The Dow Jones Industrial Average and other major indexes rallied in late afternoon trading as two Federal Reserve officials discussed the possibility of rate cuts. Cathie Wood’s ARK Invest portfolio experienced a surge after the company surpassed analyst estimates and raised its sales outlook. However, Alibaba stock slumped following its quarterly results.
Meanwhile, the S&P 500 climbed 0.9% and approached the 5,000 level, while the Nasdaq led the pack with a 1% gain. Despite the improvement in breadth on the NYSE, decliners still outnumbered advancers on the Nasdaq.
Small caps also turned early losses into a slight 0.2% gain, with the Russell 2000 finding support at the 50-day moving average. This resulted in the Innovator IBD 50 (FFTY) exchange-traded fund outperforming the small-cap index with a 1.4% gain. Additionally, the yield on the benchmark 10-year Treasury note rose 1 basis point to 4.11%.
In economic news, Boston Fed President Susan Collins hinted at future rate cuts, while Richmond Fed President Thomas Barkin called for patience with rate cuts. The Mortgage Bankers Association’s Market Composite Index also showed a 3.7% increase in mortgage loan application volume for the week ended Feb. 2.
Wood’s focus on buying stocks on the dip was highlighted as Roblox, a top holding in her ARK Invest portfolio, surged in early action and traded 12% higher after the game company beat fourth-quarter views and raised its outlook for the full year and current quarter. However, IBD recommends buying stocks with strong earnings and price performance rather than laggards and advises investors to look for leaders in strong industries that show superior earnings growth and sales. Snap, an IBD Leaderboard stock, crashed below the 50-day and 200-day lines, significantly undercutting the stock’s base after reporting fourth-quarter earnings. Additionally, ELF Beauty fell more than 3% despite a beat-and-raise report.
Expanding the context from the initial summary, the article also discusses the positive earnings reports and surge in stock prices for various tech and other companies such as Uber, Chipotle Mexican Grill, Yum Brands, Terex, and more. It also emphasizes the importance of thorough stock research and proper timing, highlighting stocks that are breaking out and potentially offering strong investment opportunities for investors. These insights underscore the complexity and dynamism of the stock market and the diligent effort required by investors to navigate this terrain.