Finance
Dow Jones Futures: Creation of a New Market Rally; AI Stocks Near Buy Points While Nvidia Struggles
Dow Jones futures open Sunday evening, along with S&P 500 futures and Nasdaq futures. Earnings season is slowing down a bit, but inflation and other economic data will be available this week.
The stock market recovered from the August 5 global sell-off. A rally attempt is underway, but a follow-up day must take place.
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‘Setup Day’ means a step in the right direction; Cava, Costco, ONON in pictures
Nvidia (NVDA) continues to struggle. But several AI stocks are showing strength, including Metaplatforms (META), Palantir Technologies (PLTR), ServiceNow (NOW), Samsara (IOT), Arista Networks (ANET) and Nvidia chipmaker Taiwanese semiconductor (TSM).
Meanwhile, a number of stocks rose above their 50-day moving average Eli Lilly (LLY), CAVA (CAVA), TradeDesk (T.D), When holding (ONON) And Costco Wholesale (COSTS). They were all arguably early entries, although ONON reports early this year on Tuesday.
Nvidia stock, ServiceNow and Eli Lilly are active Leader board. CAVA and Costco stock have joined SwingTrader. Palantir stock, Samara, Arista Networks, and Service Now are all available IBD 50 list. Palantir and Arista shares are on the line IBD Bigcap 20. Samsara was the IBD stock of the day on Friday.
The video embedded in the article discussed the market action in depth and analyzed CAVA stock, Costco and On Holding.
Elon Musk to interview Donald Trump?
Former President Donald Trump said this on August 6 Tesla (TSLA) CEO Elon Musk was scheduled to interview him on Monday evening. Musk, who has endorsed Trump, has not confirmed the interview. If the conversation does happen, it would likely include a discussion about Trump’s electric vehicle policies. Trump has advocated eliminating EV subsidies and mandates, and encouraging Chinese EV makers like Tesla rival BYD (BYDDF), to set up factories in the US. Also expect a discussion about Bitcoin and cryptocurrencies.
Dow Jones futures today
Dow Jones futures open at 6:00 PM ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
Remember, overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading during the next regular stock market session.
Join IBD experts as they analyze leading stocks and the market on IBD Live
Stock market rally
The stock market started the week with a terrible open on Monday, as the carry trade in the yen declined and a slowdown of Nvidia’s AI chip combined with recession fears, leading to a global rout and huge volatility spikes.
But indexes bottomed on Monday and began an attempted stock market rally on Tuesday as the yen stabilized while stronger US economic data calmed nerves.
The Dow Jones Industrial Average fell 0.6% in stock trading last week. The S&P 500 index lost a fraction. The Nasdaq index fell 0.2%. The small-cap Russell 2000 fell 1.35%.
The Dow Jones recovered to close just above the 50-day line, while the Russell 2000 continued to resist there. The S&P 500 and Nasdaq have not yet reached their 10-day lines, let alone the 21- or 50-day averages.
The stock market still hasn’t confirmed its rally attempt with a follow-through day. That could happen any time next week. Remember that not all confirmed rallies succeed.
The major indexes were stagnant on Friday, but the number of stocks moving above their 50-day lines, including Cava, Eli Lilly and Costco, was an encouraging sign. These join a number of stocks from different sectors setting up or showing early entries.
U.S. crude futures rose 4.5% to $76.84 a barrel last week, breaking a four-week losing streak.
Interest on government bonds recovers, important dates expected
The yield on ten-year government bonds rose by 15 basis points to 3.94%. The ten-year yield briefly fell to 3.67% on Monday and reached the 4% mark intraday on Thursday.
Markets have priced in a rate cut for the September 18 meeting, but it is a matter of between 25 and 50 basis points.
In the coming week, investors will receive the July producer price index on Tuesday and the consumer price index on Wednesday. Get ready Thursday for the July jobs report, weekly unemployment claims and August regional manufacturing reports from the Philly Fed and the New York Fed.
These economic reports could be the catalyst for a follow-up day, or send the indexes back to recent lows.
ETFs
Among the growth ETFs is the Innovator IBD 50 ETF (FFTY) rose 2.2% last week. The iShares Expanded Tech-Software Sector ETF (IGV) rose 2.8%, with ServiceNow, Palantir and Samsara all members. The VanEck Vectors Semiconductor ETF (SMH) gained 2.9%. Nvidia is No. 1 in SMH, with Taiwan Semiconductor stock No. 2.
SPDR S&P Metals & Mining ETF (XME) fell 0.8% last week. The Global X US Infrastructure Development ETF (PAVE) fell by 0.1%. SPDR S&P Home Builders ETF (XHB) retreated 2.9%. The Energy Select SPDR ETF (XLE) gained 1.1% and the Healthcare Select Sector SPDR Fund (XLV) fell 0.6%, with Lilly shares being a major component.
The Industrial Select Sector SPDR fund (XLI) climbed 1.25%.
The Financial Select SPDR ETF (XLF) advanced 0.8%.
Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) rose 0.6% last week and ARK Genomics ETF (ARKG) fell by 1.4%. Tesla shares are still a big holding at Ark Invest. TSLA shares fell 3.7% to 200 last week, putting them below the 200-day line and essentially wiping out the huge recent run. The shares came out of the lows well.
Time the market with IBD’s ETF market strategy
AI stocks to watch
Palantir shares shot up 21.3% last week at 30.02, hitting a three-year high. Shares bounced back from a brief Monday slide to the 200-day mark. Strong revenue and guidance at Palantir, plus a new alliance with Microsoft (MSFT), provided positive catalysts. PLTR stock is extended from the 50-day line and a previous buy point of 27.50, but it’s worth watching.
Meta shares rose 6.1% to 517.77, decisively regaining the 50-day line. Investors could use a previous buy point of 514.01 as an entry point, or the post-earnings high on August 1 of 527.17. Meta stock needs another week for a new base
ServiceNow shares rose 2.65% this week to 811.59 after testing the 50-day line on Monday. The shares broke past a buy point of 806.52 and an alternate quote of 815.32 on July 25 after the earnings report, but quickly fell back with the market. Shares hit the handle buy point again on Friday.
Samsara shares rose 8% this week to 38.24. On Monday, shares briefly dipped below the 50- and 200-day lines, but closed fractionally higher. IOT stock has a buy point of 39.21 cup-with-handle. The Internet of Things game is volatile and tends to make wild moves after earnings. But second-quarter results are not expected until early September.
Arista shares rose 5.2% this week to 335.87, recovering from Monday’s intraday decline. The shares are above their 50-day line. It may be the only AI hardware stock above that key level. ANET stock has a messy chart, especially Meta’s, but could have a new base after another week.
Shares of Taiwan Semiconductor fell to the 40-week line on Monday morning, but ultimately rose 11.55% to 167.17, almost back to the 50-day line. On Friday, Taiwan Semiconductor reported that July sales rose nearly 45% from a year earlier, driven by AI chips for Nvidia and others.
Microsoft, Nvidia AWOL. Meet the new big ‘Daddy’ on Wall Street.
Nvidia stock
But can AI stocks thrive if the 800-pound gorilla, Nvidia, is struggling?
Nvidia shares rose well above Monday’s lows and are back above the 100 level and a previous base. Shares were still down 2.35% to 104.75 for the week, creating resistance at the 10-day line. Market wave. It was the fourth straight weekly decline for NVDA stock.
Concerns about AI spending fatigue persist, while reports that Blackwell, Nvidia’s next-generation AI chip, is facing production delays have weighed on NVDA.
What to do now
Investors could have made some pilot purchases late in the week, taking advantage of the early movers. Keep in mind that if the market falters, many of the promising names will likely struggle.
Investors should still be largely in cash, awaiting an FTD. When that happens, whether it’s Monday or next year, you can gradually invest as the market and your positions attract you. If you add 10% per day, it won’t take that long before you’re almost fully invested.
For now, focus on those watchlists. Have a broad list of stocks showing promising action while focusing on a smaller list of potential top targets.
Be willing to act, but also willing not to act.
Read The Big Picture every day to stay informed about market direction and the most important stocks and sectors.
Follow Ed Carson on Threads at @edcarson1971 and X/Twitter on @IBD_ECarson for stock market updates and more.
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