BREAKING: Market Rally Gains Steam As These Hopes Rise

The Dow Jones Industrial Average surged Friday morning as the major indexes were on track to post gains for the week. The Dow and other major indexes are on track to end a three-week losing streak. Meanwhile, FedEx (FDX) jumped over 6% on bullish earnings guidance, despite missing fiscal fourth-quarter estimates.

About 45 minutes after the open, the Dow Jones Industrial Average rose 2.2% while the S&P 500 gained 2.3%. The S&P 500 is up around 5.7% for the week while the Dow holds a weekly gain of 4.9%. Small caps also showed gains, with the Russell 2000 up 2.5%.

The tech-heavy Nasdaq composite saw a 2.3% advance, leading the upside and notching a gain of around 6.3% for the week. Volume was higher on the Nasdaq and on the NYSE vs. the same time on Wednesday, according to IBD data.

The indexes started off the day with strong gains. Indexes have been rallying in impressive volume in recent days, which bodes well for the bulls. A new rally attempt is very much underway, which means investors should be on the lookout for a possible follow-through day. This would restore IBD's market outlook to confirmed uptrend from correction. Until then, investors should be watching for new bases and buy opportunities to form in stocks.

New U.S. home sales numbers for May 2022 were released at 10 a.m. ET this morning, showing a 10.7% rise month-over-month. Sales of new single-family houses in May 2022 were at a seasonally adjusted annual rate of 696,000. The May increase serves as a surprising trend reversal in light of current market conditions like rapidly rising mortgage rates.

Also, an economic report showed a record low in consumer confidence levels. The University of Michigan's Surveys of Consumers consumer sentiment index was revised lower to 50.0 in the final June survey.

FedEx gave stronger-than-expected fiscal 2023 guidance after just missing revenue and earnings estimates for the May-ended quarter. Still, EPS rose 36% on a year-over-year basis to $6.87, an acceleration from the previous quarter's 32% gain. Analysts polled by FactSet expected FedEx earnings to reach $6.88 a share. Revenue rose 8% year over year to $24.501 billion.

FedEx gave fiscal 2023 EPS guidance of $22.50-$24.50. Analysts were expecting $22.21, up 7.8%, FactSet says.

Shares of FedEx rose above the 200-day line for the first time since August 2021, aside from a brief move above it last week. The stock was up more than 6% in early trading.

Tech stocks led the Dow Jones industrials, as Salesforce.com (CRM) regained its 50-day line after a strong downtrend this year. The stock led the Dow for the second day in a row, as shares gained nearly 6.5% in early trading.

UnitedHealth (UNH) led the Dow's downside, losing 1.7%. The stock was among only two stocks in the Dow to fall. Shares declined after coming close to a breakout above a 507.35 double-bottom buy point. UnitedHealth is struggling to gain above the 50-day line.

Market Rally Gains Steam; What To Do

IBD 50 stock Funko (FNKO) rose 3.5%, for its second day of very strong gains. Funko has more than 1,000 licensed properties for its lines of action toys, apparel, accessories and games, depicting characters from Marvel to Pokemon. JPMorgan upgraded the stock on Thursday, which contributed to a rise of nearly 13% in heavy volume. On Friday, shares continued higher, up over 5%, while the RS line notched a new high.

Chinese electric-vehicle firms continued to power higher this week. IBD 50 stock Li Auto (LI) rose nearly 4% in early trading but pared gains to around 0.5%. The stock has been rallying on expectations of extended China EV subsidies. Shares rose close to 7% on Thursday, breaking out above a 37.55 buy point from a long and deep consolidation. The stock is now extended from the buy point and 58% above the 50-day moving average.

Elsewhere, XPeng (XPEV) rose 4.5% and Nio (NIO) pared early gains to 0.5% as both moved closer to their 200-day moving averages. BYD (BYDDF) pared early gains to 0.5%, after shares broke out above a 39.81 buy point from a 48%-deep cup-with-handle base, according to MarketSmith analysis.

Follow Rachel Fox on Twitter at @IBD_RFox for more Dow Jones and stock market commentary.

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