Dow Jones Falls After Surprise Drop In Jobless Claims; Nvidia Soars 25% On AI Chip Demand

Stock for tech company, Nvidia, jumps 27% in anticipation for key data release at 8:30am ET.

Dow Jones Falls After Surprise Drop In Jobless Claims; Nvidia Soars 25% On AI Chip Demand

The Dow Jones Industrial Average dropped Thursday while tech stocks rose after revised GDP estimates for the first quarter and weekly jobless claims were released ahead of market opening. Meanwhile, chipmaker Nvidia (NVDA) soared more than 25% after reporting a smaller-than-expected earnings decline, bolstered by a "surging demand" for AI chips.

Initial claims for unemployment benefits from the Labor Department dropped unexpectedly to 229,000, compared with 242,000 the week before. Econoday's estimates predicted that they would rise to 248,000.

The second estimate for the first quarter GDP by the Commerce Department was 1.3%, which is higher than the Wall Street estimate of 1.1% growth. Personal consumption expenditures also increased to 3.8%, up from 3.7% the previous period. It was expected that they would remain unchanged.

Nvidia's stock soared after it surpassed Wall Street targets for its first fiscal quarter, thanks to record sales of data centers. Jensen Huang, the company's chief executive, said that his company was ramping up production in order to meet demand. The chip industry is "going through two simultaneous transitions - accelerated computing and AI generative."

Best Buy (BBY), Dollar Tree, ELF Beauty, Snowflake and Splunk are all other key players in the earnings race.

Best Buy shares rose nearly 3% this morning, while Dollar Tree's tumbled over 15%. ELF, which was on IBD Leaderboard's watchlist, rose 11% after strong earnings and sales for the fiscal fourth quarter.

Snowflake's first-quarter earnings exceeded Wall Street expectations, but its product revenue forecast missed the views due to slowing growth among cloud computing partners like (AMZN). SNOW shares fell 15% in the early trading.

Splunk's morning performance was a success. The company rallied by more than 3%.

Stock Market Today

The best stocks in the current stock market trend are Advanced Micro Devices, ASML, Shopify and Dow Jones Boeing (BA).

ASML, Salesforce and Boeing are featured this week in the Stocks Near A Buy Zone.

Dow Jones Today: Oil prices, Treasury Yields

The Nasdaq Composite, a tech-heavy index, rose 1.1% after Thursday's opening. Nvidia led the way with the gains. The Dow Jones Industrial Average dropped 0.3% while the S&P 500 gained 0.4%. Intel (INTC), Cisco Systems (CSCO), and other low-ranking companies were the main culprits.

The Nasdaq-100 tracker Invesco QQQ Trust, (QQQ), traded higher by 1.7% while the SPDR S&P500 ETF, (SPY), rose by 0.5% on Thursday morning.

On Thursday, the 10-year U.S. Treasury rate traded at 3.76%. Investors are pulling out of bonds, as the impasse over federal debt ceiling worsens. The yield on 10-year Treasury notes is at its highest since mid-March. Fitch Ratings put the U.S. Government's AAA credit ratings on negative watch late Wednesday. Fitch cited the "increased political partisanship" that was preventing a resolution on raising or suspending the debt limit.

After reaching their highest level in early May, U.S. crude oil prices dropped back to their previous trading range on Wednesday. West Texas Intermediate futures dropped 2% Thursday morning, sending WTI futures below $73 a barrel.

Stock Market Action

The Dow Jones Industrial Average dropped 0.8% on Wednesday. The S&P 500 fell 0.7% and the Nasdaq Composite dropped 0.6%.

The Big Picture column on Wednesday noted that a mini-rally in the last hour "followed" the release of the minutes of the Fed's meeting of May 3, in which the U.S. Central Bank raised rates to their current range of 5-5.25 percent in an ongoing effort to permanently curb inflation.

After the recent change in market outlook, it is important to read IBD The Big Picture.

Dow Jones Stocks to Buy and Watch: Boeing, Salesforce

Boeing, a Dow Jones aerospace company, dropped by 1.6% on Wednesday and closed below its 50-day level. According to IBD MarketSmith's pattern recognition, shares are still forming an even base with a buy point of 221.43. BA shares fell 0.4% on Thursday morning.

According to Leaderboard's analysis, Salesforce has surpassed alternative entries of 194.01 and 200.0 in recent weeks. In the meantime, its relative strength indicator hit a new peak last week. This is a bullish sign. Salesforce will announce its first quarter results on May 31, after the close of the markets. The CRM stock rose 1.1% on Thursday after Wedbush increased the price target of the stock to 230 from 220.

AMD, ASML and Shopify are the best stocks to buy.

According to IBD MarketSmith pattern identification, Advanced Micro Devices has moved further away from the buy zone above a cup's buy point of 102.53, after a small rise on Wednesday. The 5% buying area increased to 107.66. AMD shares rose 9.6% on Thursday in response to Nvidia's earnings.

IBD Leaderboard ASML dropped further below its 683.28 purchase point in a cup handle during the 2.15% decline on Wednesday. ASML scrambled up 4.9% Thursday morning.

Shopify was added to IBD Leaderboard on Monday after it made a bullish movement above a trendline near entry 62. The shares rose by 1.1% on Wednesday, recouping a portion of the big losses from Tuesday. SHOP shares rose another 0.3% on Thursday.

Stock Market Rally: Best Stocks to Buy and Watch

There are four stocks that you should buy today and keep an eye on, including two Dow Jones leaders.

Advanced Micro Devices 102.53 Cup Base

Source: IBD data as of May 24, 2023

Tesla Stock

Tesla's stock fell another 1.5% on Wednesday, extending Tuesday's losses. The shares are finding support near their 50-day line as they create a cup with a buy point of 207.89 for now. Watch for the handle that will offer you a lower entry. The shares closed Wednesday at a 42% discount to their 52-week peak.

TSLA's stock appeared to recover from Wednesday's losses but reversed early gains and fell nearly 1% on Thursday.

Dow Jones Leaders - Apple and Microsoft

Apple shares, among Dow Jones stocks ended Wednesday with a modest gain, reversing an early loss. This broke a two-day streak of losses. The shares are still just below their 52-week high of 176.39. Stock continues to hold strongly above a buy point of 157.48 and is outside the range where it reached 165.35. AAPL rose by 0.4% on Thursday.

Microsoft shares dropped 0.45% on Wednesday, adding to their losses from Tuesday and moving further away form their recent 52-week peak of 322.72. The stock price is significantly higher than the 276.86 buy-point. MSFT's stock rose 2.5% on Thursday morning.