Dow Jones Futures Rise After Market Rally Pause; Tech Bellwether Signals

Dow Jones futures tilted higher early Thursday, along with S&P 500 futures and Nasdaq futures. The stock market rally advanced Wednesday, extending a rebound but with the major indexes closing well off session highs.

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Apple chipmaker Taiwan Semiconductor (TSM) is signaling a breakout on strong earnings before Thursday’s open, also giving Applied Materials stock a boost. KB Home (KBH) and Delta Air Lines (DAL) also climbed on quarterly results.

Consumer inflation came in slightly hotter than expected on Wednesday, hitting a fresh 39-year high of 7%. But investors appeared relieved that the December inflation report wasn’t even worse. Meanwhile, crude oil and copper prices continued to rally, with energy, mining and other commodity-related stocks rallying.

Still, the major indexes backed off morning highs, with the Nasdaq hitting resistance after rebounding since Monday afternoon. Applied Materials (AMAT) rebounded bullishly from its 50-day line while Mosaic (MOS) broke out past a buy point. Tesla (TSLA) was among Wednesday’s big movers, reclaiming key support, but is not yet actionable.

Key Earnings

KB Home reported earnings after the close while Taiwan Semiconductor and Delta Air Lines reported early Thursday, kicking off quarterly results for their respective sectors.

KB Home earnings beat views. Sales came in a little light, but the homebuilder gave bullish guidance on revenue, selling prices and profit margins. KBH stock, which was a laggard when rivals were breaking out, rose solidly overnight, signaling moves above the 50-day and 200-day lines.

Taiwan Semiconductor earnings topped estimates, with the chip foundry also guiding up for Q1 revenue. TSM stock rose 4.4% to 138.01, signaling a breakout from an 11-month cup-with-handle base with a 135.60 buy point. As a chip contractor, Taiwan Semi makes chips for Apple (AAPL), Nvidia (NVDA) and many other fabless chipmakers. Meanwhile, TSM also gave a bullish 2022 capital spending forecast. That’s good news for chip-equipment makers such as Applied Materials

Apple stock edged lower in premarket trade, still actionable from its 10-week line. Nvidia stock rose a fraction, still below its 50-day line after last week’s sell-off.

Delta earnings and revenue slightly topped views. The carrier expects a Q1 loss as the omicron variant spurs major flight cancellations, but it stuck to forecasts for a 2022 profit. DAL stock rose modestly before the open. Shares have been rallying for the past several weeks but are well off 2021 highs, along with other airline stocks. But Delta earnings are important not only for other airlines, but for hotels and online travel sites that are performing better.

Tesla stock and Nvidia are on IBD Leaderboard. Applied Materials and MOS stock are on SwingTrader. AMAT stock is on the IBD 50 list. Mosaic was Wednesday’s IBD Stock Of The Day.

The video embedded in this article discusses Wednesday’s market action and analyzes AMAT, Mosaic and TSM stock.

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