Dow Jones futures will open Sunday evening, along with S&P 500 and Nasdaq futures. Micron Technology Earnings ( MU ) and the Fed’s favorite gauge of inflation headline next week.
↑
X
What to expect after a negative change; Nvidia, Alphabet and Spotify in focus
Stocks rallied without weekly gains, with the S&P 500 and Nasdaq composite hitting all-time highs through Thursday morning. But there were some downsides at the end of the week.
Nvidia (NVDA) and other artificial intelligence chips play as Broadcom (AVGO), Semiconductor Taiwan (TSM), Arm Holdings Stocks ( ARM ) and Micron turned back lower from record highs after big moves in recent weeks. Nvidia shares in particular were flirting with extremely extended levels.
Micron’s earnings late next Wednesday could be crucial if this AI chip play finds support or suffers more serious traction.
Carnival (CCL), FedEx (FDX) and Dow Jones component Nike (NKE) also reports this coming week. All three stocks have lagged but will provide readings on the economy and consumer spending.
Amazon.com (AMZN), Meta Platforms (META), Nu Holdings (NU) are the stocks being created.
Shares of Nvidia and Taiwan Semiconductor are on IBD’s leaderboard. Meta Platforms, Nu Holdings and Amazon shares are on SwingTrader. Shares of Nvidia and Arm Holdings are in the IBD 50. Shares of Broadcom and Nvidia are in the IBD Big Cap 20.
The Fed’s inflation gauge
The Commerce Department will release the Fed’s preferred gauge of inflation, the core PCE price index, on Friday morning. Economists expect a relatively subdued May reading. Markets now see a roughly 65% chance of one Fed rate cut in September and two cuts in 2024.
Dow Jones Futures Today
Dow Jones futures open at 6pm ET on Sunday, along with S&P 500 and Nasdaq 100 futures.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze top stocks and the market on IBD Live
Rally Marketing
Stock market growth saw little to strong gains in major indexes last week, despite late-week turbulence from AI chip plays.
The Dow Jones Industrial Average led the indexes with an advance of 1.45% in last week’s trading on the stock market, moving above the 50-day line at a one-month high. The S&P 500 index gained 0.6%. The Nasdaq composite rose less than a point.
The small-cap Russell 2000 rose 0.8% but still remains below its 50-day low.
The Invesco S&P 500 Equal Weight ETF ( RSP ) rose 1.1%, back above the 50-day line. The First Trust Nasdaq 100 ETF (QQEW) advanced 1%, just below record levels.
Major stocks had a mixed week, with gains mostly on Monday and some suffering heavy losses Thursday through Friday.
However, the Nasdaq and S&P 500 are just off all-time highs. It’s hard to see many problems in the weekly charts.
The Nasdaq is now 6.7% above its 50-day line. That’s still extended, but down from 8.3% on Monday. The Nasdaq stalling or falling slightly over the course of a few weeks while Nvidia and AI stocks take a breather would be positive.
Even better would be if small caps and some other areas of the market could be above major levels.
The 10-year Treasury yield rose four basis points to 4.26%.
U.S. crude oil futures rose 3.4% to $80.73 a barrel last week.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF ( FFTY ) fell 1.1% last week. The iShares Expanded Tech-Software ETF ( IGV ) rose 2%. The VanEck Vectors Semiconductor ETF ( SMH ) sank 1.1%. Nvidia is the #1 holding in SMH, but Taiwan Semiconductor, Micron and Broadcom are the main members.
The SPDR S&P Metals & Mining ETF ( XME ) rose 1.5% last week. Global X US Infrastructure Development ETF (PAVE) advanced 0.9%. The US Global Jets ETF (JETS) rose 1.5%. The SPDR S&P Homebuilders ETF ( XHB ) fell 1%. The Energy Select SPDR ETF ( XLE ) rose 1.9% and the Healthcare Select Sector SPDR Fund ( XLV ) rose 0.6%. The Select Industrial Sector SPDR Fund ( XLI ) rose 1.5%. Financial Choice SPDR ETF (XLF) rose 1.7%.
Reflecting the more speculative story stocks, the ARK Innovation ETF ( ARKK ) fell 1.2% last week and the ARK Genomics ETF ( ARKG ) fell 2.8%.
Time the market with IBD’s ETF Market Strategy
Stock Nvidia
Shares of Nvidia fell 5% for the week to 126.57. Shares turned back lower from a record high of 140.76 intraday on Thursday. The AI chip leader is now 25.3% above its 50-day line. This after briefly reaching 40% at the peak of Thursday.
On March 7, NVDA stock closed 41.9% above the 50-day line, the most in 21 years. The next day, Nvidia shares staged a sharp reversal that marked the beginning of a consolidation.
Micron earnings
Micron reports fiscal third-quarter results on Wednesday. It is expected to report earnings of 42 cents per share, the first positive reading in six quarters. Revenue should rise 58% to $5.82 billion after a 16% second-quarter gain.
The memory chip giant’s results and instructions will be important for other AI games. It will also affect the broader semiconductor space, including chip equipment makers.
Micron fell 1.3% to 139.54 in last week’s trading on the stock market, well off Tuesday’s peak of 157.54. Shares rose slightly from Friday’s test of the 21-day line.
Other AI Chip Stocks
Broadcom shares fell 4.4% to 1,658.63, down from an intraday high of 1,851.62 on Tuesday. This followed a 23% increase last week in revenue.
The arm’s shares rose 1.5% to 160.30 for the week, but were well off Tuesday’s record high of 177.31. The UK-based wireless chip giant settled below the official consolidation buy point of 164. However, Arm Holdings has rallied over the past two months. Investors can wait to see if Arms shares can stop around the buy point, allowing the moving averages to close the gap.
Shares of Taiwan Semiconductor rose 0.8% for the week to 173.96, despite hitting Tuesday’s high of 184.86.
Stocks near points of purchase
Meta Platforms fell 1.9% on the week to 494.78, creating a handle and testing the 21-day line. The Facebook parent now has a 414.01 buy point from a cup-with-handle base. Meta stocks may have an early entry from the downtrend break of the handle.
Amazon shares rose nearly 3% to 189.08 last week, recovering from the 50-day line. The e-commerce and cloud computing giant has a flat base with a 191.70 buy point. The June 12 high of 188.35 provided an early entry to AMZN stock. Investors can treat the base as a short and shallow cup handle with 188.35 as the official entry.
Nu Holdings shares rose 4.2% to 12.25 for the week, hitting a record close after several weeks of tight action. The Brazilian digital bank has a flat base amid another consolidation, according to MarketSurge analysis. The buy point is 12.49. NU stock was up on Friday after breaking a downtrend at a flat base.
What should you do now?
The market seems a bit indecisive. It doesn’t help that the Nasdaq is still somewhat overextended while the Russell 2000 is below its 50-day line.
If you own a large stake in Nvidia, you might be feeling a bit shaken up at the weekend. But that’s after massive gains in recent weeks and months.
Nasdaq chip play and AI just might be taking a break.
Meanwhile, other megacaps generally look strong, with Meta and Amazon settling in the meantime Microsoft (MSFT) and possibly Google-parent Alphabet (GOOGL) are in buy range.
There are a number of stocks in non-tech sectors that are showing strength or almost in position.
So, investors should follow these names. But it’s not a particularly great time to add exposure, except perhaps for choppy markets.
Meanwhile, if positions start to struggle, investors should exit quickly.
Read the Big Picture daily to stay in sync with market direction and key stocks and sectors.
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
YOU MAY ALSO LIKE:
Why this IBD tool simplifies the search for top stocks
The best growth stocks to buy and watch
IBD Digital: Unlock IBD’s premium stock lists, tools and analysis today
S&P 500 Giants lead five stocks near buy points