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Stock Market Higher; Macy’s EPS Beat Sparks Retail Gains

The stock market was modestly higher in morning trade Wednesday, as stocks looked to recover from Tuesday’s sell-off. Department store Macy’s (M) surged to a 52-week high after its strong earnings release early Wednesday and sparked solid gains among other retailers. (For updates on this story and other market coverage, visit Stock News Today.)

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The tech-heavy Nasdaq paced the major indexes with a 0.3% gain, while the S&P 500 moved up 0.1%. The Dow Jones industrial average inched lower.

Among companies reporting earnings, department store Macy’s (M) jumped over 5% after beating the Street’s Q1 earnings and sales estimates, while raising its full-year guidance. Shares surged into new high ground before paring those gains. A previous breakout above a 31.14 flat-base entry failed when the stock fell more than 7% below the buy point on May 10, forcing investors to cut their losses short. Now, the stock has leaped from support at the 50-day moving average. That creates a new buy area, although shares seem a bit extended already.

Other retailers were also on the advance. Costco (COST) rose 1%, as it approaches a 199.14 cup-with-handle buy point. Blue chip stock Nike (NKE) advanced about 1.5% on its way to a breakout above a 70.35 flat-base buy point.

Chinese internet giant Tencent (TCEHY) advanced over 6% after announcing strong revenue growth in the most recent quarter. The stock is finding support near its long-term 200-day moving average line, as it tries to shape the right side of a potential base.

Computer networking giant Cisco Systems (CSCO) fell ahead of its fiscal-Q3 earnings release after the close Wednesday. Shares are just below a cup-shaped base’s 46.26 buy point.

F5 Networks (FFIV) fell just 0.2% after being downgraded from buy to neutral at DA Davidson. The analyst firm has a 181 price target on the company, just 5.7% higher than Tuesday’s closing price. Despite the company’s strong positioning in its new product cycle, shares have minimal upside compared to the 12-month rating, resulting in the rating reduction, according to DA Davidson. Shares have been strong since a breakout above a 154.01 flat-base buy point, according to MarketSmith’s chart analysis.

Inside The IBD 50

Among the top growth stocks, Nvidia (NVDA) moved up nearly 1% in early trade Wednesday. The stock’s breakout has been fading, having given back all of the stock’s advance since a May 7 breakout above a 239.35 double-bottom entry. But, the stock is still holding above that buy point and the 50-day line.

Micron Technology (MU) was one of the IBD 50’s top-performing stocks with an over-3% advance. RBC initiated coverage on the stock with an outperform rating and an 80 price target. Shares are shaping the right side of a potential base.

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