Dow Jones futures tilted higher after hours, along with S&P 500 futures and Nasdaq futures. Attention turns to the CPI inflation report before Wednesday’s open.

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The stock market rally was mixed Tuesday, with the indexes fading into the close.

Concerns about cloud-computing growth weighed on titans Amazon.com (AZMN), Microsoft (MSFT) and Google parent Alphabet (GOOGL). That also hit cloud-software names such as Snowflake (SNOW) and Datadog (DDOG).

But medical products and services looked strong, with Intuitive Surgical (ISRG), Align Technology (ALGN) and Zimmer Biomet (ZBH) all flashing buy signals, with Shockwave Medical (SWAV) making a big move.

Homebuilders D.R. Horton (DHI), Meritage Homes (MTH), Lennar (LEN), Tri Pointe Homes (TPH), and Pulte Group (PHM) were actionable, with building materials firm Builders FirstSource (BLDR) breaking out.

Skechers (SKX) also broke out, as several footwear stocks have stepped up.

D.R. Horton, Skechers, Builders FirstSource and SWAV stock moved in volume that was well above average.

MTH stock is on Leaderboard. DHI stock is on SwingTrader. MSFT stock is on IBD Long-Term Leaders. Meritage, Tri Pointe Homes and PHM stock are on the IBD 50.

The video embedded in this article reviewed the market action and analyzed BLDR stock, D.R. Horton and Shockwave Medical.

Big Bank Reserves

Banks that provided the biggest slices of $30 billion in deposits to First Republic (FRC) will set aside about $100 million each for loss reserves, Bloomberg reported Tuesday night, sources said.  JPMorgan Chase (JPM), Wells Fargo (WFC), Citigroup (C) and Bank of America (BAC) each put up $5 billion. JPMorgan, Wells and Citi report Friday, with BofA due next week.

CPI Inflation Report

The Labor Department will release the CPI inflation report at 8:30 a.m. ET. Economists expect the consumer price index to rise 0.3% in March, with the annual CPI inflation rate cooling to 5.2% from February’s 6%. But core CPI, which excludes food and energy, is seen up 0.4% vs. February. That would push the core CPI inflation rate to 5.6%, up slightly from February’s 5.5%.

Annual CPI inflation rates are cooling in part because prices were running so hot in early 2022. But those year-over-year comparisons will ease later in the year, making it hard to bring inflation rates down. Meanwhile, economic data finally has been weakening, including on jobs, while banking woes are starting to hit lending.

Investors see a strong chance of another Fed rate hike in early May, but are betting that would be the final move.

Dow Jones Futures Today

Dow Jones futures rose 0.1% vs. fair value. S&P 500 futures advanced 0.1% and Nasdaq 100 futures climbed 0.15%.

The CPI inflation report is sure to move Dow Jones futures, Treasury yields and more.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live

Stock Market Rally

The stock market rally opened weak, battled back, then faded again late. But the indexes closed mixed, as they were for most of the session.

The Dow Jones Industrial Average rose 0.3% in Tuesday’s stock market trading. The S&P 500 index was flat. The Nasdaq composite declined 0.4%. The small-cap Russell 2000 bounced 0.8%.

U.S. crude oil prices rose 2.2% to $81.53 a barrel, the highest close since Jan. 23. Copper futures climbed nearly 1%.

The 10-year Treasury yield rose 2 basis points to 3.43%. The 2-year Treasury yield climbed 5 basis points to 4.06%. The 3-month T-bill rate fell slightly, but is at 5.03%. That severe 3-month to 10-year Treasury yield curve inversion signals the Fed’s unfinished inflation fight and growing recession risks.

ETFs

Among growth ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.7%. The iShares Expanded Tech-Software Sector ETF (IGV) dipped 0.5%, with Microsoft stock a major IGV holding. The VanEck Vectors Semiconductor ETF (SMH) also fell 0.5%.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) climbed 0.6% and ARK Genomics ETF (ARKG) 1.2%.

SPDR S&P Metals & Mining ETF (XME) rebounded 1.5% and the Global X U.S. Infrastructure Development ETF (PAVE) 0.8%. U.S. Global Jets ETF (JETS) ascended 1.5%. SPDR S&P Homebuilders ETF (XHB) stepped up 2%. The Energy Select SPDR ETF (XLE) climbed nearly 1% and the Health Care Select Sector SPDR Fund (XLV) edged up 0.3%.

The Financial Select SPDR ETF (XLF) advanced 0.9%. The SPDR S&P Regional Banking ETF (KRE) rose 0.3%.

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Cloud Computing Concerns

Cloud-computing growth is likely to slow further, analysts from UBS and Jefferies both stated, with negative analyst comments about Microsoft’s Azure, Google Cloud and Amazon Web Services.

MSFT stock fell 2.3% to 282.83, but is still in range from a 276.86 flat-base buy point.

GOOGL stock, the least exposed to cloud-computing out of the three, dipped 1% to 105.35. That’s just below a 106.69 cup-with-handle buy point cleared on Thursday.

AMZN stock sank 2.2% to 99.92. Amazon is working on a bottoming base, but forming below the 200-day line.

Meanwhile, some cloud-related software and networking names retreated. SNOW stock was a notable loser, down 5.8%.

Stocks Flashing Buy Signals In Volume

DHI stock rose 3.7% to 99.77, back above a 99.08 cup-with-handle buy point after flashing bullish signals earlier in the session, according to MarketSmith analysis.

BLDR climbed 4.2% to 92.37, clearing a 90.31 buy point from a flat base next to the top of a 14-month consolidation. Last week, Builders FirstSource retreated amid selling in the construction and industrial space, but held support at the 21-day moving average. While still in a buy zone, it’s more than 10% above its 50-day line now. On the upside, the relative strength line for BLDR stock is at a new high.

SWAV soared 10.6% to 251.05, vaulting above the 200-day line for the first time since December. Investors could have used that move as an aggressive entry. However, Shockwave stock is now trading around the bottom of a base from last fall that ended in a failed breakout. Investors may want to wait for SWAV stock to move higher, then forged a handle.

Shockwave soared as a new Medicare rule could sweeten reimbursement payments for its systems.

SKX stock popped 3.4% to 48.70, clearing a 47.80 cup-with-handle buy point. Volume was slightly above average, though it didn’t turn positive until late in the session. Skechers stock popped 2% on Monday in a setup day.

Market Rally Analysis

The stock market rally looked set to close near session highs once again, but faded in the final hour of trade. But the major indexes still look healthy, while leading stocks showed strength.

The Nasdaq composite lagged, but held above the 12,000 level, pausing below key resistance and key support.

The S&P 500 continues to trade tightly over the past several days. The Dow Jones hit its best level since Feb. 17. The Russell 2000 is back above its 21-day line.

While some tech titans such as Microsoft and Amazon weighed on the indexes, the Invesco S&P 500 Equal Weight ETF (RSP) climbed 0.65%, hitting a one-month high and closing in on the 50-day line. The First Trust NASDAQ-100 Equal Weighted Index ETF (QQEW) closed fractionally higher vs. the 0.6% drop on the Nasdaq 100.

Advancers led decliners Tuesday, especially on the NYSE. Even in the morning, when the S&P 500 and Nasdaq were near session lows, winners were outpacing losers.

In addition to homebuilders, medical products and footwear, a variety of groups are showing strength, including gold and copper miners, drugmakers, restaurants, several software plays and the broad chip sector.

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What To Do Now

The stock market rally has steadied after some sharp selling in industrial and growth stocks last week. A large number of leading stocks are once again flashing buy signals as market breadth improves.

Investors can gradually add exposure again. Don’t buy extended and don’t get too concentrated. Sector rotations can still trigger big losses in some areas while bringing others into position. The overall market rally could blast out to new highs with a good day or two — or break key levels with a sell-off

So stay engaged and be nimble. Spot potential leaders by working on broad watchlists while doing research on a smaller number of stocks on the cusp of buy areas.

In addition to the CPI inflation report, earnings season is about to begin.

Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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