other hand, Marvell Technology (MRVL) and Dell Technologies (DELL) experienced a decline after reporting earnings.

Additionally, Alibaba (BABA) and Pfizer (PFE) also experienced fluctuations in response to market downgrades and news regarding their late-stage trials, respectively.

Alibaba, Pfizer Among Stock Market Movers

Alibaba saw a 2% decline following a downgrade from Morgan Stanley, while Pfizer slid 4% due to news of halting late-stage trials for a weight loss drug.

Finally, for more market insights, IBD suggested subscribing to their investing podcast, getting free newsletters, and using MarketSmith’s tools for individual investors.


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