The Dow Jones Industrial Average rose as stocks rallied on encouraging inflation data. Tesla (TSLA) surged even as CEO Elon Musk issued a warning on high-octane growth stocks. Apple (AAPL) raced higher and Microsoft (MSFT) was another blue-chip winner.
Meanwhile, a trio of stocks tested buy points amid the positive action: Leaderboard stock Eli Lilly (LLY), Cabot (CBT) and Diamondback Energy (FANG).
Volume was mixed, rising on the Nasdaq but falling on the New York Stock Exchange vs. the same time Thursday.
The yield on the benchmark 10-year Treasury note slid 2 basis points to 2.74%. West Texas Intermediate crude rose again and was trading around $115 per barrel.
Positive inflation data was helping stocks to end the week on a high. Core personal consumption expenditures — the Federal Reserve’s preferred inflation indicator — rose 4.9% in April, slower than March’s 5.2% increase. This raises hopes that price increases could be slowing.
Nasdaq Leads As Small Caps Impress
The Nasdaq was leading the way as it benefited from a rebound in tech stocks. It gained around 2.5%. Cybersecurity play Zscaler (ZS) was one of the top performers as it soared some 12% higher.
The S&P 500 was also shining as it rose almost 2%. Ulta Beauty (ULTA) was the star here, tacking on 10% as it posted sparkling earnings and gave better-than-expected guidance.
U.S. Stock Market Today Overview
Last Update: 1:14 PM ET 5/27/2022
The S&P sectors were all moving higher. Technology and real estate were making the best gains. The defensive consumer staples areas was bringing up the rear.
Small-cap investors flexed as they gave the bears a bloody nose, with the Russell 2000 popping about 2%.
Growth stocks were also partaking in the rally. The Innovator IBD 50 ETF (FFTY), a bellwether for growth stocks, rose more than 1.8%.
Dow Jones Today: Apple Stock, Microsoft Excel
The Dow Jones Industrial Average was the weakest of the major indexes but still gained more than 300 points. It was up over 1%.
Apple stock was helping to raise the blue-chip index. The iPhone behemoth was the top performer as it surged more than 3%.
AAPL stock remains below its major moving averages but is close to retaking the 21-day line, according to MarketSmith.
Microsoft was another noteworthy performer. The software giant rose more than 2% as Big Tech stocks attempt to rally from recent lows.
MSFT rose above the 21-day exponential moving average, which is encouraging. But the move coming in low volume is a flaw.
It was not all major tech names that were boosting the Dow Jones today. Aerospace giant Boeing (BA) was up nearly 3% and is on track to end the week with a gain of more than 8%.
Tesla Jumps As Elon Musk Warns On Growth
Tesla stock is another darling of growth stock investors that has come back to earth with a bump.
But the EV stock was also showing impressive strength Friday as it popped nearly 6% in above-average volume.
Nevertheless, it has miles to go before it can come close to reaching its current first-stage consolidation pattern entry of 1,208.10, MarketSmith analysis shows.
Aggressive investors could look to the stock retaking its 50-day moving average, but TSLA also sits nearly 18% below this level.
Tesla stock was making swift progress despite CEO Elon Musk warning about high-octane growth stocks.
“Companies that are inherently negative cash flow (i.e., value destroyers) need to die, so that they stop consuming resources,” Musk said in a Tweet.
Some users protested that Tesla itself had generated negative cash flow for a lengthy period. Nevertheless, loss-making stocks valued on revenue have been hammered in 2022.
Cathie Wood’s Ark Innovation ETF (ARKK) is down about 54% for the year, though it gained nearly 5% Friday.
He also predicted that “based on past experience” any potential recession could last for “about 12 to 18 months.”
Outside Dow Jones: 3 Stocks Test Buy Points
While stocks are rallying, investors should remain cautious for now. Taking smaller pilot positions may be a good way to gain market exposure while keeping risk at a manageable level.
Eli Lilly has punched above its buy point from a flat base. The ideal entry here is 314.10.
The pharma stock is back above its moving averages and continues to buck market weakness overall. Big Money has been snapping up the stock of late, with its Accumulation-Distribution Rating coming in at B.
Eli Lilly is currently a member of the prestigious IBD Leaderboard list of top stocks.
Cabot is also actionable after it broke out of a consolidation pattern. The buy point here is 74.97.
Overall performance is very strong, though its EPS Rating of 69 out of 99 is not ideal.
Diamondback Energy has also snaked its way into a buy zone after passing a consolidation entry of 148.09.
The oil and gas play has seen its relative strength line hit new highs, a bullish sign. It currently sits on the Sector Leader list, IBD’s most stringent and powerful screen.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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